How Craft Breweries And Beer Bars Prevent Foot Traffic From Going ‘Flat’
Millennials are changing the way wine is consumed. But does that ring true for craft beer? Foursquare's foot traffic analysis suggests that it is.
Americans spent more than $37 billion on beer at retail stores in 2016, according to a Nielsen report on the beer industry last spring. To put that into perspective, Americans spent just over one-third as much ($12.5 billion) on water — the most consumed beverage globally.
Beer sales also outpace those of wine and spirits—the other two categories in the adult beverage space.
Over the past 20 years, the craft beer industry has exploded. But as the industry matures, it also has to contend with a common symptom of success: an increasing crowded marketplace, Foursquare analysis of foot traffic trends at craft breweries and beer bars has found.
In a larger sense, as a pessimistic WSJ story this summer showed, brick-and-mortar retail sales of craft-style beers slipped by $143 million to $2.3 billion in the first half of 2017. The WSJ, citing data from Nielsen, added that craft beer shipments had been rising steadily by double digits for several years, even as overall beer sales fell.
Still, the demand for craft beer appeared to — pun intended — to flatten and last year.
But as the Foursquare analysis points out, different parts of the beer sales sector are having varying degrees of success of attracting visits and sales.
Foursquare looked at the relative popularity of beer overall compared to the relative popularity in wine and spirits to track notable changes.
The location intelligence platform used two categories to represent each drink: breweries and beer bars for beer, vineyards and wine bars for wine, and distilleries and cocktail bars for spirits. Foursquare then compared each category’s relative share among users over the age of 21, over the last 32 months.
In terms of the results, it appears as though craft beer drinkers are continuing to expand in number.
Since 2015, foot traffic to craft beer-focused venues has increased its share by over 16 percent, going from 27 percent of foot traffic to over 32 percent. At the same time, wine share of traffic has declined 9 percent from 32 percent to 29 percent. Also, liquor share has declined 7 percent from 41 percent to 38 percent.
Craft beer is also the only drink that saw net positive growth in this time frame, Foursquare says in its Craft Beer Insights 2017 report.
“Since the beginning of 2015, we’ve seen more and more businesses jump on the brewery bandwagon, with a 50 percent increase in the number of active breweries,” Foursquare says. “Does this mean craft beer brands should branch out with a brewery arm tomorrow? Not necessarily.”
Although brewery foot traffic remains strong overall, Foursquare notes that an average of 25 breweries close their doors each month since 2015, echoing the issues in the Nielsen and WSJ reports mentioned above.
Those 25 or so breweries have also seen 50 percent less foot traffic than their successful counterparts per month, lasting an average of only 2.5 years in operation each, Foursquare says.
Industry analysts indicate that consolidation could be a factor in the closings. Over the last few years, established beer holding company brands have been buying out independent brewers (e.g., Heineken purchasing Lagunitas and Anheuser-Busch InBev’s absorbing Karbach Brewing Co.).
“At the same time, we see that average foot traffic per brewery has remained relatively constant,” Foursquare says. “So, it’s not necessarily that more folks are flocking to existing breweries—it’s that more of them are opening.”
Amid greater competition, the pressure is on beer marketers to differentiate and drive visits by enhancing the drinking experience from start to finish. Foursquare advises that can positively impact foot traffic for ailing businesses don’t always have to do with beer—a great happy hour or having an accessible urban location can keep places afloat.
Millennials On Tap
Just as the youngest Millennials turned 21 this year, the notion that this age demographic are changing the way wine is consumed is widely acknowledged.
Foursquare’s report poses the question: does that ring true for craft beer?
“Investopedia proposes that millennial craft beer love is an outright rejection of mass-produced brews, not only because it conflicts with showcasing individual identity but because ‘cheap’ beers aren’t so cheap anymore,” Foursquare says. “CNBC seems to think another factor could be that craft beer usually has a higher alcohol content, making it a more worthy purchase.”
According to Foursquare’s data, just under half of craft beer drinkers do skew in the Millennial age group.So it’s important to note their perceptions of the product.
“Our data confirms that Millennials are 45 percent more likely to prefer high quality over good value,” Foursquare says. “They also index high for enjoying booze in general, and are 3x more likely to prefer whiskey, vodka and gin. The challenge for marketers is to think not snoot but smart, with unbeatable product quality at reasonable prices.”
Among the other topline findings of Foursquare’s report:
- Craft beer is stealing market share:
- Foot traffic to craft breweries and other beer-specific venues has been on the rise since 2015, stealing share from wine and spirits-focused venues, (e.g., wine bars, distilleries), in the process.
- Relative to liquor and wine-centric venues, craft beer locations have increased their share of foot-traffic by 16 percent in the last two years
- Meanwhile, traffic to both liquor and wine-centric bars are in decline, relative to craft beer traffic— making beer the only beverage category to grow its share of the market.
Top Travel Destinations for Beers & Breweries — These are the destinations where Foursquare users traveled more than 150 miles from home to visit a brewery:
- Denver, CO
- Portland, OR
- San Francisco, CA
- Asheville, NC
- San Diego, CA
- 2018 — the year of the Lager?
- Based on first-party taste data from a combination of user-generated content and machine learning within the Foursquare City Guide app, Foursquare has indicated that Lager, Sour Beer and Double IPAs are increasing in popularity and are slated for top spots in 2018.