Is the Craft Beer Boom slowing to a Craft Beer Crawl?
The boom in craft beer brought to the world the concept of a new pastime: spending time in the middle of a functioning brewery watching beer experts practice their craft. Choosing the right ingredients, mixing them, fermenting, bottling, tasting. Craft breweries feel easy and breezy, stripped down from the sanitized versions provided by the big beer providers of the past, allowing people to relax from the pressures of work and life and enjoy an environment designed to make visitors feel part of the experience.
They have become great locations to meet with friends, places to go after work, an acceptable venue to take a client or customer. Local breweries rent out their patios for high school reunions or for clubs and associations to meet, and they often hold weekly events such as run clubs, yoga practices or even sponsor garbage clean ups.
The interest in craft beer is not only the beer itself, but the lifestyle and values behind the beer. Increasingly people associate with craft breweries for reasons such as the owner’s foundation beliefs or if they give back to the community. Sometimes it’s as simple as connecting with the story of how the brew master practices their craft. Whatever the reason for patronage, the craft brewery movement continues to evolve and is emerging to a global phenomenon that goes beyond IPAs and IBUs.
The 2018 Survey of 133 Countries
Two years ago, employees globally of Kentucky Ale, Foxes Rocks, Town Branch & the Pearse Lyons Distilleries got together to estimate the global numbers of craft breweries (CB) based on the request of the then owner Dr. Pearse Lyons, its founder and a master brewer himself. The beer & spirits are sold in 24 countries worldwide but the breweries’ parent company, Alltech, conducts business is more than 100. The survey created a fair amount of heated debate, not surprising given that it involves beer which itself generates lots of opinions. Kentucky Ale employees naturally have a passion for craft beer and with this we send out a new questionnaire to them requesting their estimates for 2018. We received answers from 133 countries and compiled our latest list.
Firstly, there are over 21,500 craft breweries in the world
Numerous market reports have been published recently suggest a small increase or a small decline in beer consumption in the last few years in its largest markets, for example one report suggests a 1.8% decrease this past year. Despite this, the number of craft breweries continues to grow. Our latest global survey estimates the number of global breweries at 21,563, up 23% from a previous survey conducted two years ago, or an average compound annual growth rate of 11%. The US continues to lead the world as the country with the largest number, with 6,266 breweries in total, up 32% over the last survey. The number of breweries in the UK grew 21%, and with about 2,000 craft breweries, it remains the second largest. Germany remains in third place with effectively no change in its numbers at 1,300 breweries in total.
In many of these countries, the millennial generation is leading the growth of the craft beer boom, with 57% of US millennials citing themselves as weekly craft beer drinkers. Millennials in Italy are also making the move away from the drink of their parents. Studies show older Italians actually consume four times as much wine as their younger counterparts. Our survey puts Italy in 7th place with 816 craft breweries
Four countries now report to have more than 1000 breweries, up from three in our last survey. The US, the UK and Germany have been joined by France, suggesting that craft beer is a growing movement there and challenging norms in another country known for its devotion to wine. The top four countries account for almost half of all craft breweries found globally (49.5%) while the top eight countries are home to nearly two thirds.
Top 10 home to 70% of the world’s CB’s
The top 10 countries include the US, the UK, Germany, France, Argentina, Canada, Italy, Brazil, Mexico and Spain. Of these, each has at least 500 craft breweries, and combined are home to 70% of the world’s craft breweries. Thirty-one (31) of the 133 countries said that they have over 100 craft breweries. The 31 countries represent 93.8% of all craft breweries identified in the survey.
Europe & North America leading, but South America the new star
Since Europe has two of the top three countries in our survey, it is not surprising it also leads as a region ahead of any other with 9,639, almost 45% of the global total. The UK has about 16% of the European total and France with 11%. This means that the top four countries, including Germany (13.5%) and Italy (8.5%), represent over half of the total number of breweries for the forty-nine (48) countries we surveyed from Europe. Interestingly strong declines have been seen in the numbers of breweries in many major European markets, we saw a mixture of growth and decline: UK (21%), Germany (flat), Spain (-22%), Italy (-13%), Belgium (-32%), Denmark (-9%), Austria (-38%), Sweden (-8%), Norway (-9%), Poland (-31%) and Ireland (-29%), and France, Switzerland and the Netherlands showing increases. While it’s hard to be sure of specific numbers we are seeing fewer new European craft breweries.
Latin America is the new the shining star of the craft beer business. Traditionally a market that favored light, lower alcohol and very cold beers appropriate for beaches and hot weather, this region’s top three countries, Argentina, Brazil and Mexico all saw incredible growth over the last two years. Nearly three quarters (72%) of Latin America’s craft breweries are to be found in just these three countries. Some Latin American countries have reported sales growing by 40% per annum. Other countries with significant growth in the number of craft breweries include Bolivia (now with 125), Columbia (195) and Peru (150).
Despite representing more than half the world’s population and booming urban centers and the beer thirsty nations of Australia and New Zealand, the combined Asia-Pacific and Oceania region is home to only 7% of the world’s craft breweries. While almost all countries have a craft beer presence of some type, growth of these markets is still remarkably slow. Nearly fifty percent of the region’s craft breweries can be found in Australia and Japan, and when the breweries of New Zealand and India are added, then 70% of Asia Pacific’s craft breweries are represented in just these four countries.
