By Ellie Gabel, Contributor
The past decade has been a roller coaster for the craft beer industry. After an explosion in popularity in the 2010s, the COVID-19 pandemic seemed to spell the end. However, breweries largely weathered the storm. Now, rising costs and a shifting consumer market threaten small-batch beer once again, but that doesn’t mean the end is nigh.
Tariff Trouble
The Trump administration’s aggressive tariff strategy is one of craft beer’s biggest challenges today. While higher taxes on imports like Heineken and Guinness may seem like good news for U.S. brewers, material duties tell another story. More than half of the nation’s aluminum comes from overseas, and this metal now faces a 25% tariff. As a result, cans are getting more expensive.
Suds themselves may get pricier, too, thanks to import duties on barley and hops. Domestic farms can and do grow these crops, but they’re struggling. U.S. hop production fell by 16% in 2024, and domestic barley-malt supplies hit a record low because of severe droughts.
Changing Palates
Craft breweries and the beer industry as a whole also have to adapt to a shifting market. In 2023, beer consumption fell to its lowest point in 20 years, driven partly by high costs but largely by a change in preference.
The Millennial adults behind the craft beer boom have grown to have homes and kids, making it harder to justify spending on barrel-aged stouts and imperial IPAs. Gen Z has also departed from the tastes of their parents, often reaching for seltzers and cocktails over beer. Many adults are forgoing alcohol consumption entirely, too, mostly for health reasons.
How Can Craft Brewers Respond?
Despite these headwinds, there’s still plenty of opportunity for microbrewers. Small operational tweaks can reduce expenses to make up for higher materials costs. Keeping water content in steamers between 1% and 5% will prevent excess moisture to drive efficiency and minimize repairs in brewing equipment. Breweries can also use smart HVAC and lighting systems to avoid energy waste and reduce costs.
Focusing on the customer experience can help. While overall beer sales and production may be falling, craft beer’s retail value rose by 3% in 2024, suggesting on-site sales outperform distribution. That’s a unique advantage craft brewers have over the big dogs.
Craft breweries can offer a unique, highly localized experience not found elsewhere. They’re hangout spots and restaurants, not factories pumping out large amounts of beer found on every state’s store shelves. Brewers who home in on this and make their establishments unique can draw people in when beer alone isn’t a big enough selling point anymore.
Finally, many craft breweries have started selling non-alcoholic (NA) options and ready-to-drink (RTD) cocktails to appeal to the non-beer-loving crowd. There’s still a small market for traditional brews, but the NA market is exploding. Canned RTD options haven’t quite reached that status but are steadily growing, too. Leaning into these alternatives can help breweries avoid getting stuck in the past.
Craft Beer Faces Challenges but Can Still Thrive
The road ahead may be a bumpy one for craft beer, but the recent struggles won’t be the end of the market. The boom of the mid-2010s couldn’t last forever, and those that adapt can survive, even thrive. It all starts with recognizing how the space is shifting and evolving in response.
