Has craft beer peaked? In one sign that the industry has grown less frothy, more craft breweries closed in 2017 than any time in the past decade.

And while craft beer makers saw more growth in production than the overall market last year, their pace is slowing.

A new report by the Brewers Association – which represents small and independent American craft brewers – showed that craft brewers saw a 5 percent rise in production volume in 2017. Yet with that growth comes an increasingly crowded playing field, leading to more closures of small craft breweries. In 2017, there were nearly 1,000 new brewery openings nationwide and 165 closures – a closing rate of 2.6 percent. That’s a 42 percent jump from 2016, when 116 craft breweries closed.

Experts say saturation is still some time away, and that pullback is inevitable for any booming industry that, with time, begins to mature.

“We have seen a little bit of deceleration,” said Bart Watson, chief economist of the Brewers Association. “When you’re talking about an industry that (takes in) tens of billions of dollars a year, it’s hard to grow at double-digit rates.”

Growth in the craft brewing industry began in the late 1970s and early 1980s, Watson said, and has seen a resurgence in the past decade. With consumers who tend to skew male, younger, whiter and with higher incomes, the industry gained its foothold among adults willing to pay more for beer that tasted better than the mass-produced products that had long dominated the market.

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Small craft breweries compete among themselves for taps at restaurants and shelf space at retailers. Yet they are also up against massive industrial brewers who wield heavy influence over the national distribution of beer, and often buy up smaller companies. In 2011, for example, Anheuser-Busch InBev bought the craft brewer Goose Island for almost $39 million.

“The largest brewers have a lot of ways that they can push into the market, rather than relying on consumer pull,” Watson said.

Matt Simpson, owner of the craft beer consultancy The Beer Sommelier, said the slowdown is natural after “an initial explosion.” There are many reasons why brewers won’t be able to keep up the pace, he said.

Some of that culling, he said, results from home brewers who don’t know how to successfully run a business or market products. At the same time, the industry has revived enthusiasm among craft beer aficionados who set out to found a company and sometimes make bad-tasting beer. Simpson even recalled a recent craft brewers conference where a speaker said that if newcomers didn’t produce good products, they were “going to be the death of home brewing.”

“The majority of brewers entering the marketplace are making good beer,” Simpson said, “but a few bad apples can spoil the whole bunch.”

With more than 6,300 breweries operating in the United States in 2017, small and independent brewers represented nearly 13 percent of the market share by volume of the overall beer industry. Craft brewers produced 25.4 million barrels in 2017, with an estimated $26 billion retail value, according to the Brewers Association. Over much of the past decade the industry’s growth rate held at double digits, peaking at 18 percent growth in 2013 and 2014.

Watson and Simpson agreed that it will take some time for the industry to reach full saturation. And albeit at a slower pace, craft breweries are still growing.

“Craft beer tastes better than macro-industrial lagers, which have gotten by for decades using bikini-clad women and famous sports figures,” Simpson said. “They’ve made some really touching or funny ads, but that doesn’t make their products better.”


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