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8 TRENDS DEFINING CRAFT BEER IN 2019.

There's no question that beer drinkers today are spoiled with a diverse abundance of high-quality brews. And as consumer palates expand, improve and change, brewers have reacted with new takes on old styles. While many flavor trends that defined the industry in years past will remain strong this year, newer alternatives have also emerged and taken hold.

But all those world-class brews may not be enough if the industry has simply reached its saturation point. While craft beer growth has slowed, the number of U.S. breweries continues to reach new records.

Breweries face myriad challenges, from saturation and competition to holding the attention of the increasingly fickle consumer and wine and spirits stealing market share. Many believe that there's still room for growth in craft beer, especially in hyper-local and national-macro. These are some trends now defining the industry.

#1 THE SATURATION QUESTION

The sheer number of breweries and SKUs can be daunting for most craft beer consumers. Even the most knowledgeable craft fans may no longer know half the brands available.

Behind this SKU surge is the brewery boom: More than 7,000 currently operate in the U.S., and active brewery permits with the Alcohol and Tobacco Tax and Trade Bureau (TTB) now exceed 9,000. That's an indicator of the industry's size two years out, says Bart Watson, chief economist for the Brewers Association.

At the same time, the explosive growth enjoyed by the category in the earlier 2010s has slowed considerably. The industry grew about 5% in 2018, down from the double-digit increases of prior years.

It's altogether more difficult now for breweries to capture consumer attention, especially as more drinkers turn to other beverage alcohol categories as well as cannabis products. The strategies for attracting customers vary.

"Competition is becoming more concentrated. More than ever, craft breweries will need to be hyper-focused on consumer trends and look to innovate on these insights," says Ben Widseth, vice president of marketing for Green Flash Brewing Co. in San Diego.

That likely means even more creative takes on standard beer styles. Brewers will fight for consumers' eyeballs with unique brews that stand out on shelves.

But some craft brewers believe it's better to pull back from crazier releases and instead focus on core brands.

"The number-one trend I see is that there will continue to be too many choices. Consumers are more confused than ever with the amount of options--some that are overthe-top--that eventually people will go back to what they know," says Jack Hendler, co-owner/brewer at Jack's Abby in Framingham, MA.

As for the growing number of breweries, not everyone sees a glut. "Whenever we are asked, 'Are there too many craft breweries?' I always ask, 'Are there too many barbeque joints in Kansas City?'" says Natalie Gershon, vice president of marketing for Boulevard Brewing Co. in Kansas City, MO.

"While the market may have slowed a bit, there is still a ton of opportunity for breweries to carve out spots where they can become the neighborhood bar."

Caption: "Not only will consumers want more lagers, breweries will start making more," says Jack Hendler, co-owner/brewer at Jack's Abby in Framingham, MA. As breweries slow down a bit because of the state of the beer industry and the economy, "it frees up more capacity, allowing them to devote more time and brew more lagers."

Caption: "Whenever we are asked, 'Are there too many craft breweries?' I always ask, 'Are there too many barbeque joints in Kansas City?"' says Natalie Gershon, vice president of marketing for Boulevard Brewing Co. in Kansas City, MO.

#2 CRAFT BEER GOES MACRO

The terms "macro" and "craft beer" are usually at odds, perhaps part of the problem for craft beer right now. What if craft took a page out of domestic beer and focused more on key brands?

That's the future envisioned by Mike Stevens, cofounder of Founders Brewery in Grand Rapids, MI. "For a while there, you'd have four different seasonals, plus limited-edition addons, and then next thing you know you were up to 28 beers in your portfolio, and you'd think, 'Whoa, what did we just do?'" Stevens says.

Those rotations of different beers "helped captivate the craft beer audience we have now," he adds." But now we need to bring that SKU number down and focus on the core brands."

Stevens imagines larger-scale breweries such as Founders making fewer seasonals and one-offs. This is all part of his vision for the category that moves beyond traditional craft beer drinkers.

"You look at the beer industry as a whole; we're all fighting over that same 15% market share, and not that 85%," he says. To achieve broader appeal among mainstream consumers, brewers need to focus on a narrowing handful of brands, "and spending money supporting those core brands."

