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As U.S. Craft Market Cools, Brooklyn Brewery Pursues New Growth Avenues

June 9, 2017

One of the pillars of the craft beer movement, New York-based Brooklyn Brewery has enjoyed nearly three decades of success, rising to become the 12th-largest craft player in the U.S., according to the Brewers Association. The company, which has annual volume of roughly 300,000 barrels, currently distributes across 27 states, with most of its U.S. business concentrated in the Northeast. With the U.S. craft beer boom starting to lose steam, Brooklyn Brewery is hedging its bets by complementing its U.S. business with significant investments overseas.

“The craft beer market is slowing down in the U.S., but it’s not because of lack of interest from the consumer standpoint,” says Brooklyn Brewery CEO Eric Ottaway. “With over 5,000 craft breweries in this country, plus certainly hundreds if not thousands of imported beers, we’ve completely overwhelmed the consumer. There is such a thing as too much choice.”

Ottaway says Brooklyn carved out high single-digit sales growth in 2016, marking a deceleration from an average of 15% annual growth over the past six years. That performance mirrors the broader craft beer category in the U.S., which grew about 8% by value in IRI channels last year, compared with a 23% jump in 2015.

With the U.S. craft market primed for a shakeout, Brooklyn is holding off on entering new states for now, opting instead to widen its international footprint. The brand is currently present in more than 30 countries, with Sweden, the U.K., Norway and France among its largest export markets. Much of the brewer’s global success has been built via strategic partnerships, including tie-ups with Denmark’s Carlsberg and Italy’s Amarcord Brewery. Last October, Brooklyn announced that Japan’s Kirin had taken a 24.5% stake in the brewery for an undisclosed sum, with Kirin pledging to support global growth as the two companies establish a new joint venture in Japan.

“We knew that if we were ever going to penetrate some of these Asian markets, we’d have to do so from the inside, and Japan is a great example,” says Ottaway. “Imported beer and craft beer are each less than 1% of the Japanese market, but mainstream beer is on the decline and the only growth is happening in craft.” Brooklyn Brewery is also on the move in South Korea, linking with entrepreneur Hyukkee Moon to establish Jeju Brewing Co. Jeju marks Brooklyn’s third sister brewery project, joining its Nya Carnegiebryggeriet facility in Stockholm and E.C. Dahls brewery in Norway, both founded in partnership with Carlsberg.—Christina Jelski 

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