Craft Beer Industry Finally Recovers from Prohibition

Craft Beer Industry

Jan. 12, 2018 | 4

The craft brewing industry accounts for a sizeable chunk of the total US beer market. As more success is imminent for micro-breweries and craft beer brewers, we look back in history to see how the previously robust craft beer industry was altered by Prohibition.

Not long after craft beer became the primary alcoholic beverage in the late 1800s and early 1900s, anti-saloon and “dry” groups succeeded in establishing the Eighteenth Amendment, which forbade the manufacture, distribution, and sale of alcohol. Prohibition lasted 13 years (1920-1933), but in that relatively short timeframe, one of the most robust industries of the 20th century crumbled, and only recently, has it been able to recover lost ground.

The Craft Brewing Industry Now Boasts Impressive Sales

Today, the craft beer brewing industry is zipping along. Despite stagnant overall beer volume sales, craft brewer volume sales are growing 6.2%—accounting for 12.3% of the total US beer market.

The craft beer retail numbers are more impressive; sales rose 10%, amounting to $23.5 billion of the total US market (22%).

The industry’s success comes at the tail-end of a long dry spell. Below, we delve deeper into the history of craft- and micro-breweries in the United States.

The Beer Brewing Industry in the 19th Century

Without the influx of German immigrants in the second half of the 19th century, the United States might never have become a beer nation.

Seeking political and religious freedom, Germans arrived in the United States and settled predominantly in Pennsylvania and Wisconsin, among other states. Local breweries started producing small batches, and soon enough, the traditional German brewing techniques were shared across state lines. By 1890, beer surpassed distilled spirits as the preferred alcoholic beverage of Americans.

At the same time, major technological advances like the railroad and telegraph were underway, which helped boost beer distribution and turn some small breweries into big national businesses, such as Anheuser-Busch in St. Louis, Missouri and Pabst in Milwaukee, Wisconsin.

Goods and services became easy to acquire and sell. Nonetheless, transferring large kegs of beer proved too cumbersome for saloons. It was efficient to source and maintain a complete selection of competing spirits on their shelves, but it was impractical for saloonkeepers to keep competing beers on tap.

Brewers took the issue into their own hands by opening “tied houses,” saloons that were opened and financed by one brewery, and which the brewer provided advertising signs and paraphernalia for. This allowed brewers to guarantee an outlet and continuous sales funnel for their beer.

What started out as a savvy marketing move soon evolved into an unsavory blight on the American cultural landscape. The brewers were aggressive in their competitiveness, opening one saloon after another until some towns had a prolific number—up to one saloon per every 150 to 200 men. To persuade customers to drink, the saloons offered free salty lunches and permitted sideline vices on the premises, like gambling.

Many were displeased by the rowdiness encouraged by saloons, and in 1893, the Anti-Saloon Organization was formed. They, along with the Women’s Christian Temperance Union and other dry groups, eventually established the Eighteenth Amendment and snuffed out the flame of the US brewing industry.

After the 18th Amendment was ratified in 1933, the breweries that survived Prohibition quickly opened their distilleries and flooded the US market with their beers. Their resources allowed large brewers to grow production and acquire up-and-coming breweries that presented competition. Craft beer brewers were present but in small numbers.

In large part, it's the changed attitude of the 21st-century consumer that is responsible for the growth of the craft beer industry. For several reasons (such as organic preferences or out of support for socially-responsible companies), the American consumer is choosing local food and beverage producers to replace “big business” companies. It can be said that, like the slow-food movement, the craft beer resurgence lies in the public’s desire for sustainable, wholesome products that draw on age-old, traditional styles of production.

Without a doubt, it’s a new and enduring era for craft brewers in the United States.

Beer Brewers that Survived Prohibition

Prohibition-era cocktails and speakeasy dining trends celebrate the uninhibited bar culture that formed during Prohibition, but for brewers, there was little to celebrate. Beer required noticeably large quantities of ingredients and proved impossible to brew in secret like rum or whiskey. Soon enough, most were forced to shut down.

The handful that stayed open switched their production to a non-alcoholic product. Some breweries continue these non-beer lines, and one brewery even grosses higher sales with its other company!

  1. Anheuser-Busch switched production to make Bevo, a nonalcoholic malt, as well as ice cream, soft drinks, and truck bodies.
  2. Yuengling is one of the oldest US brewing companies and remained in business by entering the dairy market with the successful Yuengling Ice Cream and Dairy plant. The brewery produced ice cream until 1985 and started its ice cream production back up in 2014.
  3. Coors weathered Prohibition by opening a ceramics business called CoorsTek. Post-Prohibition beer sales remain among the highest in the United States market, but still, it does not top CoorsTek in sales. CoorsTek made $1.25 in sales in 2015 and is the largest engineered-ceramics manufacturer in the world.
  4. Schell’s Brewing Company used its beer-production factory to make candy and soft drinks during Prohibition.
  5. Pabst Blue Ribbon, like Coors, opened a successful alternate business. Based in Wisconsin, the brewery started making cheese, and in 1933, sold its Pabst-ett Cheese company to Kraft.

Although it took the better part of a century to get back on its feet, the craft brewing industry is as strong as ever, thanks in large part to your local community of beer lovers.

Equip your brewery with the right Brewery POS system to stay ahead of the competition.

Jan. 12, 2018 | BY Emma Alois

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