Craft beer industry enjoys resurgence

In the 1990s, craft beer sales took off and the industry was filled with optimism. Many breweries aimed for rapid expansion, and the most hopeful thought the industry could claim 10 percent or more of the U.S. beer market.

But the market became saturated, growth stalled and craft beer production grew at rates from 0 to 4 percent a year from 1998 through 2003. More than 500 brew pubs and microbreweries closed between 2000 and 2004, outpacing the number of startups, according to the Brewers Association.

The business is now on an upswing, with production up by about 7 percent in 2004 and 9 percent last year, according to the association. Overall beer sales in 2005 fell 0.2 percent in volume, according to Beer Marketer's Insights. Sales of wines and spirits last year grew by less than 3 percent in volume, according to industry organizations.

In Seattle, Georgetown Brewing Co. doubled its production last year to about 186,000 gallons. Georgetown's beers, a pale ale and a pilsner, are sold at more than 380 bars and restaurants, or about double the number of a year ago.

Just like coffee drinkers, beer drinkers' tastes are changing, said Bret Chopp, operations manager and partner at Georgetown.

"I think it's a maturing of the customer base," Chopp said. "First of all people didn't know there was anything out there, and once they tried it they like it."

The aging of America helps to explain the market shift, said Ray Daniels, director of marketing for the Brewers Association. Baby boomers are edging up toward senior status, and the median age of the U.S. population grew from 32.8 in 1990 to 36.2 in 2004, according to the Census Bureau.

"I think ultimately as consumers get older their tastes are more sophisticated," Daniels said. "And that's a big part of the growing interest in the category."

Much of the craft beer growth is coming out of regional breweries _ rather than brew pubs that have tiny breweries on the premises. It's the breweries that produce the bottled beer and kegs for restaurants, bars and retail stores.

In Maine, more than two dozen companies of varying sizes brew their own beer. They made nearly 3 million gallons last year, a 30 percent increase in three years, according to the Bureau of Alcoholic Beverages.

Gritty McDuff's _ the third-largest brewer in Maine behind The Shipyard Brewing Co. and D.L. Geary Brewing Co. _ has most of its sales in Maine, but its out-of-state markets are growing. It now sells beer in 70 stores and bars in Massachusetts, up from less than 20 a year ago. This spring, its products will be sold in New Hampshire for the first time.

Distributors are taking greater notice of craft beers, Stebbins said, making it easier to get Gritty's beers on store shelves and in bars.

"They see the numbers. They see the trends," he said. "So they're planning their marketing around those trends."

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