Looking Back and Looking Forward (Plus Dubious Predictions)
Standing boldly on the edge of the frontier, we gaze in wonder at our future. Or past. Or something.
A year-end post has been rolling around in my brain for weeks, but I’ve been having a hard time conceptualizing it. You always want to write an annual retrospective in such a way that a through-line connects the points—a ribbon, if you will—so that when you come to the end, you can tie it up in a nice bow, presenting a clear picture of the year just deceased.
Well, there is no through-line, no way to tie the whole thing up. We are in a transitional phase and mixed signals are the rule of the day. This applies as much to the larger world as to the beer industry, and I suppose those two are connected. So for this year-ended, rather than attempt to force artificial neatness on matters, let’s do something more honest, if less satisfying, and just pore over the details.
No one is going to argue that 2024 was an awesome year. Overall, the beer industry struggled and the craft segment was down 2% at midyear. The more worrying part of this trend is that craft beer underperformed the industry as a whole in the second half of the year, so the final numbers will probably be even worse. Another bad sign: for the first time since—what, the 1990s?—more breweries closed than opened in 2024. On the other hand, there was the spectacle of Guinness, that 265-year-old brewery, selling so well it ran out of beer. Mexican beer is likewise going gangbusters, and the threat of seltzers is petering out.
Industries go up and industries go down. The more salient question is whether we’re at the bottom of the trough, or still sliding toward it—and if someone tells you they know the answer smile, nod, and ignore them. Now let’s start poring.
Looking Back
1. Big Trouble For Little Breweries [Not so good]
The canaries in the beer mines are tiny breweries. Optimists open them in the fat times, taking on debt and figuring they can bootstrap production up to a profitable level. That makes them the most vulnerable during lean times. (Debt, scale of production, shoestring budgets with consequent lack of marketing and sales support, and getting to market all work against them.) Have a look at Ezra Johnson-Greenough’s annual year-end closures piece just to get a sense of this specific dynamic. A couple larger players closed in Oregon last year, but most of the names on the list made way less than a thousand barrels a year.
The silver lining to this news should be obvious: even in a year with more closures than openers, it looks like the trouble is afflicting the most vulnerable. The Brewers Association tracked around 400 closings, which probably understates matters (breweries are a lot quieter about closing than opening). Although their official list is 9700 breweries, that figure is definitely inflated, too. Something on the order of 5% of breweries closed in 2024, which in a bad year doesn’t seem too bad.
2. Hop Acreage Slashed [Not so good]
I’ll have a full post on this later this week, but the US hop crop shrank by 18% in 2024. That is … a lot. Again, there is some nuance to the story, however (a huge preexisting surplus), and this may be evidence of a healthy reset. For growers, though, it’s undeniably tough.
3. The Guinness Miracle [Very good]
I am very proud of my partner and sponsor. In a year when so much of the beer news was terrible, Guinness was so popular pubs in the UK were running out. It has become such a buzz brand that young people have developed a new drinking game: “splitting the G.” (As nothing in beer is ever really new, that game has its own antecedents.) Everything about this story is ideal from the beer-maker’s perspective: young people [✓], social engagement and viral rituals [✓], draft sales [✓], oh, and young people [✓!].
Guinness is hardly a fresh new brand, which made it a tougher sell during the smoothie sour/hazy IPA era. But there’s something about enduring brands that have the capacity to capture new fans generation after generation. Middle-age is not cool. Old is really cool. Guinness, a jet-black ale, is a little different than the mass market beers out there, but also familiar, and it represents stability and normalcy in weird times. It’s easy and very pleasant to drink, and it’s pretty obvious in the glass (proprietary vessels or no) from across the room. In 2024, holding a glass became the cool thing to do. It’s a great story, and a case people will be studying very closely for years to come.
4. The Macro-Micro Divorce [Almost certainly good]
I won’t rehash my post from last month, but it’s worth a brief mention. Little breweries and big breweries are fundamentally in different businesses. As the market share of the former shrank and the latter grew, big beer decided to invest in “craft” beer as a hedge. But making beer at scale and making it for a neighborhood require not just different approaches, but different products, and those highly-touted “synergies” looked more like poison pills in the end. In 2024, everyone seemed to agree: let’s call the whole thing off.
Looking Forward
1. Tariffs [Horrible, no good, possibly unreal]
Incoming President Donald Trump has, in his inimitable way, hinted at placing tariffs on Mexico and Canada, in amounts ranging up to 25%. Brewers source both aluminum and barley from Canada, so this would not be great for them. It will either be a big story, or one of those fever dreams we all briefly shared.
