The craft beer industry, once the darling of consumers and entrepreneurs alike, has faced unprecedented challenges in recent years. Closed taprooms, canceled festivals, and changing consumer habits have led many to declare the end of its golden era. But is the craft beer party truly over – and with it, the artisanal movement as a whole? A bold new study, “Trouble brewing: Craft ventures during market disruption,” by Ivey Business School professor Andreas Schotter and his American colleagues, argues otherwise.
From the toast of the town…
For years, craft beer was the toast of the town, with a meteoric rise that rewrote the rules of the brewing industry. By 2019, it claimed an impressive 10.1 per cent of beer consumption in Canada and 13.6 per cent in the U.S., becoming a cultural phenomenon. The industry prided itself on tradition and individuality, a collective of small-scale brewers who stood as the scrappy David to Big Beer’s Goliath. With their hands-on craftsmanship, endless creativity, and a uniquely collaborative spirit, craft brewers built an identity rooted in authenticity and community. Yet, behind the scenes of this golden age, an unexpected shift was fermenting.
…to the last call for craft?
Just as craft beer reached its zenith, the COVID-19 pandemic struck, shaking the industry to its core. Sales plunged, and small breweries – the soul of the craft movement - were hit hardest. The once-vibrant spirit of collaboration unraveled as businesses fought to stay afloat.
And it’s here, in the eye of one of history’s greatest disruptions, that Schotter and his colleagues found their inspiration. Driven to understand how disruptions shape craft ventures, they immersed themselves in in-depth interviews with brewery stakeholders and conducted a thorough analysis of industry data. What they discovered was unexpected: the craft sector isn’t going stale. Instead, it’s evolving, undergoing a profound transformation that could redefine the very meaning of "craft."
The great craft shakeup
Like industries across the globe, COVID-19 exposed critical vulnerabilities within the craft beer sector. Of these, Schotter highlights three that had long been brewing beneath the surface:
- David becomes Goliath: In the craft world, smallness was the hallmark of authenticity, with purists casting doubt on brands who had invested in larger operations. Yet, it was these small, independent companies that proved most vulnerable in crisis, while the bigger players’ growth became a vital lifeline.
“It leads us to question: in today’s craft landscape, does size erode authenticity? Or might it just be the key to survival?” asked Schotter. - The comfort in the known: The industry's passion for novelty – a defining trait – suddenly gave way to a craving for consistency and familiarity throughout the pandemic. In uncertain times, consumers sought comfort in trusted brands and classic styles, challenging the industry's reliance on constant innovation.
- The collaboration myth: In crisis, the "rising tide lifts all boats" mentality that defined craft's early days has been put to the test. As resources became scarce, many businesses turned inward, focusing on self-preservation – raising uncomfortable questions about the limits of collaboration in a maturing industry.
The craft industry grows up
While these trends seem to challenge craft’s essence, Schotter counters that they instead point to an industry – and a broader movement – that's growing up. “The idealism of craft's early days is giving way to a more nuanced, resilient approach to artisanal business,” he says.
To support craft enterprises in building resilience and adapting to this evolving landscape, Schotter outlines a series of strategic recommendations:
- Embrace scale smartly: Growth doesn't have to mean selling out. Craft businesses need to find ways to scale that preserves their ethos while building resilience against future shocks.
- Redefine innovation: Innovation isn't just about the product, it's about the business model. Craft industries need to innovate in how they reach customers and deliver experiences, not just in what they produce.
- Reimagine collaboration: The spirit of collaboration isn't dead, but it needs reimagining. Strategic partnerships that go beyond feel-good gestures to create real value will define the next phase of craft industries.
- Reclaim real: As craft businesses grow, they need to find new ways to maintain the connection with consumers that made them special in the first place. This might mean leveraging technology to create personalized experiences or doubling down on local engagement even as distribution expands.
The craft party isn't over, but the venue has changed
As global markets regain stability, Schotter’s team is noticing the stirrings of a craft revival, but it’s far from business as usual. The pandemic’s aftershocks, coupled with shifting consumer preferences, have flung the doors wide open to a new wave of players – ones who aren’t necessarily bound by the traditional rules of craft.
With competition intensifying and the old playbook tossed aside, Schotter acknowledges that the path ahead will be daunting for entrepreneurs in this space. Success will demand experimentation, resilience, and a willingness to rewrite the rules. He calls on craft businesses to embrace creativity, striking a balance between artisanal passion and business savvy, authenticity and adaptability. Those who dare to embrace new approaches will be the ones to shape their place in this evolving world.
“Be it in beer, furniture design, or artisanal chocolates, for entrepreneurs the message is clear: the craft party isn't over, it's just moving to a bigger, more interesting venue. The question is, are you ready to adapt and join the celebration?”
Thirsty for more insights into the craft beer evolution? View the full details of Schotter’s study: “Trouble brewing: Craft ventures during market disruption,” in the November 2024 Journal of Business Venturing.
