Is the Craft Beer Bubble Beginning to Burst?

CHICAGO — Growth of the craft beer market is starting to slow after several years, prompting some formerly successful breweries to downsize as competition between new brands gets tougher, according to a Chicago Tribune report.

Anheuser-Busch InBev (AB InBev) acknowledged on Oct. 28 that the craft segment has been decelerating for more than three months. The world's largest brewer also predicted that industry volumes in the United States will decline this year in spite of previous expectations that they would see improvement.

"There's a natural point where it can't grow anymore and this might be it," Anthony Bucalo, an analyst at HSBC, told the Tribune. "Consumers are overwhelmed by too much choice; the industry has been swamped. There's too many brands, too many styles, not enough quality."

Even longtime craft beer stalwarts such as 20-year-old Stone Brewing, based in Escondido, Calif., and the Craft Brew Alliance Inc., owner of Woodinville, Wash.-based Redhook Brewery, have cut down on their number of workers.

Part of the segment's difficulties come from the large number of craft beer breweries fighting for shelf space and consumer dollars. In June, the number of craft breweries hit a record of 4,656, but the volume of beer produced is growing at half the 18-percent rate it saw two years ago, according to the Brewers Association.

The huge amount of choices could be a turnoff to some consumers, according to AB InBev CEO Carlos Brito.

However, many larger beer companies have bought stakes in craft breweries or purchased them outright, and some of those brands are still seeing strong growth, noted AB InBev Chief Financial Officer Felipe Dutra.

"We see a very recent slowdown in the craft industry. It's still too early to say whether there's a trend," Dutra said.