OnTap Magazine

I t’s no secret that United States craft beer has seen tremendous growth over the last 2 decades. It’s been splashed all over the news, screamed about on social media and sung loudly at beer festivals. All of us “good beer” drinkers have seen new breweries, new beers, new business models and new drinkers seemingly added daily. The headlines during this period of rapid and expansive growth have been all about how more is better and as an industry and a community, we seem to have swallowed that hook. The overt positivity has created a sense of excitement and a feeling that every brewery owner is even happier than they are rich. But neither seems to be true. Expansion on the scale we’ve seen would be unsustainable in any industry. Just from 2010 to 2024 the number of breweries in the US grew by 5.5 times. Imagine if every major metropolitan city added 5 new airports in the next 10 years. That would amount to five times the number of planes, five times as much jet fuel being burned into our atmosphere, five times the number of security agents, five times the lost luggage. I suspect, every airline company would confirm to you that there would be a shortage of people to fill all those flights to make it a viable development Picture how your commute to work would look if in the next three years the number of cars on the road doubled. And then doubled again the three years after that. Where would you park? Howmany lanes would the roads need to be expanded by? Would there even be enough fuel? Imagine for a moment movie theaters keeping pace with the number of breweries going up 500% instead of the 40% growth they actually achieved. Each theater has an average of 30 seats per screen, so that would be an increase in seats equal to the population of New York City... And Los Angeles... And Chicago… COMBINED. That’s a lot of real estate they would have to add to make room for empty seats. At movie theater prices, that’s like a couple of trillion dollars’ worth of popcorn. What does this have to do with craft beer? Well, when you take a dive into the overall numbers of the US craft beer market, a very concerning picture emerges; one that should give any aspiring owner, operator, brewer and even bartender a serious pause. Things really started untethering from reality around 2010. From 2010 to 2025 the number of breweries in the US doubled twice. And then grew another 50% after that. In only 14 years the number of breweries exploded by 5.5 times. We went from 1759 to just under 10,000. That’s an average of 160 new brewhouses in every single state. Even tiny little Rhode Island and barely populated Wyoming. That’s a lot of new breweries and a lot of new beers. During the same time, what we call “Rotation Nation” killed what we call flagships, one of the most important revenue streams in a craft brewery’s business plan. (This is a concept where bar owners rotate lines to get the newest beer releases, rather than holding a consistent product in stock.) Now we’ve got a record number of breweries, more and better beer options from better facilities and taprooms. Technically, all of that is better for the consumer and the craft beer fan, but… Unfortunately, for any level of growth in the number of breweries (supply) to be sustainable, there has to be and equal or greater level of craft beer drinkers (demand) who are purchasing this beer. That creates profit. Profit is simply revenue that exceeds expenses. There needs to be enough to buy hops and grains and cans. Enough to pay the rent every month (and on time). And there certainly must be enough to pay the brewers that craft and the bartender that pours you that beautiful new beer. The total amount of craft beer produced in 2010 was roughly 10 million barrels. As the industry grew and we added breweries faster than pimples pop up on a teenager, the total output of all the breweries also grew. But here’s the problem: During the same time that the number of craft breweries grew 5.5 times, the total output of all those breweries only grew by 2.5 times to 23 million barrels. And revenue per brewery only grew 3.9 times to 29 billion. Every brewery in the US saw their ‘piece of the pie’ dwindle by 60%. To make matters worse, the top 10 breweries all grew output during that time. In the case of Boston Beer, they nearly doubled. Yuengling opened half the country to distribution for the first time in it’s history. So, the pie was (and is) being split unevenly. In 2023 70% of the breweries in America made less than 1,000 barrels of beer. That equates to around $360 000 in sales if the brewery canned it all and sold it through distribution. A brewery could generate $ 1 . 5 million if it sold all of it in pints across the bar for $7. Most breweries use a hybrid model of selling some of each so let’s say that most of those 7,000 or so breweries generated around 700K in sales (which I know from experience that they did not). With rising costs of rent, ingredients, interest rates and payroll, selling 500-700K every year is like hitting an airball on every free-throw. In my opinion, the answer to the question in the headline is “Yes, craft beer as an industry is broken.” Then the next obvious question always comes down to: “How do we fix it?” There are really only two choices in the United States: A. Make more people drink significantly more craft beer. B. Reduce the number of breweries Making an impact on the trends of consumers is as prohibitively expensive as it is nearly impossible. So that’s out. 2014 was the last year that the number of breweries and the revenue and production per brewery grew. So you could make, and I am making, the argument that 4800 breweries was close to the equilibrium. To build a marketplace that is sustainable and profitable we need to reduce the number of breweries. At least by 30% and likely by half. Consumers should keep supporting the brands they love while accepting the closures of breweries. Maybe it’s too much to ask that we'd celebrate a shrinking number of craft beer breweries - I get that. But fewer breweries should equate to more innovation, creativity and a more diverse selection of great beers. So, I’ll raise a pint to fewer breweries, will you clink your glass with mine? ontapmag.co.za | Autumn 2025 | 37