Over 14,000 industry members of all stripes, colors and sizes descended on Nashville last week for the Craft Brewers Conference, the annual conference hosted by the Brewers Association (BA).

The mood was mixed between good-vibe-enthusiasm and an aura of pending doom. The good vibe was fueled by beautiful spring weather, abundant live music, food and beer and the gathering of friends. But the conference also offered an honest look at the slowing growth, massive industry overcapacity, hyper-competitive landscape and many external pressures beginning to pound on the industry.

BA-defined craft brewery sales were up 5% (down from 6% growth in 2016) and reached a 12.7% market share by volume (23% by dollars).

But growth is almost entirely coming from the bottom and from the new. Breweries who have been in business five years or more grew by only 1.3% while those who have opened since 2014 grew 52.6%. And size stood out well, with breweries larger than 15,000 bbls/year (defined as “regional” breweries by the BA) collectively grew only 1% while “microbreweries” (distributing breweries smaller than 15,000 bbls/year) grew at 17%. One of many shocking numbers was the amount of excess capacity in the industry. Bart Watson, chief economist for the BA who presented the annual State of the Industry presentation alongside BA director Paul Gatza noted that total excess capacity was now sitting at 56-57% - a key warning sign of pending down trends. And Bart had a word of warning for the high-flying newer breweries; “I urge you to build in realistic expectations for your business. While you’re growing fast now, don’t expect that you’re going to beat the odds when so many older and more experienced breweries were not able to.”

Both Bart and Paul pointed out multiple external pressures which could impact future growth rates for the industry, which include competition from cannabis, wine and spirits and threats to brewery tasting rooms from wholesalers and retailers. But possibly the most significant pressure point will be fact that people aren’t drinking as much as they used to. Many in the industry are now seeing the next generation coming into drinking age as drifting away from alcohol consumption, something that may significantly impact the overall alcohol beverage industry over the next 5-10 years.