The craft beer craze is also storming into South Africa, but most other African countries don’t have any. Africa accounts for just 1% of the world’s numbers of craft breweries, and South Africa leads the regions ‘league table’ with little competition. The country saw numbers grow considerably from the survey two years ago and its now has 229 craft breweries. While Nigeria’s population is more than three times that of South Africa and even has a larger GDP, the craft beer industry has been slow to take off. Reports from Nigeria cite currency issues and domination by larger companies such as Heineken and Diageo. Other countries have similar economic stability issues and even concerns such as access to reliable electricity and sourcing of ingredients such as toasted barley and hops prevent the industry from thriving.
With religious and cultural restrictions, it is no surprise that few craft brewers make the Middle East their home. Israel however reports 24 craft breweries, but for the other just Libya and Iran with 3 and 1, respectfully. The United Arab Emirates & Dubai didn’t report any craft breweries, but that might be a good thing since it was recently voted the priciest place to buy a beer in the world!
Just as naturally as the Middle East may not have craft breweries, the North American region most assuredly does. The United States globally has the most craft breweries of any country at 6,266. The US boom started years before many other countries and the opportunity in even the most remote of towns is a safe bet today to find a craft brewery. Canada’s beer scene may seem as developed as its southern neighbor, but the country still has 817 breweries and there are plenty of opportunities to try craft beers, particularly in Quebec and Ontario, where hazey IPAs and sour alesare topping the charts.
The table below indicates the No.1 country in each region by numbers of breweries (and the percentage it represents of the region’s total craft breweries).
Interesting fact- Big populations don’t mean more craft breweries
Noticeably absent from the top ten list of craft breweries are the world’s most populous countries such as India, which in terms of number of CBs, is in the 25th position and China, which is the 28th. On a per person basis each craft brewery in these markets serves 8.9 million and 9.5 million people, respectively. On a similar basis there is a US brewery for each 52,149 people and medium-sized US towns such as Lexington, Kentucky have more breweries per person than the entire city of Beijing! This reflects the fact that although China and India may drink a lot of beer, the craft revolution hasn’t taken off. Perhaps it also points to a bright future for investors and new brewers there.
Given that Europe has the greatest number of craft breweries in total, it is probably not surprising that many of the countries with the highest ratio of breweries to people are found in this region. Twenty-eight (28) countries have a ratio of less than 100,000 people per craft brewery. Of these, 22 countries are in Europe, including Switzerland, the Czech Republic, Iceland, Estonia, Denmark and the Netherlands. Despite the high brewery to person ratio, many of these countries including Switzerland, Denmark, Iceland and the Netherlands are renowned for having some of the most expensive beer in the world, so the competition isn’t driving down prices.
Interesting fact - Rich countries don’t have a higher proportion of Craft Breweries
Looking at the Gross Domestic Production (GDP) of the 133 countries and comparing it to the survey numbers provides other impressions. The countries in the top ten by GDP don’t necessarily have the highest craft breweries per person ratios. The US of course has the highest GDP and with the most breweries sets the bar high, but this can hardly be the standard by which to evaluate potential for craft breweries in other countries. Our No. 2 country, the UK, does even better on a per person ratio and beats out the US with 33,287 people/brewery versus the US at 52,149 people/brewery. Then recall that big populations also don’t merit many craft breweries, despite high GDPs; such is the case with China and India.
Some of the countries with the best ratios of residents to breweries are found in Europe, including countries with lower GDPs, such as Slovenia, Latvia and Lithuania.
A last Sip – Reflections on what to take away
The growth of the craft beer industry in the US and the UK has been rampant for many years, but as this 2018 survey shows, that growth is staving off. Just because there are fewer craft breweries cropping up doesn’t mean that the enthusiasm for the craft beer industry is lessening or that global production we are seeing the same trends. Mature craft beer markets (USA, UK specifically) are:
Focusing more on protecting and growing local business and leveraging their strong relationships with the bar/restaurant owner
Owning the chain by buying into the distribution chain e.g., bars, restaurants, etc.
While exotic flavors such as peanut butter or tomato basil continue to intrigue us, many craft brewers are venturing into distilling spirits (other than bourbon) and from their creating blended options such as tequila-infused beer. Others are using marijuana to create new tastes.
Although craft brewers have been very attached to their bottles, most are increasingly falling in love with the can as a vehicle to get their product to the consumer.
Innovations...craft brews are now available at home through Krups’ on-demand mini keg, allowing consumers to get the tap fresh taste they wouldn’t have otherwise.
What more innovations can we expect?
Stories about the craft beer market typically look at just local or regional level. Few have tried to look at the global craft breweries scene. It isn’t an easy task, particularly as large conglomerates such as Heineken and InBev are buying up local craft breweries even as they pour their first brews. As quickly as that happens, another craft brewery pops up to take its place. Led by Millennials and followed by Generation Z, Western consumers’ interest to discover different beer experiences continues unabated and new beer flavors and innovations can be expected to continue.
But the highly penetrated western markets, with more and more craft breweries, brew pubs and microbreweries, chasing the same business can only make the attractiveness of pursuing overseas markets in regions clearer. If the US/UK experience can be replicated the opportunities globally are huge. The key question for the global craft beer businesses, then, is not the development of new flavors of beer but whether India, China, Africa and others are ready to join the party?
A great many thanks to Makenzie Mitchell and Alexa Potocki for their assistance in collecting and analyzing the data.
