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Consumers' trend for social experience lifts craft breweries

Thursday, May 31, 2018   (0 Comments)

Milwaukee Business Journal
Nick Williams

The rise in craft brewers across Milwaukee, and Wisconsin for that matter, has increased dramatically in the past few years.

In 2011, there were 73 craft breweries in Wisconsin, according to the Brewers Association, an organization representing independent and small craft brewers across the U.S. By the end of 2017, however, that number more than doubled to 160, which ranks 14th in the U.S. Craft breweries currently have a $2 billion economic impact on Wisconsin and that number is only expected to grow.

"We’re in this consumer enthusiast category and everybody dreams of having a small brewery so a lot of these guys can survive because their business model is very small,” said Jim McCabe of MKE Brewing Co.

"A lot of people like to buy local and people like the variety of supporting local,” said Russ Klisch of Lakefront Brewery, Milwaukee.

What’s furthering the craft brew trend in the state is small brewers have learned that opening brewpubs or taprooms in growing neighborhoods is a good business model rather than focusing on just distributing their products.

"Any city of 20,000 to 30,000 can support one and there’s a lot of these areas inside of the state,” Klisch said. "Someone told me between West Bend to Oshkosh, there isn’t a brewery, so one is eventually going to be opening up there soon.”

Added Ashley Kinart-Short of Capital Brewery of Middleton: "It’s kind of fun to see how many small neighborhood breweries are going in. That’s something very cool to see, reverting back to that original and historical market that we had so maybe we’ll start to see the developing of some regional styles based on that.”

According to a panel of beer industry executives at the recent "Business of Beer” event presented by the Milwaukee Business Journal, the craft brewing trend in the Milwaukee region won’t reach a saturation point anytime soon.

However, the share of stomach is a growing issue for all beer manufacturers and craft breweries play a large a role in that.

U.S. beer volume sales were down 1 percent overall in 2017, but craft brewer sales grew at a rate of 5 percent by volume. Craft breweries now account for 12.7 percent of the overall beer market in the U.S. by volume. Dollar sales for craft beer is up to $26 billion, a near-25 percent portion of the $111.4 billion U.S. beer market, according to the Brewers Association.

"Retailers aren’t growing in space and that’s really our challenge is to go out there and get it in front of the ultimate beer drinker so they’re able to choose you,” said Dick Leinenkugel, president of Jacob Leinenkugel Brewing Co., Chippewa Falls.

To add, craft brewers are beginning to face some of the issues bigger breweries have dealt with for years, like the shrinking share of beer in the overall alcohol consumption market and possible rising costs due to tariffs on imported aluminum.

"Back when we were doing this 20 years ago, we were cheers-ing having 3 or 4 percent of the market and volume and now we’re all talking about a much larger share for what are considered craft beers versus domestic premium,” McCabe said. "Now that it’s a more significant chunk of the industry, we’re all being affected by these universal beer issues. It used to be the authenticity of this little tiny 4 percent in a David and Goliath story and that’s not the whole story any more.”

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