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Thursday, May 26, 2011

Craft Beer: 5% of Sales, 60% of Drinkers

Here is a statistic: craft beer accounts for roughly 5% of the overall beer market (probably double that if you include faux craft and high-end imports). Question: what percentage of beer drinkers drink craft beer? Careful, it's a trick question.

Until earlier this year, I made the same mistake I assume most people do in answering this question. Obviously, only five percent of beer drinkers bother with craft beer. Ah, but market share and market penetration (to deploy a word I don't actually understand) are different things. Behold the findings from the market-research firm Mintel conducted just last December:
Only a modest percentage of beer drinkers (13%) say they prefer domestic craft or microbrew beers (compared to 43% for domestic and 22% for imported), but an impressive 59% say they like to try them, and 51% would try more craft or microbrew beers if they knew more about them. It seems consumer education is the key to cultivating growth in the craft/microbrew market, according to Mintel research.
How is this possible? One problem with the market=population thesis is that it assumes everyone drinks exclusively either macro or micro. But of course, many people drink both. (I was at the Timbers game yesterday with a recent college grad and craft enthusiast who pointed out that in college, he had to drink a lot of swill because that was all he could afford.) Another factor is consumption rate. People buy macros to consume in quantity; micros are more often savored. No doubt other factors are at play, too.

This is yet another reason why I think the trend toward good beer will continue to grow and grow. Steady growth in the next couple decades to an overall market share of 15%-20% isn't inconceivable. The people drinking suitcases of Hamm's will always skew numbers toward macros, putting a ceiling on overall growth. Still, we've reached an important tipping point. Craft beer isn't some obscure thing no one knows about; it's mainstream. Lots of people drink craft beer, and as they learn more about it, they'll drink even more. We're nowhere near the end of growth.


  1. "People buy macros to consume in quantity; micros are more often savored."

    Err, any actual proof for this often trotted out statement? I have spent a lot of time in beer bars and micros watching a lot of people drink a lot of beer. Never have understood the "savored" stuff.

    A Good Beer Blog
    (your comment tool wants me to sign up for Blogger today)

  2. Alan, must I remind you that this is a blog? Proof? Come on.

    I kid. Actually, one metric is that, as the proportion of Oregon's craft beer consumption increases, its overall per-capita beer consumption decreases.

    I'm sure there's data out there (at least survey data) that tracks the average beers consumed by all-macro drinkers versus micro, but I don't have the time to track it down. However, since you refute my point with observation, I'll offer one of my own: by dint of packaging strategies alone, we can conclude that macros sell in bulk.

    But perhaps it was the word choice that set you off.

  3. its a common pooint of discussion amoungst my friends who drink. Part of the problem for craft drinkers is that there are still so many places in Canada where you can't get craft beer. Thankfully this does seem to be a problem that's getting a little less common, but there are still lots of places where you have little or no choice in beer selection. I am always surprised that so many good restaurants, with good wine lists, still trot out molson and mass produced imports instead of local quality craftbeers. It is a pity that at sporting stadiums in Canada it seems acceptable to simply serve lagers. Heading down to Seattle to either a Mariners or a Seahawks game reminds me what is possible. I am pleased the Vancouver Canadians buck this a little by serving Granville island and whistler beer, but its still limited to a couple of their beers. How hard would it be to put a case of a limited release beer in the fridge for those who are interested. The good news is that more pubs and restaurants seem to be making the effort and that has to help penetration and overall consumption.

  4. Erm... I appreciate your optimism but it says "Only a modest percentage of beer drinkers (13%) say they prefer domestic craft or microbrew beers".

    13% is the real number we're looking at, not 60%. That jibes more with my personal real life experience. I mean just think about it: would it even be physically possible for a scant 40% of Americans to drink 95% of the beer produced here? That would be 51 gallons of beer per year on average (or an entire case of beer per week) for each of those people.

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  6. OK, proof is a meanie pants word. Can we work with "hint"?

    To add a twist, I would point out there is no reason to deny getting a skin full on the good stuff. I you read Martyn Cornell or Hornnsey or Heron's books there has always been a division between the affluent and the working class and the implications of drinking. All I am pointing out is that I doubt craft beer drinkers are purer, just happier.

    [still fighting of Blogger's demands.]

  7. I think people buy macros simply because they like and know them and perceive them as good value, and not necessarily to drink in bulk.

    And though I have no clue about the beer landscape in your area, I am very doubtful about the assertion "People are drinking less, but better". I might apply to some, but my view is that people are just drinking less.

  8. I regret having guided people away from my main point by offering unverified explanations for what is, I think, an unambiguous finding. Lots of people drink craft beer, not just a tiny minority of beer drinkers. That's really the point.

    As to my loose explanation, I guess we'll have to just leave it there. The suspicions that I'm wrong are as unverified as my claim (though I haven't heard anything that convinces me people drink craft beer in smaller quantities than macro).

    Flagon, the stat is pretty clear, and I didn't spin it. While only 13% have converted to full time craft drinking ("prefer"), over half "like to try" craft beer. That's not optimism, that's just the fact. I also find it interesting that 13% say they favor craft beer. That's three times the percentage of craft beer sold, which would seem to support my thesis that they drink less of it. But hey, we're just spitballing here.

    And Alan, nowhere in this post is there any mention of purity. That is is a bag you carried into the discussion.

  9. Fair enough. Aside from splitting hairs about what "like to try them" means in terms of numbers or consumption, I do agree with your larger point that craft beer drinkers make up more than the 5% number we're always told, which is a good thing. I often wonder how much beer sold at stadiums alone inflates the numbers on the macro side.

  10. My bag has a certain charm. But I poke not you with the sharp stick specifically. It is a general complaint of mine.


  11. Just a thought, it would be interesting to give beer drinkers a list of American made beers and state whether they consider them to be macro or craft - I imagine a sizeable portion of the population think of Samuel Adams as a macro brewer.

  12. Jeff, come on now. Not only is "like to try" meaningless to describe economic behavior, even "prefer" is not actually describing their consumption patterns.

    I "would like to try" a hell of a lot of things that I never will. There are plenty of people who "prefer" to do one thing and then do another, for various reasons. One of which, in this case, is price:

    "However, price is a deterrent for some drinkers when it comes to trying or purchasing craft beers. Forty-one percent of drinkers only enjoy craft/microbrew beers as a treat because they are expensive. Meanwhile, 29% report drinking less craft beer than they did a year ago because of the price. But the market still shows resilience, as 29% of consumers who report drinking more beer than they did a year ago say they are drinking more craft/microbrew beer as an affordable luxury."

    I'm not really sure what point you are trying to make here, but 60% of beer drinkers are not regular craft beer buyers. That, and the 13% of people who "prefer" craft beer is still dwarfed by the 22% who prefer imported, the 43% who prefer domestic (and will probably never buy craft beer ever).