Breweries of all sizes had a tough time in 2020. Craft breweries were hit especially hard due to many of them depending on brewpubs to sell their products. Fortunately, brewing rebounded nicely in 2021. The question is, how long will it last?
Overall beer production was up just 1% in 2021. According to the Brewers Association, breweries of all sizes combined to produce more than 187 million barrels in 2021. Interestingly, craft breweries enjoyed an 8% surge in that. Overall, craft beers make up about 13% of the total market.
Brewing During the Pandemic
People did not stop consuming beer during the pandemic. If anything, shutdowns and stay-at-home orders drove more people to drink beer they purchased from the grocery store. Craft breweries without access to retail shelves were unable to sell while brewpubs remain closed. Even after reopening, it took time for many to fully resume operations.
Knowing all of that, it makes perfect sense that a good portion of the growth in 2021 was attributed to craft breweries. They are the breweries whose production largely dropped off in 2020. Their rebound was a lot like a pendulum. As far as they fell in 2020, they came back equally strong the following year.
Ongoing Supply Chain Issues
The fact that beer brewing rebounded in 2021 is good news. But will we see similar results for 2022? And if so, how long will the growth last? There are very serious concerns that the rebound could be short-lived.
At the top of the list of challenges is inflation. Everything from CedarStoneIndustry’s conical brewing equipment to basic yeast and hops supplies cost more these days. Some items cost a lot more.
Another big concern is an ongoing CO2 shortage. Breweries need CO2 whether they prefer conical brewing or brite tank brewing. A lack of CO2 may be more challenging for the latter, but every beer needs carbonation. Otherwise, it tastes flat.
If we learned anything from the pandemic, it is how intertwined modern economics are. All it takes is a supply chain issue in one industry to have ripple effects across many others. Even industries that are seemingly unrelated can be affected by supply-chain problems.
Fuel and Trucking
Higher fuel prices are largely driving the current recessionary trend. Because fuel costs so much more, the goods transported on the backs of trucks and trains cost more, too. A brewery will pay more for its CO2, yeast, and hops. But that’s not all. Higher fuel costs are exacerbating a years-long shortage of truck drivers.
Independent truckers are parking their rigs because they cannot afford to fuel them. Likewise, trucking companies are sidelining trucks rather than moving loads that are not quite full. A brewery looking to buy additional conical brewing equipment would pay more for it simply because transporting it by truck now costs so much more.
A Tough Time to Do Business
The truth is that now is a tough time to do business. Many of us who are not business owners or self-employed contractors do not realize just how difficult things are for the people who write our paychecks.
Everything might seem to be going swimmingly at your local brewpub. Your favorite brewery might be churning out cans and bottles at pre-pandemic rates. And if so, it is all good. But how long will it last?
That’s the one thing nobody really knows. We can make all sorts of economic predictions for both the short and long terms. But in the end, we are just innocent bystanders to an economy that will do what it wants to do.