Craft beer industry enjoys resurgence

updated 5:23 p.m. ET March 27, 2006

PORTLAND, Maine - Like most small breweries, Gritty McDuff's went through a lull as sales of craft beer leveled off in the late 1990s. Now Gritty's and the craft beer industry as a whole are enjoying a resurgence, with sales growing at their fastest pace in a decade.

Production of craft beer — those specialty brews typically made in small regional or local breweries — grew by 9 percent last year, the biggest jump since 1996, when the microbrewery fad of the '90s was still going full tilt. Mainstream beer sales, meanwhile, fell slightly.

At Gritty McDuff's, production last year rose nearly 30 percent to more than 250,000 gallons.

Ed Stebbins, brewmaster and co-owner, said consumers are demanding more varied and full-flavored beers. At the same time, small breweries are putting out more consistent beers and are more business-savvy than a decade ago, learning how to better market and distribute their products, he said.

The 1990s were a boom time for the industry, with sales rising fast and even doubling in 1994. But growth slowed by the end of the decade, and hundreds of microbreweries and brewpubs went out of business.

The industry is growing again, but at more sustainable levels. Craft brewers, Stebbins said, don't need to grow at astronomical levels to be profitable.

"I think we've learned that the beer industry doesn't have to grow in leaps and bounds, that it will grow steadily and slowly," Stebbins said.

Americans last year bought more than 6.3 billion gallons of beer, dominated by pale, golden-hued varieties, according to Beer Marketer's Insights trade newsletter. The top five brands were Bud Light, Budweiser, Miller Lite, Coors Light and Natural Light.

But for consumers who demand more variety, there are craft beers. These beers, in general, are made with malted wheat or barley — without corn, rice or sugar adjuncts — and include ales, bocks, stouts, marzens, porters and other styles that can be light or dark in color and are typically more complex in taste.

They are often made in small batches and are more expensive — sometimes double the price — than the best-selling brands. Gritty McDuff's six-packs, for instance, usually sell for $6.99 to $7.99 at supermarkets.

The best-known craft beers are national brands like Samuel Adams or Sierra Nevada, but there are hundreds of small breweries nationwide that distribute their own brews locally and regionally. As of December, there were 1,368 breweries and brew pubs making craft beer, according to the Brewers Association trade group in Boulder, Colo.

Craft beer accounts for just 3.5 percent of U.S. beer sales, and imports make up 12.5 percent, said Eric Shepard, executive editor of Beer Marketer's Insights. But those numbers are going up, while the market share of mainstream beers is declining.

"It was a good year for the high-end (beers), and we'll see where this goes," Shepard said.

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