On March 17, millions of Americans celebrate St. Patrick’s Day with festivities full of shamrocks, leprechauns, parades and beer. While Guinness, an Irish beer, remains a popular choice on this holiday, consumer tastes have been trending toward artisanal beer with finer ingredients and a wider variety of flavors than traditional beers. Over the past five years, craft beer and cider have been the fastest-growing alcoholic beverage industries. With a little luck, these industries are expected to cash in this St. Paddy’s Day with a variety of seasonal and festive packaging and promotions.
Craft beers are typically produced in local microbreweries that boast quality ingredients, a high degree of expertise and attention to detail. While changing consumer tastes have fueled the craft beer craze, the deregulation of intrastate alcohol distribution and retail laws has also significantly contributed to its surging growth. Over the five years to 2017, the Craft Beer Production industry is expected to grow at an annualized rate of 14.8% to $6.2 billion. Moreover, Americans have been steadily consuming more alcohol over the past five years; IBISWorld projects per capita expenditure on alcohol in the United States will increase at an annualized rate of 0.4% over the same period. To capitalize on the St. Patrick’s Day festivities, many craft breweries will host special events and promote limited edition batches for the holiday.
The Cider Production industry produces both alcoholic and nonalcoholic cider traditionally made of fruits like apples and pears, or other nontraditional fruits, such as cherries. Cider has experienced a resurgence over the past five years as consumers explore alternative alcoholic beverages to traditional beer, wine and liquor products. Since this industry also includes nonalcoholic beverages, it captures the niche of party-goers who are either underage or prefer not to consume alcohol. Moreover, cider is typically marketed as a more palatable alternative for those who dislike beer. Cider Production industry revenue is expected to increase at an annualized rate of 26.3% to $304.4 million over the five years to 2017. Although this growth is faster than craft beer production, data suggests that the popularity of cider has reached a plateau and that industry growth will significantly slow in the years to come. Despite the fact that St. Patrick’s Day is usually associated with beer, many cider producers have increasingly used seasonal labeling and promotions to cash in on the celebration.
While both industries have experienced a boom over the past five years, IBISWorld expects only craft beers will be able to sustain the high growth rates over the next five years. The Cider Production industry is projected to increase at an annualized rate of 1.3% to $324.3 million over the five years to 2022, while the Craft Beer Production industry is expected to grow at an annualized rate of 3.6% to $7.5 billion over the same period. Large breweries are expected to engage in significant mergers and acquisition activity over the next five years to add both craft beer and ciders to their large and diversified portfolios. The Breweries industry is consolidating quickly, as evidenced by the major Anheuser-Busch InBev acquisition of SABMiller in late 2016, in what is being reported as the third-largest acquisition in recent history. The success of craft beers and ciders this St. Patrick’s Day will highlight their value for acquisition by large breweries.