USA: Beer consumption is shrinking but craft beer still rules

In 1873 there were 4,131 breweries in the U.S. Over the next century the number fell and fell, hitting a low—not counting Prohibition, when it went to zero—of only 89 in 1978. It wasn’t that Americans had stopped drinking beer; overall consumption was higher than ever. But the business was following the path of so many others in the Industrial Age, consolidating and squeezing ever more out of each manufacturing facility, Bloomberg reported on June 17.

Then in the 1980s, something not so typical happened. Craft breweries started opening, eventually by the thousands. Last year there were 7,450 breweries in the U.S., according to the Brewers Association, a craft-beer trade group. Brewery tallies from the Department of the Treasury and the Bureau of Labor Statistics are lower but show a similar growth trajectory, and the BLS estimates brewery employment has more than tripled since 2010, to 80,774 as of December.

Beer consumption, reports beverage data analyst IWSR, fell in the U.S. in 2018 for the second year in a row after several years of virtually unchanged sales. This might mean the brewery boom is destined to stall, but a boom amid falling sales could also be a sign of something more interesting.

Most beer production in the U.S. is still controlled by megaproducers Anheuser-Busch InBev SA/NV and Molson Coors Brewing Co., but even as they’ve acquired upstart competitors, their market share has declined. The Brewers Association estimates that craft-beer sales rose 3.9% in 2018, with brewpubs and microbreweries (and thus not larger regional breweries) driving all the growth. Beer is deindustrializing.

Anheuser-Busch and Molson Coors’s market share was 64% in 2018, according to Beer Marketer’s Insights, down from 78% in 2008.

Small craft-beer facilities are responsible for much of the growth in the number of U.S. producers. Liquor distilleries are multiplying as well: BLS employment data showed 1,002 at the end of 2018, up from 125 in 2008.

Real output per hour worked (aka labor productivity) in the beverage industry is down 65% since 2009 as production has shifted from industrial to artisanal.

As the number of smaller, less-efficient, less-likely-to-be-unionized breweries has exploded, average annual pay for brewery workers has collapsed. In 2009 it was $72,874; in 2018 it was $45,007.

18 June, 2019