2. Fourth Category [Good?]
The specter of seltzers and FMBs and RTDs and all those other alternate alcohols used to strike fear in the brewer’s heart. That seems to be changing. I do not follow this stuff closely enough to offer details, but my sense, looking at reports about seltzers and hard teas, is that the category is no longer crushing beer under its boot heel. This is not enormously surprising to me—artificially-flavored fizzy booze products always lose their appeal after a while. That doesn’t mean some fresh new hell isn’t around the corner, but the threat from blue-colored alcohols seems smaller today.
3. Mexican Imports [Reply Hazy, Try Again Later]
On the one hand, Mexican imports have been the brightest spot in years—over a decade—growing and growing and growing. We have seen a “Modelo miracle” more impressive even than Guinness’s, as that brand has become America’s number one seller. On the other hand, how much Mexican beer does America really need—and what happens if those tariffs go through?
Stepping back, this is one of the more remarkable stories in the history of American brewing. The U.S. has a huge, powerful, and old brewing industry. it’s very weird to see Mexican beer do so well here for such a sustained period of time. (It’s not just Modelo—Corona started it all, and Pacifico is very popular, and at least on the West Coast, so are Tecate and Dos Equis.) Mexican beer is just a mass market lager, and almost no consumers could distinguish it from domestic lager in a blind tasting. It sells well because it’s Mexican. Yet its success has happened at exactly the moment nativist and anti-Mexican fervor grips the U.S. We’ve been desperately trying to seal off the border—but happily waving the beer trucks through. So strange.
4. Tradition is in, experimentation out [Neither good nor bad]
Why are Modelo and Guinness succeeding while other mass market lagers fail? Both ooze tradition. I’ve been quite taken with Modelo’s ad campaigns, which lean into its Mexican heritage. Guinness’s heritage speaks for itself. Contrast that with the domestics, which seem dated but not traditional. (Light beer only dates to the late 1970s, which makes them middle-aged.) Younger drinkers have lived unstable lives, from the financial crash to the Trump years to the pandemic, all of it knitted together with the fragmentation of social media. No wonder they are reaching for culture that has been around awhile.
Within the craft realm, we’ve already seen how this plays out. Drinkers are not taking risks on $8 pints. They want cheaper, more reliable beers. The novelty phase is over, and the flagship phase is back.
Predictions!
I have been way too reluctant to throw out predictions. My cred as the Oracle of Oregon [TM] is in danger of losing currency (long time readers understand the joke, for others there’s this). So to give our future selves the ammo to shoot down December 2024 Jeff’s terrible guesses, let’s put these down for the record. My predictions, which may or may take more than a year to be proven true or false, are these:
Non-alcoholic beer remains a dud. The biggest story, for years now, has been the supposed growth potential of this segment. Ha! I do think it makes sense for breweries to make or at least offer their own versions, for the same reason it’s great to have gluten-free options, cocktails, and other choices available. But I just don’t see non-alc becoming much of a market. If it ever reaches 5% of the beer market, I will be shocked. I predict it tops out at 2%. How’s that for a precise, no-waffling prediction?
The stovepipe/high alc thing begins a decline. If NA beer is the angel sitting on consumers’ shoulder, the 19.2 ounce tallboy of 10% imperial IPA is their devil. This was a nice little niche for the breweries that got into it quickly, especially Voodoo Ranger. The cans sell singly at convenience stores in a sort of echo of the old 22-ounce bomber, creating a nice revenue stream. They’re also clearly designed to deliver alcohol units efficiently, which somewhat tarnishes the “craft” image, but whatevs. I think these things will begin a decline, though they’ll stick around for a few years more. They’re good for C-stores, but there’s necessarily a limit on the number of producers who can get in on them.
The BA-defined craft segment will continue to shrink another year before stabilizing. There are a lot of unknowns in 2025. The economy may experience a series of provocations from the incoming administration, and it’s hard to know how that will affect things. However, what we do know is that inflation has already driven beer prices past customers’ comfort zone, and that’s especially true with on-premise drinking, where a burger and a couple beers can set you back $35-40 with a tip. I predict the craft segment will decline a bit more before leveling off in 2026. Growth is still years off.
Hazies fade as American IPAs return to dominance. This one is a little vibes-y and I’m not sure how to make it a concrete prediction. But, anyway: the thick, sweet, and tropical hazy IPA is not going to last as a major style. American IPAs, which may be hazyish, but which are drier, feature appreciable hop bitterness, and have familiar flavors of pine, citrus, and/or cannabis accenting sweeter tropical flavors—that will be the ascendant IPA in terms of sales and availability. I also think the super-dry, pretty bitter IPA (sometimes called West Coast) is probably going to decline as well.
As always, consider this post and invitation to offer your own thoughts, comments, corrections, and predictions.
And happy new year!