For my final column of the year, I had hoped to take a page out of Maureen Dowd’s book and turn this space over to my brother, a normie, for his take on the past year’s advances in malt-based boozing. A look at how the other half drinks, if you will. But he was having none of it. “I basically only drink Coors Light, man,” he told me, his confusion evident even via text. “What would I even say?” Fair point, but inconvenient for yours truly. Having failed to pawn off my column on someone else for the holiday, I had no choice but to tap it out myself.
Just kidding. The truth is, 2022 was a remarkable year for our big, beautiful, sometimes baffling American beer business, so there’s plenty to write about. Too much, even! So for this week’s Hop Take — the 14th since I took over the helm back in September, thank you very much — let’s take a quick jaunt through the past 12 months of brewing-related news and narratives to refresh our memories on key developments and prepare ourselves for whatever fresh hopped hell this way comes in 2023.
Below you’ll find nine of the biggest structural shifts, beverage trends, and macroeconomic shockwaves that drove the American beer business in 2022, and will stay on your humble Hop Take columnist’s radar next year. The upshot: With supply-chain mayhem easing and pandemic lockdowns lifted all over the country, 2022 wasn’t nearly as across-the-board brutal as 2021 for the American beer business. But it wasn’t a full-blown return to form, either — and the sands of progress (plus consolidation, regulation, etc.) are shifting fast, keeping the industry very much on tilt headed into 2023.
All right, enough chit-chat! Let’s get to the malt of the matter. Here’s the past year in beer, according to Hop Take.
Selling Out Is In
The craft brewing industry’s preoccupation with corporate ownership suffered serious, potentially fatal setbacks this year, as outfits like CANarchy (Oskar Blues Brewing Company, et al.) Stone Brewing Company, Made By Water (Catawba Brewing Company, et al.) and more sold to macrobrewers, private equity buyers, or strategic partners from outside the industry entirely. There was little gnashing of teeth or rending of garments, although Beer Twitter did make some jokes at the expense of co-founder Greg Koch, one of last decade’s most ardent anti-corporate advocates. But for the most part, 2022 felt like the year that both industry insiders, facing stiffer headwinds than ever before, and rank-and-file drinkers flooded with new beyond beer options, have lost interest in the question of who owns what.
Stay Small, or Go Big
In early November, Southern California’s venerable The Lost Abbey announced it would scale back its capacity by roughly 50 percent in a strategic move to stop chasing top-line growth and focus instead on building a more sustainable business at lower altitudes. Just a few weeks later, central Texas firm Austin Beer Works unveiled plans to build a world headquarters on 64 acres of some of the country’s priciest real estate. 2022 showed us that craft breweries that do still care about staying independent have two viable paths: either low to the ground, or high in the sky. (Woe to the firms that fly too close to the sun on cheap debt, though: Modern Times Beer, acquired out of receivership by Maui Brewing Co. this past fall, illustrated that point all too well.)
The Bigger They Are, the Harder They’ll Tea
This year, those that have settled on the latter route took a page out of Molson Coors’ book and really started thinking about themselves as “beverage companies” rather than beer-only businesses. Boston Beer Company is basically Boston Twisted Tea/Truly Company these days; Sierra Nevada’s new 500,000-barrel facility will serve its “beyond beer” ambitions; even as New Belgium Brewing rides its Voodoo Ranger juggernaut to glory, it’s hedging with Fruit Smash hard seltzer and other fermentables in R&D. Maryland’s Flying Dog Brewery, a top-50 firm, is launching a hard tea in 2023; Island Brands USA, a fast-scaling Southeastern marketeer, already has one. I expect more to follow.
N/A’s Outsized Strategic Significance
With Dry January just around the corner, now is as good a time as any to point out that non-alcoholic beer remains just the scantest sliver of the overall beer category in both volume and dollars. The category is posting eye-popping year-over-year gains on small denominators, led by giants (four of the top five brands in the U.S. are macrobrewers’ line extensions) and Athletic Brewing Company, which just a few weeks ago took a $50 million investment from Keurig Dr. Pepper (KDP) to help it scale up and overcome any Allbirds-esque cultural baggage. I’ll be keeping an eye on the macros’ 0.0 moves in the coming year — N/A is a great story the likes of Anheuser-Busch InBev and Heineken to tell, but their core businesses remain booze-focused, so be skeptical of any spin to the contrary.
Big Soda’s drive into alcohol hit high gear this year, with Coca-Cola, PepsiCo, and Monster Beverage Corporation all signaling their designs on the formerly semi-forbidden fruits of the beverage-alcohol category. (And don’t count KDP or Red Bull out, either: The former’s Athletic move, and the death of the latter’s co-founder, may indicate more sea changes to come within the orgs.) I’ve argued that 2022 was the year that alcopop’s historical arc finally bent toward redemption, and that’s mostly due to the serious interest and investment from these major players — often in conjunction with joint-venture partners within bev-alc, to be fair. Will 2023 bring more of the same? Or does Hard Mtn. Dew’s tepid second half this year portend trouble for The Beast Unleashed and its ilk next year? Hmm.
