Craft Beer Share is Down Amongst Millennials

In Distillery by John Temple

Macro beers are taking share from craft amongst the early-adopting, millennial eCommerce consumer. The craft beer industry has grown tremendously over the last 10 years. More than 90% of beer SKUs in Drizly’s catalog are “craft” as defined by the Brewer’s Association. Despite the fact that there is an abundance of craft beers available to the consumer, macro beers represent more than half of beer sales on Drizly and are growing.

While the industry has been reporting a slowdown in craft beer growth only recently, and a slowdown of beer overall, the early adopting millennial Drizly consumer has been actively shifting their spend from craft beer to macro beer, wine, and spirits for the last couple of years.

When comparing the first half of 2017 to the first half of 2016, craft beer is down only 1%. However, in comparison to the first half of 2015, it is down 8%, despite the modest uptick in Q2 this year.

Those who are still buying craft beer at the highest rate are consumers in their 30’s, who became old enough to legally drink around the time of craft beer’s peak growth phase. However, those in their 20’s, as well as those in their 40’s, have shown less of an affinity for craft beer. Unsurprisingly, the generation of baby boomers who are 50 and older never became particularly enamored with the craft beer movement, and have shifted away from craft even further over the past two years.

This trend of craft decline has occurred across the nation. There are states like New York and Illinois where craft has been at a lower level of penetration for the past two years. Washington is an outlier from this perspective as craft beers have been an increasingly important part of the beer culture and beer sales, led by growth of local beer brands like Fremont Brewing and Seattle Cider.

Corporations tell another piece of the story. The corporate consumer not only disproportionately drinks craft beer, but also has been more loyal to the category than non-corporate consumers.

Given the overall decline in craft, we took a look at the data to see what craft beer consumers bought after moving on from the category. Of these former craft beer consumers, more than half (55%) left the beer category overall, opting for wine and spirits. The remaining 45% opted for macro beers, whether they be the traditional macro offering or recently acquired smaller beer brands that are now owned by the major brewers.

Across both craft and macro beers, there are star and lackluster performers. Here are some notable macro and craft beers and how they have performed over the past two and a half years:

You will notice that within the selection of quickly growing non-craft beers, there is a combination of successful established brands as well as smaller acquired brands. Indeed, acquiring prominent independent breweries has been a key way for large breweries to grow, though even that does not fully explain the rise of the macro brewers. For example, Ballast Point, which was acquired by Constellation Brands at the end of 2015, accelerated through the middle of 2016. It then slowed its growth while Corona, Constellation’s flagship beer, drove meaningful sales increases.

Getting to know the craft beer consumer

The craft beer consumer drinks differently than a beer buyer who favors macro brands in a few key ways. First, a craft beer typically costs about $0.40 more than macro beer for a 6 pack.

Another way craft beer is different from non-craft is in pack type. Almost 40% of craft beer sales are packaged as traditional six packs, versus half that amount for non-craft brands. Additionally, craft beers skew towards 4 count packages, something that is rare in macro beer brands.

In terms of packaging, craft beers are more likely to be sold in cans than macro-beers which skew towards bottles. Although a smaller portion of sales, craft beers are twice as likely to experiment with alternative packaging types such as kegs and growlers.

Craft beers also skew higher in alcohol volume, averaging 6.0% ABV compared to 4.9% for non-craft beers which include more light lagers.

The craft beer consumer will continue to operate distinctly from the more macro minded beer consumer. With the pressures on beer as a category overall, this struggle between craft and macro beers will wage on both in the online and the offline marketplace.