As we enter the second half of 2022, there are a variety of swirling questions about the present and future of the crafting market. The recovery from COVID-19 has been mixed based on geography, size, and business model, and the conflicting but increasingly negative signs regarding the near-term future of the U.S. economy raise the question of how long the craft recovery can continue.
To that end, the best indicator of the state of craft brewing comes from you, the brewers! Please take a few minutes to complete our mid-year survey. It’s anonymous (we ask for the name of the brewery just to avoid double counting and to get proper weighting) and even shorter than our annual survey:
However, before having this data in hand, we can turn to other indicators that provide pieces of the puzzle.
Analytics data shows weak start to 2022
First, the analytics data, which I could sum up with the words “disappointing” or even “worrying” depending on your perspective. To put the data in some context, total beer volume sales were down 6.5% in the first half of the year and dollar sales were down 2.0% from a year ago. (IRI Group, total US, multi outlet with facility (MULO+C) + total liquor). This shouldn’t be too shocking given that, A) the comps for packaged sales in the first half of 2021 were clearly still high (10% above 2019 in volume and 20% in dollar sales), and B) the onsite in the first half of 2022 was much stronger than the first half of 2021. At point B, the relatively strong second half of 2021 makes it easy to forget how much onsite was still recovering in the first half of 2021, meaning that some of the momentum we see when we look at the year-over-year numbers this year is still relative to the channel shift.
Given this context, the difficulties of crafts in terms of digitization in the first half of 2022 must be considered somewhere between expected and alarming. The expected viewpoint will note that given the importance of onsite to crafting, you might expect the channel change to affect crafting more than other segments (I’ve already suggested, in part in the vein of an intentional provocateur, that while sweeping negative recovery trends could be a good thing for the craft). Add to that the fact that craft share was only slightly down from a year ago and dollar sales are still higher than 2019 and you can make a case that the numbers line up with that at what you expected.
Source: IRI Group (Total US, MULO+C+Total Liquor). Analysis of the brewers association.
The most pessimistic take will note that while channel shifting explains the overall weakness in dollar volumes and trends, at best there is clearly very little momentum behind craft beer in retail chains for the moment, continuing a series of several years where this is the case. . At worst, scan volume was essentially at 2019 levels (0.1% higher) in a first half where distributed draft was still quite clearly lower than it was pre-pandemic. Sales to the brewery might fill some of that gap, but regardless, chain-packed independent crafts haven’t grown in the past three years. And with ready-to-drink (RTD) spirits and a variety of other fourth-grade products hitting craft shelves, it’s hard to see much momentum to change this trend anytime soon.
Source: IRI Group (Total US, MULO+C+Total Liquor). Analysis of the brewers association.
Research trends on site and draft
The real open question is to what extent improved draft and on-site trends might compensate for weak packages (and how different unmeasured distributed packages might look). Reminder: this is where our survey comes in! Take two minutes and fill it out!
We have some clues from other data sources, such as retail census data, which show that food services and drinking places sales are up 15% in real terms from the year (24% before inflation control). Similarly, open table reservations were only 6.2% lower than 2019 in the first half of 2022, compared to 30.5% lower than 2019 levels in the first half of 2021.
Source: United States Census Bureau; Retail Monthly. Analysis of the brewers association.
Source: OpenTable, seven-day average. Analysis of the brewers association.
Both of these metrics show that on-site trends have improved, but draft sales won’t follow either number perfectly due to changes in restaurant mix and consumer buying habits, so the survey will give us a more accurate picture (at least until we get updated TTB data, which hasn’t been updated so far in 2022).
In closing, craftsmanship has benefited over the past year from the return of local people. Against this backdrop, weak first-half analysis data sits somewhere between a continuation of good news and a sign of future weakness. The draft was certainly up in the first half from a year ago, but we won’t know how much until we have better data. And while I’m confident that brewery sales continue to grow, I’m less convinced that they’re growing fast enough for everyone to grow, especially given the continued growth in the number of breweries.
More to come on all of these topics, as well as the US economy on July 28 when I present the results of our mid-year survey in a members-only BA Collab Hour webinar – Register now!
