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Craft to triple but who's buying?

By editorial assistant Sandi Toxic

Posted March 09, 2014
dogfish head
Off to the shops: Demand for craft beer is rising rapidly in the States and elsewhere. © Dogfish Head Brewery

The US craft beer market looks set to hit $18bn (£10.8bn) by 2017, largely thanks to younger punters.

If you've got a spare £2,466.89 kicking around and you're interested in learning more about the craft beer market, you might want to consider buying Craft Beer - US - November 2012, an off-the-shelf market report from international market research firm Mintel.

Admittedly, while, as its name suggests, it focuses on the US craft beer market, there are many parallels to be found with beer markets elsewhere, particularly that of the similarly fast-growing craft beer/real ale1 market in the UK.

Furthermore, although some of the stats and finding may have gathered a few cobwebs since it was first published at the end of 2012/start of last year2, one would certainly hope it is not too dated given its current availability and price tag.

Assuming that its findings are not now the equivalent of a Betamax video cassette dressed in A-line flares, then it appears that the US craft market will have attained an overall value of $18bn by 2017, 50% up on the 2012 figure of $12bn and more than triple the 2007 market worth of $5.7bn.

"The growth rates seen by craft beer are impressive, especially during a period when domestic [viz the beer produced by the large US producers] and imported beers have shown a flat to declining performance," says Mintel global food and drink analyst Jennifer Zegler in a press release issued to accompany the report's publication.

"Unlike its domestic and imported beer counterparts, craft beer has been able to defy overall beer market trends and continue expansion during the economic downturn and subsequent slow recovery."

"While the craft and craft-style beer category remains a small segment of the $78bn US beer industry, the category has been able to stabilise the overall beer industry, which has experienced volume declines in the domestic and imported beer categories since 2008."

So who exactly is buying and ergo drinking craft beer?

Well, Mintel reveals, "craft beer's sweet spot is with 25-34 year old consumers".

While some 36% of all US consumers drank craft beer in 2012, it continues, the number of "older Millennials", or people aged 25-34 if you don't speak marketing, clocked up a noticeably higher 50%.

Sticking with the stats and the marketing jargon, Mintel states that "some 43% of both Millennials and Generation X", which, rather than being members of Billy Idol's old band, refers to people born between 1964 and the early 1980s, "expressed a belief that craft beer tastes better than domestic beer".

However, among Baby Boomers, i.e. people born between 1946 and 1964, just 32% felt the same way.

When it comes to spunking up the wedge, though, only 17% of Millennials and 18% of Generation X believe that craft brews offer better value than domestic alternatives.

In this they are not alone, with a clear majority of all consumers, some 56%, giving domestic beers the nod when it comes to how much bang they get for their buck.

wide choice
Eeny, meeny, miny, moe: So which one are you having? © Great Lakes Brewing Company

Echoing similar sentiments expressed in the UK, where the dazzling array of top-notch real ales in the barrooms of Blighty can sometimes prove a tad beguiling for the uninitiated supper, Mintel found "that nearly half (45%) of consumers would try more craft beers if they knew more about them".

And let's face it, there are certainly quite a few craft brews in the US to choose from.

According to the US Brewers Association, which describes itself as "an organisation of brewers, for brewers and by brewers" that seeks "to promote and protect American craft brewers, their beers and the community of brewing enthusiasts", there were some 2,347 US craft breweries in operation in 2012.

These, the BA says, comprised of 1,132 brewpubs, 1,118 microbreweries and 97 regional craft breweries.

What's more, some sources in the media expect this total to rise to well over 3,000 craft brewers in 2014.

This compares to a current UK total of 1,147 breweries, itself up from just 668 in 2008.

"Despite the variety of beer releases created by craft breweries, craft beers are not yet everyday beer choices for most drinkers due to a lack of understanding about their taste profiles," Zegler says.

"To continue growing, craft beer must be its own best advocate and expand appeal beyond Millennials who are most likely to consume it."

"An additional barrier is lack of knowledge."

"Craft brewers need to focus on education through tastings and classes that inform consumers about the differentiation in flavour between craft beer and other alcoholic drinks."

Furthermore, Mintel found that "50% of overall craft beer drinkers express interest in locally made beer" while 25% were interested in purchasing craft beer where it was brewed.

Whether that means literally at source, i.e. the brewery itself, or within the town, city or village where it is made we here at the Rake & Herald can't honestly say, although should you be lucky enough to own your own craft brewery, you might want to think about opening up a shop next door if you haven't done so already.

What we can tell you with 100% confidence, however, is that the press release then states that "another 39% say that they are influenced to purchase a craft beer if it has a personality to which they can relate".

