The Sick Man of Beer
The National Beer Wholesalers Association (NBWA) puts together an interesting monthly report. They survey purchasers of beer and inquire about their expected demand over the coming month. It’s a simple snapshot that allows you to glance at a segment in the market and evaluate whether that segment is expanding or contracting compared to the same month a year earlier.
For years, a couple of trends never seemed to change: amid fluctuations in other segments, craft was stable, posting numbers in modest growth territory. For most of that time, imports grew well, light beer bounced around, and flavored malt beverages, buoyed (and later anchored) by seltzer, shot up and then collapsed. But something seems to be happening to craft now: it’s been way down for a year and shows little sign of improvement.
The way it works is simple. On a 100-point scale, anything above 50 is expanding, and anything below is contracting. Since the start of 2022, craft has had a rough ride, in contraction for the past year. The NBWA tracks seven segments, including three versions of domestic lager and cider. I’ve graphed the performance of four of these for clarity. What you’re seeing are quarterly averages to smooth the noise. NBWA has data going back to the start of 2018, so well before Covid, to the present. Here’s the full dataset:
I’ll post a condensed version from Q1 2020 at the end of the post, which accentuates the fluctuations during Covid. But the trend is visible here as well. Craft has settled to below 30 for the past six months. It’s not the same dramatic fall seltzer registered, but it comes from a stable base, rather than straight off a bubble, so it’s a bit more worrying. (At its peak, FMB/seltzer had a 17-month run in the 80s and 90s, one that topped out at the remarkable height of 95. No other segment has ever topped 80.)
There’s a concept called the “sick man of Europe” that describes a country, once strong and successful, that has entered an extended period of decline. (At the moment, post-Brexit Britain seems to have inherited the dubious title.) With a full year of contraction and a six-month valley, craft has become beer’s sick man. The reason large breweries bought into the craft segment was because it was a shining light, seemingly perpetually growing—and commanding premium pricing—while old school domestic lagers dwindled by the year. No one’s chasing craft now.
We’ve entered some kind of new moment where imports, with three years of robust performance, are the new king, FMBs have come down from their ceiling and are in decline, and craft has veered into the ditch. I don’t have any great theories about what this means or where we’re headed, but I’ve been watching these patterns a while now, and it seemed like a good time to mention them. With industry headwinds hammering craft, it’s a bad time to find yourself in a ditch.