The industry posted double-digit growth for the 8th straight year.
America’s smallest breweries are continuing to fuel a flavorful revolution in bars and liquor stores across the nation.
On Tuesday, craft brewers reported a 13% increase in volume in 2015, the eighth consecutive year of double-digit growth as American beer drinkers continued to be lured by fuller-flavored ales.
With 4,269 breweries – more than ever before – the craft beer industry now represents 12% market share of the total beer market, trade group Brewers Association reported. The growth was especially notable as the total U.S. beer market reported a slight drop of 0.2% in volume for 2015. The spirits and wine industries have stolen market share from beer in the total alcohol-beverage category, resulting in stagnant sales for the overall beer category in recent years.
“The figures show there is still strong growing demand for fuller flavored products from small brewers,” Bart Watson, chief economist of Brewers Association told Fortune. “It shows the premiumization trend that we’ve seen the last few years has room to run.”
“Premiumization” is an industry term for the willingness by consumers to spend more money on beers that command higher price points. Craft brewers, which don’t mass produce their beer styles as greatly as say MillerCoors or Anheuser-Bush InBev bud , almost always charge more for their beers. Essentially there are two fronts to this battle: Big Beer tries to win on volume, while craft brewers score bigger on price.
Growth has tilted in the craft brewers favor for many years now. Market share stood at 5.7% in 2011, so the industry has more than doubled in just four years.
Watson says that’s because of growth for a variety of styles that craft brewers have popularized, including IPAs, session IPAs, pilsners and sour beers.
While the Brewers Association doesn’t set long-term growth projection targets, Watson says there is an “aspirational goal” of achieving 20% market share by 2020. In other beverage markets, like spirits and coffee, high end drinks can generally command as much as 40% market share – implying there is a lot more room for the industry to grow.
That helps explain why there has been so much merger and acquisition activity in the category.
IPAs are a growth driver, also growth in pilsners, light sours, session IPAs – they grew faster than the category. Big Beer companies, as well as private-equity firms, have scooped up tiny brewers to gain exposure to the popular slice of the stalled beer market.
And while some consumers fret when their favorite local craft brewer is bought by a larger rival, there’s still plenty of competition coming online. Throughout 2015, there were 620 new brewery openings and only 68 closings. The Brewers Association said the openings figure would likely be revised higher as more data from several states, including California and New York, is combed through. In 2014, for example, 615 openings were originally reported by that number was later revised to a record 884.