Regulation, Legislation, Consternation
Those blurring lines may be exciting to beverage execs and novelty-obsessed drinkers, but they’re not without downsides. This year, consumer pressure groups, industry organizations, and the Biden Administration pressured regulators, lawmakers, and competing firms to enforce labeling standards, investigate alleged anti-competitive distribution practices, study the business’s oligopolistic dynamics, and stop selling hard sodas too close to Game Boys, or whatever.
Middle-Tier Consolidation and Complaining
A new King of Beers emerged in 2022 — Reyes Beer Division. The sixth-largest privately held company in the U.S. went on an acquisition spree, picking up tens of millions of cases in three new states, plus more in the massive California market, where its trucks deliver roughly 43 percent of beer. It’s a trend reflected across the powerful middle tier as boomer-aged distributorship owners seek an exit, and on balance, it ain’t ideal for craft breweries. But lest our increasingly powerful wholesalers quietly enjoy their
lucrative sinecures value-adding independent businesses, they spent 2022 getting red-assed in public over mild criticism from the Treasury Department and perceived encroachment from Blue Cloud, Pepsi’s from-the-ground-up alcohol distribution division. Yeehaw!
Sugar-Based Struggles, Spirits-Based Surges
Contrary to the mainstream headlines, seltzer has only “gone flat” in the sense that its insane growth over the back half of last decade has slowed down a lot faster than Wall Street hoped. Still, the segment is facing genuine pressure from its spirits-based brethren. If more states follow Vermont’s lead in lowering taxes on/allowing broader retail sale of liquor-based canned cocktails, breweries — all outfitted for fermentation, but very few for distillation — will have more trouble on their hands. That’s part of the reason the Brewers Association fought so-called “tax equivalency” pushes in eight states this year.
Cannabis Stays Mellow
Weed was a consistent bogeyman for the beer industry last decade, but developments in 2022 demonstrated that there are plenty of alligators closer to the boat. Federal legalization remains a pipe dream (ahem), and state-by-state decriminalization and legalization efforts were slow-going, with only two additional states passing pro-bud ballot measures at the polls this year. In the past 12 months, cannabis conglomerate Tilray acquired Green Flash Brewing and Alpine Beer Company and Montauk Brewing Co., adding to its SweetWater Brewing Company-led craft beer roster. Those moves affirm the valuable adjacencies between weed and beer… and maybe tacitly acknowledge that the two businesses are more complementary than competitive, too.
Aaaaaaaaand I’m done! How’d I do? It’s no easy feat, cramming an entire calendar year into a single column. Did I miss something important? Do you disagree with my analysis? Just want to send me a tip for something I should look into in the new year? You can always reach me at [email protected], and our conversations can always start off the record, so get in touch! I want to write columns you care about, so if you’re a brewer, distributor, bartender, drinker, whatever, if it matters to you, it matters to me. Have a wonderful final few days of 2022, and meet me back here next year, wouldja?
🤯 Hop-ocalypse Now
Drunk-driving is a deadly public health problem that’s at its most acute on New Year’s Eve, when intoxicated drivers have historically caused between 30 and 50 percent of all traffic fatalities. So some genuine credit is due to Miller Lite and Coors Light for once again partnering with public transit systems in six metropolitan areas (Denver, Dallas, Phoenix, Chicago, Milwaukee and the Twin Cities) to cover the costs of extended service over the holiday and — hopefully — keep inebriated idiots away from their ignition buttons. Parent company Molson Coors says that it’s spent more than $1 million on the program, which it also activated during hard-drinking celebrations like St. Patrick’s Day and Halloween, in 2022 alone. Amazing! Now imagine the dent we could put in D.U.I.s if we properly funded year-round public transportation by fairly, accurately, and consistently taxing corporations (including Molson Coors!) rather than relying on their occasional largesse for brief, fleeting glimpses of how the wealthiest nation in the history of the world could function!
Already big in Japan, beverage-alcohol firms including Sapporo, Kirin, and Suntory may soon make more moves into the American beer market… The Adult Non-Alcoholic Beverage Association a) exists, b) now has 90 members, c) demands to be taken seriously… One silver lining in craft brewing’s ongoing COGs-ageddon? Craft malt is newly competitive on price… Athletic Brewing Co., fresh off $75M Series D, is throwing seven figures behind a new ad campaign…
📉 …and downs
U.S. beer tax-paids down in November, down in 2022… Basically all wholesalers think the beer business is going to get worse next year, neat-o… Plus, tough 2023 production cost forecast means breweries that can take price, will (again)… Another unhappy Hop Take reader makes their discontent known…