Question

What conditions have contributed to the consolidation of the beer industry?

Answer 1

In the year 2019, there were around 6400 brewers in the USA when compared to the 49 breweries in the year 1983. The industry has also turned to be more competitive and dynamic as around 9% of the market share and volume has been acquired by the importers and small breweries from the large breweries lately and since the year 2009. Below are some of the reasons for the consolidation of the beer industry in the USA.

Increase In Retail Outlets

Alcohol outlets have increased throughout the USA and the retail of beer is now on a much larger scale when compared to the situation during the 2008-2009 recession period. By the end of the year 2019, there was were around 643,142 retail and beer outlets in the country when compared to 531,705 in the year 2008. An increase in the number of retail channels and investments from the entrepreneurs have ensured that the alcoholic beverages and beer is now easily available to the common consumers, which has resulted in the strengthening and consolidation of the beer industry.

Packaging

Many new varieties in the packaging of the beer products have been introduced. The distributors, retailers, as well as the manufacturers, track the inventory and pass it along the supply chain in the form of SKUs or Stock Keeping Units. Big boxes, discounters, and other kinds of specific and specialized packaging have been introduced in the SKU segment for beers. There were around 1174 SKUs that are unique, specific, and specialized in the year 2018 when compared to the 190 specific and unique SKUs of the year 1996. Unique, customized, and special packaging has ensured that the more attractive beer products can move easily, can be stored cost-effectively, and are also ready for consumption.

The New Craft Brewery Segment

While there are still quite a few big breweries and large scale manufacturers of the beer products in the country, the growth of microbreweries and brewpubs also called (craft breweries) have made the beer quite popular and provided for consolidation and strengthening of the beer industry. Even in the years when the sale of the big manufacturers was going down, the craft breweries maintained their growth rates. Craft breweries have introduced many new tastes and flavors to beer production. Lagers, pale ales, wheat sours, and other kinds of innovative products are increasing the popularity of beer and making it a more household and popular kind of beverage. The majority of these small breweries have started operating during and after the 1980s. They have been a source of new beers and flavors and some of these are also termed as indigenous to the United States of America. These new popular flavors include American Double, Black IPA, Cream Ale, Amber Ale, and California Common among others. In the year in 1970, the beer industry in the country was dominated by the major brewers, which also consolidated their businesses. It resulted in the least number of breweries during the period. However post-prohibition many new entrepreneurs entered the beer industry and the precedents were set that resulted in the expansion of the number of small scale breweries.

All of these factors and others have contributed to the consolidation of beer industry in United States of America. The beer market in the country is expected to grow at around 7.5% and the average per capita consumption of beer in the country stands at 66.4 liters. The stability of the market has also contributed to its consolidation. With awareness of common people regarding health increasing, the low alcoholic content and percentage options are also being preferred, which makes beer a good choice among common people. More number of retail outlets, excitement and preference for the local tastes, as well as increase in the number of tap rooms and microbreweries is making the product more popular, visible, and easy to assess. Also, the new craft beer is associated with sustainability, local products, and high quality, which only improves the prospects of it in the market