The COVID 19 pandemic completely upended the Craft Beer Industry. Prior to 2020, many craft breweries were finding their taprooms to be the driver of profit, rather than fighting for shelf space in an increasingly crowded retail landscape.
When lockdowns began in 2020, taprooms across North America shut down, and forced craft producers to pivot on a dime. Canning became the lifeblood of virtually every craft brewery, which was bolstered by hoarding behaviour that ensued as uncertain consumers stocked their pantries with their favourite craft beer, cider, seltzers, and wine. Although this pivot came with an increase in the sales for many beverage businesses, this sudden shift and growth was not without its challenges. Two years later, staffing and supply chain continue to be significant challenges in the craft beer industry, and beyond.
We have seen that 2021 brought an end to hoarding behaviours, while consumers have not yet fully returned to their pre-pandemic social behaviours (for instance returning to their favourite tap room). The net result was a tough 2021 for many craft breweries. Industry wide, sales for craft beer in industry wide were down 8.6% in 2021 from 2020 according to Beverage Dynamics’ 2021 Beer Handbook.
This brings us into 2022. This year promises both challenges and opportunities for the craft beer industry. We see 5 key trends that we believe will dominate the Craft Beer industry and will set the top brands above the pack:
1) Focus on branding
Let’s face it, there are a lot of breweries out there. Consumers have more choice than ever, and brands will need to compete for their attention. In 2022, it all starts with a strong online presence. If your brand isn’t the first thing that people see when they do a Google search or check their social media, that means that someone else is.
When it comes to the retail level, vibrant packaging is needed to stand out among the variety of craft beer products on store shelves today. For those who are ‘can loyal’, utilizing all the real-estate on the aluminum to get your brand in peoples’ faces is a smart move by our estimation. Small touches on packaging like a colored end tab can become a differentiator and help to build a brand that is recognizable. More critical than cost, it’s about volume of sales by attracting the most attention from consumers.
2) Inflation / Raising Beer Prices
The price of literally everything is going up right now. Embrace it and protect your margins. Raise beer prices. Everyone else will be doing it too, and consumers are already getting used to the idea that everything is going up in price.
3) Embracing the seltzer
Like it or not, the seltzer is here to stay. According to IWSR Market Analysis, seltzers and other RTDs are expected to represent 22% of the entire alcohol industry by 2022. Craft breweries have two choices:
- They can resist the trend and stick to their roots. A valid, principled stance to take, but will result in missing out on much needed revenue, OR
- They can embrace the trend. There is a huge demand for hand crafted RTD beverages, and ultimately adding a seltzer can help to raise the profile of a brand. Many savvy breweries have already been taking advantage of this market opportunity, and also using the seltzer to increase revenue, without cutting into their beer brewing capacity.
4) Focus on stability in supply to manage opportunity costs from delays
Global shipping industry woes, war in Ukraine, continuing lockdowns in parts of the world, stranded sea-cans, aluminum shortages, strained grain supplies, trucker protests, and labour shortages are all presenting real threats to supply stability for virtually all input materials that a craft brewery needs. Now is the time to put more value on stable and reliable suppliers versus shopping for the lowest price. Missing a long-weekend product launch due a late delivery of cans will cost far more than paying a small premium to get what you need from local options.
5) Quality Control
With increasing competition, and slow growth in beer sales, quality is second only to brand recognition. Once your customer has made the decision to try your product, you will likely only get one chance to keep their attention. If your brewery doesn’t have a quality control plan now is the time to put one in place. Measuring dissolved oxygen in your brite tanks, as well as in your cans is critical. If you do not have the equipment to do this, call up your local mobile canner and see if they will come out for a day of testing. Before mass producing a novel - higher risk - product like a radler or fruit beer, make sure that shelf-stability is figured out. This is especially true if that product is destined for export. While the craft industry is all about creativity and expression, nobody wins if there are refermenting cans exploding.
We all want the return of the industry us brew-lovers are excited to be in! Until then, the key is to find ways to make our businesses resilient in the face of continued uncertainty.
Cheers to a 2022 full of success for everyone!