Challenges and opportunities of the craft beer industry in 2023

The craft beer industry has contributed to the beer variety. This niche market excludes large breweries producing popular brands for mass distribution and consumption. Instead, craft brewers brew unique regional ales, pilsners, stouts, lagers, wheat beers and other specialized recipes. This developing industry is likely to grapple with some ongoing challenges and opportunities in 2023. Consider some of the issues currently affecting many businesses in this space.

Ongoing Environmental Challenges

Many craft breweries are concerned with the critical importance of maintaining an adequate, clean local water supply. By its very nature, the industry is dependent on regional environmental conditions. Additionally, many premium craft beers must water with a specific combination of minerals. According to reports, as many as seven gallons of water are used in the production of each gallon of craft beer.

So, the unique flavor of craft beer is due to the water quality. Because of this aspect of the manufacturing process, microbreweries specialize in regional beers. An environmental catastrophe that threatens the purity of drinking water in a given area can impact the survival of nearby craft beer businesses.

Solve production problems

The wide variety of craft breweries has resulted in a diverse cross-section of small businesses in the space. Some companies offer the same selection of beers in conjunction with catering facilities or brewery showrooms. Other companies change this model and produce different beers on variable schedules. Additionally, many craft brewers are selling their products to local restaurants and retail outlets.

Various craft beer production initiatives have created daily operational challenges for some businesses. In 2018, more than 6,000 craft breweries produced approximately 20,000 brands in the U.S. alone. The limited production volume of certain product lines limits the ability of marketers to spread these products on a predictable schedule. In some cases, this outcome, in turn, can dampen potential sales.

The importance of new product development

But, consumers in this market generally prefer to sample different beers at will, although the large variety of craft beer presents operational challenges production consistency. A certain percentage of customers will not show long-term loyalty to a particular product. Several analysts have commented on the constant pressure on craft breweries to develop new and original beer flavors.

In this regard, craft brewers appeal to a different market than the big brewers that market their well-known lines to national audiences.

Solving Point of Sale Problems

Competition in the $26 billion craft beer market has many small brewers looking for point-of-sale venues in retail stores and restaurants. Yet, this trend also brings new challenges. One of the problems has to do with lower margins on wholesale sales.

Additionally, craft brewers may need to invest in attractive packaging and sales presentations as they market to larger geographic areas. These materials help introduce their brand to potential buyers. This need increases production costs.

Massive demand in a saturated market

The proliferation of craft beer companies since the late 1980s poses one of today’s greatest challenges. Brett Joyce serves as president of the thirty-fourth largest brewery in the United States. He has recently noticed increased competition within the craft beer industry.

One consequence he observed included increased competition for talented employees. Additionally, competition has intensified as beer distribution companies have shrunk from 4,595 in 1980 to 3,000 in 2015. Today, intense competition makes it imperative for brewers to differentiate their brands.

Prepare for a successful year

Today, craft breweries vary business operations and financial stability. Companies that can rise to the challenge in the coming year are likely to survive and prosper.

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