First, let me say that any discussion of beer style data should be taken with a grain of salt. The incredible innovation of the craft brewing community makes the coding of new beers nearly impossible. Is a winter seasonal white IPA coded as a seasonal, an IPA, a witbier, or do you create a new category for seasonal white IPAs? Beats the heck out of me. I just know that it sounds tasty.
With that said – looking at style data can give us important information about what brewers are making, beer lovers are drinking, and where the beer market may shift in the future.
One of the most interesting trends in recent years has been the rise of the IPA category. Although the category has been increasing in popularity for years, based on IRI Group data through 12/1/13, it appears that 2013 will be the year that IPAs are the most popular craft beer category in the off-premise channel; finally wresting the crown from seasonals (which admittedly, is a category, not a style). Even the late year surge from seasonals, which typically sell best in Fall/Winter does not appear to be enough to catch the IPA juggernaut.
What should brewers and craft beer drinkers make of this fact? Here are a couple of thoughts:
- The growth of the IPA category is likely not over. Although 40% growth rates are unlikely to continue year after year, IPAs still occupy a very small percentage of the US beer market. Although it may feel to craft beer lovers like IPAs are everywhere, GuestMetrics estimates that they only have a 1.0% share of beer units on-premise, while the IRI Group reports craft IPAs at only 0.7% total beer volume YTD through Dec. 1, 2013. Given that Nielsen found that ~50% of craft beer consumers (and almost 70% of millennials!) said that experimenting with styles and flavors was the primary reason they bought craft beer; those shares should only rise.
- Differentiation in the IPA category is harder than ever. The running joke that IPA stands for ‘immediate profits ahead’ is not a given. Today there are high-quality IPAs in essentially every market and that competition will only grow. That means that not only is quality and consistency the ante for bringing an IPA to market, brewers will need to continue finding new ways to differentiate their offerings from existing players. Although challenging, differentiation is certainly possible, as the IPA category has shown flexibility with English style IPAs, West Coast IPAs, imperial IPAs, and more. This leads to point three…
- Experimentation around the IPA category will continue. One reason that IPA sales have caught up to seasonal sales, is that like seasonals, the variety of the IPA category has exploded. Single-hop IPAs, IPLs (India pale lagers), white IPAs, and black IPAs are likely just the tip of the iceberg. If the history of craft brewing has taught us anything, it’s that brewers will continually find new ways to innovate – particularly when it involves putting hops where no hop has gone before. While this will create new headaches for analysts like me trying to track the industry, it should be an exciting 2014 for hopheads.
Bart Watson December 20, 2013