Craft Beer’s ‘Next Big Thing’– Being Small

America’s growing embrace of ‘localism’ and new state laws across the nation are changing the craft beer business. And our country’s small brewery taprooms, might well be the industry’s future as well as its saving grace.

Not so long ago a craft brewery’s reach, the many states where you could buy its beers, was a sign of that brewery’s success.

But yesterday’s success can become its baggage in 2017, when being small is becoming a strength and being large more problematic for many of the nation’s craft breweries fighting to retain their craft relevance and shelf positioning.

There was a time when a top 10 craft brewery’s entrance into a new state was met with parades of enthusiasm. A major brewery entering into a new market was a highly anticipated event and craft beers fans responded with their dollars.

This was an era of hyper-growth that lead to big craft breweries going bi-coastal… from breweries like New Belgium, Sierra Nevada and Oskar Blues opening new brewing operations in North Carolina… to craft beer leaders like Stone and Deschutes heading east into Virginia.

But now more than 5,600 breweries currently operate in the US, so the craft beer market place couldn’t be more crowded.

And with the help of state laws that now allow craft breweries to sell directly to their fans via their taprooms, new craft breweries are keeping their scale smaller and their distribution plans humble (if at all).

For many new breweries, working with third-party distributors is no longer even part of their business plans. And building a sales relationship directly with their fans through their taprooms a more viable economic path than ever before.

As NPR so succinctly explains…

“Brewers pouring, selling cans or filling growlers at their own taprooms make 40 to 50 percent more than they would if they sold their beer wholesale to a distributor. They’ve cut out the middleman.”

With craft beer’s overall growth now slowing, the nation’s biggest craft breweries, who used to enjoy the full advantages of their much larger scale and distribution footprint, find themselves in a tricky situation.

As the Brewers Associations Chief Economist Bart Watson explained to us, these larger craft breweries are “locked into a position that might be increasingly more difficult for them to defend.”

Craft Beer majors are fighting off AB InBev’s considerable economic power and distribution network at one end…and a growing number of nimble independents that are taking full advantage of being small and LOCAL, at the other.

Four of the nation’s Top 10 craft brewers showed declining sales in 2016, and Watson told American Craft Beer that he’s seeing similar numbers so far this year.

And with 80% of Americans (21 or older) now living within 10 miles of brewery according to the Brewers Association, small breweries with taprooms that afford a direct sales pipeline to their fans, might well be the industry’s future and its saving grace.