Stone's Arrogant Bastard Ale springs readily to mind on that one, although maybe Mintel's interpretation of 'personality' is slightly different to ours.

"Buying local is not limited to supporting one's homebase; it also provides consumers with the ability to support towns that they do not currently call home," Zegler explains.


Yeah, maybe it is.

"To bring that local feel to consumers regardless of location, craft breweries should consider partnering to create multibrewery variety packs that would offer consumers a taste of one city, state or region," she continues.

"These taste-of-an-area packages would allow consumers to experience smaller breweries from their own or other geographies."

Sightseeing in a six-pack, if you will.

As defined by the BA, "an American craft brewer is small, independent and traditional" and among other things must have an "annual production of 6m barrels of beer or less".

And yet, as with real ales in the UK (where such living cask-conditioned brews have now overtaken dead keg pasteurised beer), theses brewers are knocking a notable dent in the fortunes of their far larger rivals, which in turn are looking to cut a slice of the craft pie for themselves through acquisitions and the introduction of their own craft-like beers.

Or, as a slightly more recent Mintel press release from January 2014 that accompanied the launch of a different report on the US beer market as a whole3 puts it: "Despite flat volume sales on the traditional domestic front, craft beer continues to make inroads, especially among the all-important 25-34 age group, where 51% feel that smaller producers make better quality products than their larger brethren."

But craft beer isn't the only cloud on the large lads' horizon, with Mintel reporting that 22% of Americans are buying less domestic beer "because they're drinking wine" while 18% "are focusing their alcohol consumption on liquor", which, for all our Cockney readers out there, means spirits as opposed to the stuff you put on your jellied eels.

On top of this, 20% of Americans "are cutting back on domestic beer consumption because it has too many calories and 15% believe it to be unhealthy".

As wine is "traditionally seen as a healthier option", this, Mintel says, has only further aided sales of the grape, which rose by 2.6% last year to an estimated $42bn in contrast "to a rather stagnant 0.3% increase for beer".

seasonal brews
Limited edition: Seasonal brews are proving popular with brewers and drinkers alike. © Mayflower Brewing Company

Coupled with calorie concerns, "much of the switch can be traced back to consumers' lust for variety and different flavours", Mintel continues, noting that craft beer and 'hard cider'4 along with wine and spirits, all enjoyed "significant upticks in consumption over the past six months, particularly among younger consumers".

Indeed, during the latter half of 2013, approximately one quarter of people aged 22-24 drank more spirits or wine compared to the prior six months, "with craft beer accounting for the one beer segment that has benefitted from increased interest across [this age group]".

While nearly 55% of all beer drinkers said that they like to try new alcoholic drinks, 18% of those aged 22-24 reported drinking more hard cider in the past six months, "the largest increase amongst any alcohol type across all measured age groups".

"We've seen for years that Americans of legal drinking age are no longer only beer, wine or liquor drinkers; instead they're trying a variety of alcoholic beverages," Zegler says.

"However," she continues, "this thirst for variety has led to flat volume sales for brewers, even though people are buying more of much-smaller segments, like craft beer and hard cider."

"Brewers of all sizes must cater to this curiosity with new styles, taste profiles and limited-edition options."

This does not appear to be lost on brewers: beers accounted for 44% of all new alcoholic product launches last year, up from just 15% in 2009.

Furthermore, from 2012 to 2013, Mintel reveals, "the number of new beer launches increased by a whopping 113%".

Of these, the bulk consisted of limited-edition brews, including seasonal specialities.

Indeed, between 2010 and 2013, the number of limited-edition beers placed on the US market rose by 850%, followed by products boasting 'environmentally-friendly' packaging (233%) and 'premium' beers (37%).

This would appear to be in accordance with the US public's taste buds as 52% of those consumers polled who drink beer, hard cider and/or malt liquor told Mintel they like to choose different alcoholic drinks depending on the season.

"While craft brewers have led the trend of seasonal releases, consumers admit that it's more than their beer that they change depending on the season," Zegler notes.

"This means adults of legal drinking age are always reconsidering their alcoholic beverage choices, leaving manufacturers constantly competing for consumption."

As Mintel's research indicates that alcoholic beverage consumption declines with age, drinks producers, the company believes, could benefit from "courting the drinkers aged 22-34 who might be making more educated choices now, which could develop into long-term habits".

"Despite the current lack of loyalty among legal drinkers, there's the possibility that 25-34 year olds are cutting back on their experimentation as they age," Zegler says.

"This could be a time when they are establishing their favourite products, or at best preferred brands, to which they might remain loyal throughout their adulthood."

"Thus it's even more imperative that manufacturers form authentic connections with these young adults of legal drinking age but continue to capture their interest with a rotation of new products."

So there.

Get 'em young, eh?

