The Rise of Craft Beer – Exploring Brewing Innovations

The good news for craft breweries is that beer sales are rebounding from the COVID-19 pandemic.

But on-the-shelf prices are rising in lockstep with higher costs for ingredients and packaging.

Those higher prices may dampen craft beer’s appeal, particularly for college-educated households with above-average incomes. Consumer research supports this demand-side explanation.

1. Yeast

A single-celled living organism that eats sugar and starch and turns them into carbon dioxide, yeast has long been essential to the making of bread, beer and wine. Scientifically known as Saccharomyces cerevisiae, it’s responsible for many of the flavor notes we associate with our favorite sudsy drinks. Check for craft beer delivery.

Yeast reproduces asexually by budding, conjugation or sporulation. Yeast can also survive periods of stress by packaging their chromosomes into hard, protective spores. Sporulation is a process of meiosis that reduces the number of chromosomes from two to one. These spores are very resistant to environmental stress and can be stored until conditions are favorable for their re-emergence. Then they can begin the process of asexual reproduction again.

2. Fermentation

As beer drinkers become more sophisticated and seek unique tastes, they turn to craft beer. The Brewer’s Association defines craft beer as brewed by a brewery that is small, independent, and not publicly traded.

The beer industry has become consolidated over the years, with major global companies such as Anheuser-Busch InBev and MillerCoors dominating market sales. These companies have been able to achieve economies of scale by buying out smaller, local breweries, and they often use vertical integration in production processes like ingredient sourcing and packaging.

This consolidation troubles economists, who believe that it stamps out innovation and hurts workers. But a number of independent, small breweries have been able to thrive despite the odds. Their success offers hope for the future of the industry, as well as an intriguing case study for students of industrial organization and economic development.

3. Bottling

Unlike the mass-produced, bland beer of major macro breweries (think Blue Moon, Batch 19, Leinenkugel’s and, of course, Budweiser), craft beer is made in small batches. This allows the brewers to add a variety of flavors that appeal to unique tastes.

As a result, craft beer is more popular than ever. However, the COVID-19 pandemic has slowed down growth, as many breweries have been forced to shut down due to stringent lockdown regulations.

The industry has to work hard to stay above water. In fact, one senator has proposed redefining the term “craft” to include breweries that produce less than two million barrels per year. This would eliminate the tax breaks that craft breweries enjoy, making them equal to the massive, publicly-traded, macro breweries they compete against.

4. Packaging

There once was a time when it was clear who made a beer—the name on the label matched the company that produced it. However, as large breweries create offshoot brands with names that sound like craft beer and even purchase craft breweries, the distinction has become blurred.

To combat these challenges, many breweries have embraced functional packaging innovations. For example, New Belgium created the variety pack, which provides strategically-selected beers in a convenient package that can be shared and enjoyed. Breweries have also innovated their route to market, bypassing legacy wholesale channels weighed down by big brewer priorities. Additionally, they have embraced digital marketing strategies that allow them to share their story and connect with consumers. They have also embraced community-building, leveraging their taprooms to be inviting spaces for all.

5. Brewing Equipment

While macro-brewed beer is still a popular choice, many consumers are willing to spend more on beverages that offer better tastes and variety of flavors. This has boosted the establishment of small and independent breweries, leading to market growth.

Some breweries take their craft seriously, sticking strictly to Reinheitsgebot, the German purity law of 1810. Others go wild with innovation and experimentation, using a medley of ingredients to create unique drinks. In the end, it all comes down to taste. The more adventurous drinkers are likely to favor microbreweries, which can produce smaller batches of beer and sell it on-site in their own taprooms. This is a major advantage over larger breweries, which have to depend on wholesalers and may not have the same access to shelf space in grocery stores.