One potential issue with this strategy it that consumers today are less brand loyal than ever. They experiment across a wide variety of brands, styles and categories.

Retailers have been reporting that some customers never drink the same beer twice: they only want what's new to them.

That attitude has changed slightly. While people may no longer have one go-to brand, they do seem to settle now "on a consideration set of about a half-dozen go-to beers, which they'll fall back on when they're not trying something new," says Scott Ungermann, production director at Anchor Brewing in San Francisco. The key for brands is getting into that consideration set.

And for the beer industry overall, the best opportunity for growth is likely reversing the trend of losing drinkers to competing alcohol categories.

"Winning over the 'macro' drinkers is a component of increasing craft beer market share," says Widseth of Green Flash. "However, the most sustainable growth plan will be to source new drinkers from other alcoholic categories, such as wine and spirits, so the total beer industry is growing--which is best for all brewers."

Caption: "The large rotations of different beers helped captivate the craft beer audience we have now. But now we need to bring that SKU number down and focus on the core brands."--Mike Stevens, cofounder of Founders Brewery.

Caption: "Our tap room is a place for people to taste existing beers and also a place of experimentation for us," says Scott Ungermann, production director at Anchor Brewing in San Francisco.

#3 BRUT IPAS VS. NEW ENGLAND IPAS

New England IPAs, or hazy/unfiltered IPAs, exploded out of Vermont several years back and then swept across the country. The word "hazy" has since appeared on the labels of so many beers--many of them not hazy at all--that the term has almost lost meaning.

The West Coast has brewed up the perfect counter to this East Coast phenomenon. Drinkers sick of all those heavy, juicy New England IPA malt bombs will enjoy the newest IPA trend: Brut IPAs.

These beers are made with brut Champagne yeast. The wine flavor comes through: Brut IPAs are crisp, balanced, light-bodied, dry, with light fruit flavors and floral hop aromas. In other words, the opposite of their hazy cousins.

Reps of the Fort Collins, CO-based brewery New Belgium recently described Brut IPAs as "an outcry against New England IPAs. This is back to the basics. There's no end in sight to New England IPAs, but the pushback has begun."

Caption: Brut IPAs such as Dry & Mighty from Two Roads in Stratford, CT, have swept across the country and made it to the East Coast.

#4 IPAS REMAIN KING

The Brut IPA answer to New England IPAs A can also be seen as another sign that IPAs remain the top driver of craft sales. The category has become so diverse that there is now an IPA for every kind of drinker. Reports of "IPA fatigue" among consumers do not appear to be true.

"The IPA segment has slowed in growth, yet it still represents more than half the volume of the craft beer market, so it's hard to say that we're nearing the end of the craze," says Widseth of Green Flash. Instead, IPAs are transforming into their own sub-category with hazy, low-ABV, high-ABV and low-calorie options, he adds. "This sort of innovation within the IPA space should continue to keep the style dominant."

Caption: Founders' All Day IPA is one of the fastest-growing beew in the U.S.

#5 LOW-CAL CRAFT BEERS

The nutritional movement that's defined food for years now has worked its way into the alcohol world--including craft beer. Consumers care more about what goes into their bodies, so if they can skim calories out of their beer consumption, they will.

That's why so many breweries have recently released low-cal options. By nature these are lower-ABV as well. Lagunitas earlier this year came out with DayTime IPA, a 4%-ABV, 98-calorie beer. New Belgium's Mural, a Mexican-style U.S. craft beer, is just 110 calories, with 0 grams of sugar.

The demographic for these beers is active-lifestyle consumers who work out and eat/drink smart.

These are people that Michelob Ultra has tapped into with extraordinary success, making that brand the only macro lager that's growing explosively.

Look for craft beers to fight for these active-lifestyle consumers with branding that plays into their habits. An example of this is Harpoon Brewery's new Rec. League Hazy IPA, 3.8% ABV and 120 calories, with a name that references gym leagues.

Caption: Lagunitas recently launched DayTime IPA, a 4%-ABV, 98-calorie beer.