See also Tapping the barrel, posted 11/2/14.

Sandi Toxic
was raised by wolves inside a disused clay pit near Lanjeth. You can befriend her on FaceBook here. She is still quite feral.


1) Although essentially cut from the same kidney and sharing the same focus on quality, purity and taste, 'craft beer' and 'real ale' (or 'cask-conditioned ale') are not synonymous. The UK's Campaign for Real Ale (CAMRA), for instance, defines real ale as "a natural product brewed using traditional ingredients and left to mature in the cask (container) from which it is served in the pub through a process called secondary fermentation". This secondary fermentation occurs thanks to the remaining presence of yeast in the beer.

Real ale, CAMRA continues, is a "living product" that by its nature "has a limited shelf life and needs to be looked after with care in the pub cellar and kept at a certain temperature to enable it to mature and bring out its full flavours for the drinker to enjoy". Brewery-conditioned, or 'keg', beer, meanwhile, "has a longer shelf life as it is not a living product" because once the beer "has finished fermentation in the brewery and has been conditioned, it is chilled and filtered to remove all the yeast and then it is pasteurised to make it sterile". Once this has been done, the now 'dead' beer is "put in a sealed container, called a keg, ready to be sent to the pub".

Moreover, "because there is no secondary fermentation occurring in the container (i.e. keg) in which it is held, there is no natural carbonation of the beer so gas, either carbon dioxide or a mixture of carbon dioxide and nitrogen, has to be added to 'fizz up' the beer". This, CAMRA says, creates "an unnaturally fizzy beer rather than the gentle carbonation produced by the slow secondary fermentation in a cask of real ale".

Importantly, real ale is dispensed using the syphoning action of a hand pump or under gravity via a tap struck straight into the cask lying on its side at an angle. Keg beer is dispensed under pressure via a font using the aforementioned extraneous gas to propel it out of the keg, which itself needs to be kept upright.

While craft beer, in the words of the US Brewers Association (BA), "is generally made with traditional ingredients like malted barley" as well as "interesting and sometimes non-traditional ingredients [that] are often added for distinctiveness", much craft beer is kegged and dispensed under pressure using a font and gas.

Furthermore, the BA defines a craft brewer as "small, independent and traditional". As well as not having an annual production of more than 6m barrels of beer, a craft brewer cannot be more than 25% owned "by a beverage alcohol industry member that is not itself a craft brewer".

Real ale, however, can be produced by a brewer of any size and ownership. Thus while Doom Bar, produced by Molson Coors-owned Sharp's, qualifies as a real ale, using the BA's criteria, it cannot be deemed a craft beer. Likewise, any kegged craft beer cannot be deemed a real ale.

Without wanting to split too many pubes or tread on too many delicate toes, real ale can be essentially seen as being defined by the nature of the beer while craft beer is defined more by the nature of the brewer.

Confused? Hopefully not because there's a bit more to it than just that. Beer, CAMRA states, "falls into one of two main categories: ale or lager", with "the key difference" being the type of fermentation used to turns the fermentable sugars in the malt into alcohol and carbon dioxide. "Lagers," CAMRA notes, "are made using bottom-fermenting yeast which sinks to the bottom of the fermenting vessel and fermentation takes place at a relatively low temperature. Authentic lagers then undergo a long period of cooled conditioning [lagering] in special tanks."

Ales, on the other hand, which include bitters, milds, stouts, porters, barley wines, golden ales and old ales, use top-fermenting yeast. As such, "the yeast forms a thick head on the top of the fermenting vessel and the process is shorter, more vigorous and carried out at higher temperatures than lager". This is the traditional method of brewing British beer and also many Belgian beers.

Consequently, to make things even clearer, bottom fermentation is also referred to as 'cool fermentation' as it usually takes place at temperatures of around 10°C (50 °F). Similarly, top fermentation is also called 'warm fermentation' as it takes place at temperatures of between 15°C and 24°C and sometimes even higher. So, while a lager can be a craft beer, it can never be a real ale. And that's not going into the spontaneous fermentation used by Belgian lambic and geuze beers. Man. I think I need a pint now.

To read the full definitions, have a click of this and this.

Hat tip: Tony Mitchelhill.

2) While the report's full name is Craft Beer – US – November 2012, the press release accompanying it was issued on January 23, 2013, leading us to assume that the report was published sometime between those two dates.

3) This second press release, dated January 28, 2014, accompanied the publication of Beer – US – December 2013, which is also available to buy for a mere £2,466.89 excluding tax.

4) The term 'cider' in North America, we gather, often means non-alcoholic apple juice and thus Mintel uses the term 'hard cider' to denote the stuff worth drinking down the pub. You know, the stuff that gets you pissed.

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