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There are now a record number of breweries in the U.S. – and the total continues to grow. If you're more of a whiskey fan, you' might be interested to hear that the craft whiskey market has seen similar growth.
One could argue that the craft beer boom that has raced across the country can be traced back to a 1978 law that legalized homebrewing.
But that would be overlooking the long history of finely crafted beer here in the 50 states, which includes Founding Fathers like Benjamin Franklin and George Washington who brewed up beer using their own recipes. But it was European immigrants, particularly those from Germany, who really kicked off the beer-boom in the U.S., where, in the 1800s, just about every downtown neighborhood had its own brew pub or beer garden.
By 1873, there were some 4,131 breweries in the U.S., including Yuengling Beer, founded in 1829 in Pottsville, Penn., which happens to still be making beer today. Other breweries with household names like Anheuser-Busch, Coors, and Pabst, all started by immigrants, also began to scale up by tapping the nation’s growing transportation infrastructure and new technology like refrigeration – moves that helped save those companies in the dark years ahead.
The Death And Rebirth Of American Craft Beer
When Prohibition struck in 1920, the beer industry in the U.S. was decimated. It was only the largest brewers that were able to adapt and diversify their business away from beer that kept them alive as thousands of smaller rivals faded away.
And it by leveraging those same advantages of scale, equipment, and logistics – with perhaps some political lobbying connections as well – that helped the big brewers jumpstart production when Prohibition ended in 1933. Before long, Americans coast-to-coast were able to snap up icy-cold bottles of crisp lager made by the big brewers. But the number of craft brewers that existed before Prohibition never came back. While there was a bump of startup brewing activity in the late 1930s, the big brewers remained the dominant players in the market, often buying or forcing their rivals to close down. By the 1970s, there were fewer than 100 breweries in the U.S., which left consumers with fewer domestic options to choose from – which helped stoke interest in imported beers from Canada, Europe, and Mexico, not all of which was top-quality beer.
But the times were a changin'.
A movement had begun to explore alternative ways of beer that harkened back to the pre-Prohibition beer gardens. Some of the pioneers of this movement, which would eventually become known as the “craft beer revolution,” included Fritz Maytag. While his family was long associated with appliances, Maytag saw an opportunity to buy a failing brewery in San Francisco called Anchor Steam in 1965 with an eye on making beer like IPAs and porters that appealed to those outside the mainstream. A decade later, also in California, an avid homebrewer named Jack McAuliffe began converting used dairy equipment into what is often credited as the first craft- or microbrewery, New Albion.
But the floodgates to the craft beer revolution flung fully open when, in 1978, a legal quirk was finally corrected that made homebrewing legal in the U.S. again. Finally, after decades of being forced to drink watered-down lagers, beer enthusiasts like Fred Eckhardt and Charles Papazian hit their test kitchens with an eye on dusting off old recipes and inventing new ones and then publishing those results in books like A Treatise on Lager Beers and The Complete Joy of Homebrewing.
Little did they know they were planting the seeds for a new generation of craft brewers to explode onto the scene.
The American Craft Beer Movement Goes Mainstream
In 1979, the U.S. had just two craft breweries, which, by definition, means that a brewery makes less than six million barrels or less of beer annually and is at least 25% independently owned.
But a wave of entrepreneurial brewers began to arrive on the scene like Ken Grossman the founder of Sierra Nevada, who had been inspired by Eckhardt’s book to begin brewing his own beer. There was also Jim Koch, who left his lucrative management-consulting career to carry on the multi-generational family tradition of brewing beer by starting the Boston Beer Company.
By 1985, there were 37 craft brewers in the U.S. compared to 34 big brewers. A surge of breweries then opened in the 1990s led some industry observers to wonder if the market had become saturated. But then things really began to explode, especially in recent years, to the point where as of November 2016 there are now 5,005 breweries in the U.S. – far exceeding the pre-Prohibition high.
You could say that craft beer has finally gone mainstream.
The Future of Craft Beer
Given the rapid growth in the number of craft breweries, there is again talk about whether the industry has become saturated. That’s especially true in small cities like Asheville, NC, which already sports some 26 breweries and a total of 60 in its region with more on the way. With a population of just 89,000 people, leads the country in the number of breweries per capita and questions of whether the growth of the craft beer movement is sustainable.
Yet the craft beer still accounts for just 12.8% of all beer consumed in the U.S. – which totals some $22.3 billion of annual sales.
And that number is expected to continue to grow at the expense of more mainstream and imported beer. That’s grabbed the attention of the big brewers, who have seen flat and even fading demand for their brews. One result has been that the big brewers have begun buying up craft brewers, often at significant prices, as a way to get a foot into the market. In one case, Constellation Brands, the company that makes Corona Extra and Modelo Especial, paid $1 billion for craft brewer Ballast Point Brewing & Spirits, back in 2015.
It remains to be seen in the coming years whether the consolidation of the industry will continue as craft brewers look to cash out – or if the growing ranks of homebrewers move from their kitchen into a brew-house to get into the action. One thing is for sure: craft beer is here to stay.