What’s Brewing in Craft Beer?

August 2019

“Craft” is now an established feature in the global beer landscape. Growth continues to decelerate in the core US market, while the movement is still in its early stages in key emerging markets, such as China and Vietnam. Microbrewers are looking to innovate and diversify due to increasing competition in mature beer markets. Flavours and styles remain a crucial point of differentiation, while shifting consumer trends provide a source of inspiration, but also bring challenges.

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Key findings

Definitions continue to evolve

“Independence” continues to gain ground as a key feature of craft. A number of small brewer organisations in different markets have released “seals” which allow brewers to highlight their craft credentials, with the term “independent” featuring prominently. In the US, the Brewers Association has dropped the “traditional” pillar of its craft requirements.

Divergence in a slowing US craft market

The deceleration of craft beer growth continues in the US. The Brewers Association reported just 4% growth in 2018. In this new environment, there will be a divergence in the market, with the very local microbrewers on one side and the larger craft brewers with national or regional distribution, such as Boston Beer Company, on the other.

Brewers branch out

Competition in established craft markets is intensifying as growth slows, while new breweries continue to open. Many microbrewers are diversifying their offers by expanding into spirits, kombucha and, especially, alcoholic seltzers. To successfully incorporate new product types into their portfolios, brewers need to ensure there is a close fit with their original beer brands in terms of transparency, branding and quality of ingredients.

Urbanisation drives emerging market opportunities

A growing middle class and rising urbanisation are helping to drive the growth of craft in Vietnam and China. Microbrewers are opening across the world, focused in the early stages on metropolitan centres, but often quickly expanding beyond the major cities. International brewers are looking to capitalise on this growth through acquisitions.

Importance of adaptation

The development of craft is shaped by the issues and trends affecting the wider beer industry. Microbrewers are tapping into rising consumer moderation, and are taking steps to enhance their sustainability. Such adaptation will continue to prove crucial as fashions change and regulations evolve – those regarding cannabis, for example.

Introduction

Scope
Key findings
Growing necessity of a focus on value
Premiumisation is one of Euromonitor International’s megatrends
Rise in growth across most beer categories

The Story So Far

There are some defining features consumers associate with “craft”
An increasing focus on independence
Calling time on tradition?
On-trade: the place to be for craft?
On-trade case study: two angles of approach for BrewDog
Craft vs crafty
Big brewer responses: a djustments and alternatives
The merger and acquisition landscape evolves
New Euromonitor data identifies leading markets

A Snapshot of Selected Geographies

US: deceleration drives divergence
Another side to the craft story in Belgium
UK: craft vs cask
Urbanisation drives growth in China and Vietnam
Microbrewers expand across Asia

Notable Trends

Innovations in flavour: leaving a sour taste?
Hard seltzer: diversification for growth
Non-alcoholic beer remains attractive in mature markets
C raft brewers see the appeal of alcohol-free
Cultivating a sustainable approach

A View of the Future

Continuing premiumisation provides a good base for craft growth
The future remains somewhat hazy, however
For craft, Brexit means…?
Cannabis: microbrewers spearhead innovation
Cannabis: is there a new player in craft acquisitions?
Conclusions

Appendix: Industry Forecast Model

About Euromonitor International’s Industry Forecast Model
Soft drivers and the Industry Forecast Model
Growth decomposition explained
Significance and applications for growth decomposition
Key applications for Industry Forecast Models
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