According to a new IBISWorld reprot, over the five years to 2016, industry revenue is expected to grow at an annualized rate of 11.7% to $614.0 million. In 2016, revenue is expected to rise 6.5%, due to growing consumer demand for craft beer.
Profit is anticipated to reach 4.6% of industry revenue in 2016, driven by many industry operators forming favorable partnerships with brick-and-mortar liquor stores. For example, some online retailers have outsourced filling and delivering orders to brick-and-mortar stores, effectively lowering costs related to complying with state regulations (e.g. purchasing licenses and obtaining permits for distribution vehicles).
“However,” notes IBISWorld Industry Analyst Darshan Kalyani, “state-by-state variations in regulations for interstate alcohol distribution have posed a key hurdle for the industry.”
Over the five years to 2021, industry revenue is forecast to grow. Alcohol sales will increase, partly thanks to population growth among individuals aged 20 to 64, which predominately encompasses the drinking age population. According to data from Nielsen, millennials account for 53.0% of respondents who plan on making online purchases, which will provide the industry with a larger potential customer base.
In July, the Brewers Association reported that craft beer production volume increased eight percent during the first half of the year, which is down five points from growth recorded at the end of 2015. Almost immediately, industry skeptics reran speculation of a craft beer bubble. That phenomenon culminated in a late October regurgitation of an AB InBev press release, in which its CEO, Carlos Brito, was quoted as saying that drinkers were tiring of too many options.
Fortunately for independent brewers, the international craft beer community is somewhat shy to accept predictions about the craft beverage market from the man orchestrating a full on assault of the industry. Regardless of all the recent discounting, this latest news from IBIS and knowledge that independent breweries are still coming online at a breakneck pace may help to reinforce confidence in American craft brewing.
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