#6 CRAFT LAGERS READY FOR GROWTH

Craft lagers are like the craft gin or rum categories: People keep saying that massive growth is around the corner, only it hasn't happened yet.

But there's plenty opportunity for lagers in 2019. Brewers agree: economics are on their side.

"Not only will consumers want more lagers, breweries will start making more," says Hendler of Jack's Abby, which specializes in lagers. As breweries slow down a bit, "it frees up more capacity, allowing them to devote more time and brew more lagers."

Lagers also represent a lower price point than IPAs, stouts or sours. Those three styles are commonly sold in premium-priced four-packs, 375-ml. " bottles, or bombers. Consumers who want more bang for their buck can pick up a y cheaper six-pack of craft pilsner.

"As craft beer becomes more accessible both from an availability and price standpoint, the craft lager will be a gateway for these consumers into the industry," says Widseth of Green Flash. "Additionally, as seen by the growth of session craft beers, loyal craft drinkers are turning to craft lagers as a change of pace from their higher-ABV and heavily hopped options."

And as craft beer looks to reach new drinkers, "it's the approachable styles that are going to get folks in the door," says Gershon of Boulevard Brewing. "While crazy-flavored beers are still going to continue to generate buzz, 'beer-flavored beer' will always have a seat at the table."

Caption: Ben Widseth, VP of marketing for Green Flash Brewing Co.

#7 APPROACHABLE SOURS REMAIN HOT

The point above about low-cal, low-ABV beers also ties into the growing trend of session sours. While craft beer aficionados will always love their 375-ml. bottles of barrel-aged apricot saison, the growth in sours is led by the likes of Dogfish Head SeaQuench Ale: light-drinking sours.

Gershon believes this is part of a broader trend of consumers seeking easy variety.

"I think this speaks more to the explorative palates of consumers," she says. "Recent studies show that two-thirds of Millennials are drinking three-plus types of alcohol regularly vs. half of the boomer population that drink one type. The crossover between wine, beer, spirits, ciders and seltzers is creating adventurous consumers, who want a variety of flavor profiles at their convenience."

Widseth of Green Flash agrees.

"As the craft beer drinker base continues to expand and their palates evolve, consumers are seeking alternative styles like sour beers," Widseth says. "Regarding the low-ABV inclusion, this is a trend that should permeate across the craft beer landscape as drinkers look for lower alcohol craft options."

#8 TAPROOMS TAKEOVER

As producers and SKUs increase, and distribution becomes tougher to obtain, newer craft breweries have turned to taprooms to support their bottom lines. Many states have changed their laws in recent years to allow these direct-to-consumer sales.

"Obviously there is a lot of room for bars in America, which is essentially what these are," says Stevens of Founders. "They're a great way to introduce people to craft beer and work on their palates. We're definitely going to see more taprooms because they're an easier road to go, where you break even much quicker."

This has caused issues for bars and restaurants, as they lose guests to taprooms. Some retailers also suspect that the taproom wave has washed away some business for off-premise, because some consumers now prefer those beers fresh from the source rather than off the shelf.

Taprooms and breweries have also become a way to cut out distributors. Many producers now sell packaged products directly to visitors, which result in "awesome margins," says Stevens. Lines of customers out the door at places like Tree House Brewing Co. in Charlton, MA, certainly speak to that.

But taprooms are more than just reliable moneymakers. They have also become an invaluable source of consumer feedback.

"Our tap room is a place for people to taste existing beers and also a place of experimentation for us," says Ungermann at Anchor. "We can immediately taste test new beers with consumers and get instant feedback. We tested pilot batches of an IPA that developed into our Baykeeper IPA before recently launching that."

Caption: #5 LOW-CAL CRAFT BEERS

The demographic for these beers is active-lifestyle consumers who work out and eat/drink smart.

Caption: Founders' All Day IPA is one of the fastest-growing beew in the U.S.

Caption: Brut IPAs such as Dry & Mighty from Two Roads in Stratford, CT, have swept across the country and made it to the East Coast.

Caption: Ben Widseth, VP of marketing for Green Flash Brewing Co.
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Author:Swartz, Kyle
Publication:Cheers
Date:Jun 1, 2019
Words:2330
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