Tracing the History of Craft Beer

Tracing the History of Craft Beer

In the early 1980s, Lew Bryson was a young beer drinker who was eager to try something new, something that wasn’t his father’s mass-market suds and fizz. He had stumbled on a new style—flavorful, intense, and made in small batches by home brewers as well as small companies that weren’t much bigger than home brewers. He loved it.

“I really got a taste for it,” says Bryson, today a well-respected author, analyst, and critic who works in craft beer and craft spirits. “But I remember talking to an older editor about it, about the beer I had found. And he said, ‘Don’t get used to it. It will be going away soon. It’s just too different.’”

Which, as Bryson says with a laugh, is not what happened. That “too-different” style turned into the $28.4 billion craft beer business, which now accounts for almost one out of every four dollars spent on beer in the US. Craft beer’s variety is dizzying—not just for the styles and approaches brewers have taken, but for the category’s eccentricities. How about a craft beer that imitates a Big Beer brand? Or one that bears a surprising resemblance to a pumpkin spice latte? Or the latest achievement, a nonalcoholic brew, which seems antithetical to the ethos of craft beer?

Through all this, the craft business has not only become an integral and respected part of American beer but kept the world’s biggest beer companies watchful of its gains. This is not to say that the path to success was easy. There were more than a few bumps along the way, some detours, and even a few corporate train wrecks. But just because it was a long, strange trip doesn’t mean it wasn’t fun—or that it’s anywhere close to being over.

Julia Herz, the executive director of the American Homebrewers Association, has worked in craft beer for 30 years, as a marketer, educator, writer, and home brewer. “Yes, we’ve grown up,” she says, “but craft beer is all about exploration, and there is so much more exploration to do.”

History Lesson

To understand the modern craft beer industry, it is important to understand the beer landscape of the early 1980s. The US beer business was dominated by a handful of national companies, and the 10 largest controlled 93% of the market. There were fewer than 100 breweries in the entire country, and that total had been steadily declining since the end of World War II. None of those brands could be classified as craft. The biggest beer news in that period was not about an upstart entrepreneur threatening the status quo; rather, it was about Coors—among the 10 biggest companies, making the exact same style of beer as the other top 10—expanding east of the Rocky Mountains.

Bill Owens, an early pioneer in the craft beer industry, explains, “We wanted to make beer that had flavor.” Owens has been a brewer, business owner, publisher, and author. His book How to Build a Small Brewery, with its host of legendary hacks, such as turning a camping cooler into a mash tun, remains a classic. He continues, “We didn’t want any corn or rice in it, and we had tasted the greatest beers in the world, and we knew we could make a better beer in the US than [what] was out there.”

It’s generally agreed that two events provided the spark for craft beer’s birth. The first came in the mid-1960s, when Fritz Maytag, an heir to the appliance fortune, saved San Francisco’s Anchor Steam Brewing Company from bankruptcy. Initially, he purchased 51% of the company, and he bought the rest four years later. Anchor Steam had been one of the few West Coast breweries to survive Prohibition, but its reputation had far exceeded its capacity by the time Maytag took control. It was best known for steam beer, also called California common, which was made almost exclusively on the West Coast. This style was more malty and fruitier than other beers of the era, with hints of the hop bitterness that would become a craft trademark.

Maytag revitalized Anchor Steam’s operations, centered the business on its steam beer heritage (even trademarking the name of the style), and added a variety of styles that would eventually become craft staples. This included a porter in 1972, reportedly the first in the US since Prohibition.

The second event was in 1978, when President Jimmy Carter signed a bill legalizing home brewing. The law overturned the Prohibition-era ban on making beer at home, and the response, explains Herz, was overwhelming. Suddenly, people could legally make beer in their basements and garages; experiment with different flavors, styles, and techniques; and figure out what worked and what didn’t. Within the year, Charlie Papazian founded the American Homebrewers Association, and, soon after, there were thousands of experienced brewers in the US.

Coincident with this, says Owens, was an increasing knowledge of European beer. In the late 1970s, Michael Jackson published The World Guide to Beer, which told American craft enthusiasts what to look for in Britain and on the Continent, and especially in Belgium and Germany, where beer was part of the culture.

Herz recalls traveling to Europe during this period. “We’d come back talking about beer,” she says, “and we’d want to know why we couldn’t make that kind of beer in the US.”

And then they did. In 1980, Ken Grossman, a home brewer in Chico, California, made five barrels of stout; his company would become Sierra Nevada Brewing Co., which is still family owned. In 1984, Boston Beer, perhaps the first craft beer that the typical beer drinker had heard of at the time, released its inaugural Sam Adams product. The next year, Larry Bell brewed an amber ale for a company he called Kalamazoo, the name of the city where he lived in Michigan. Today, it’s Bell’s Brewery.

By 1994, there were nearly 500 companies making craft beer in the US, according to figures from the Brewers Association trade group. This rapid industry growth must have been shocking at the time, given the steady decline in breweries over the previous 50 years. The beverage world would never be the same.

Cooperation and Innovation

When speaking to craft brewers, it’s evident how much they learn from each other. They talk about exchanging ideas, they give credit to other brewers, and there is a sense that everyone is in this together. It’s almost fraternal, a business where outsiders can be viewed with suspicion.

“I’ve seen so many trends come and go since we started in 1987,” says Russ Klisch, the president, founder, and owner of Milwaukee’s Lakefront Brewery. “Craft has gone from imitators to innovators. It’s not just ales and pilsners anymore. We’re creating our own styles, and not just copying other beers.”

If any one principle can be called the craft mantra, it’s innovation. In this industry, creative ideas have consistently been rewarded. Exemplifying this are beers such as Goose Island’s Bourbon County Brand stout, the first beer aged in whiskey barrels, released in 1995; and Russian River Brewing’s Pliny the Younger, a triple IPA, for those who didn’t think a double IPA was enough, launched in 2005. Beers like these attracted global attention. At the 2023 Australian International Beer Awards, US producers won 95 awards, including 17 gold, and, in 2021, US beers received 33 medals, including 8 golds, at the Brussels Beer Challenge.

Even business approaches have been innovative. Beginning about a decade ago, nomad brewers became increasingly common. They typically didn’t own equipment, instead leasing it from existing craft houses to make beers in very limited editions. Some nomad brewers, such as Brian Strumke of Stillwater, and Jeppe and Maria Jarnit-Bjergsø of Evil Twin, became industry icons.

The most recent major innovation is nonalcoholic beer. It’s notable that a business built around adding flavor—which has often meant increasing alcohol to new levels—found a way to make beer without alcohol that still has flavor.

“Things have changed a lot over the years,” says the retailer Greg Ramirez, whose Exton Beverage Company, in Pennsylvania’s Delaware Valley, stocks thousands of beers from around the world and prides itself on its US craft inventory. “It used to be, we’d have two or three hazy IPAs. And then everyone would make them. So someone would make a Wisconsin-style IPA, or there would be a resurgence in pilsners. . . . The sheer amount of craft breweries and small breweries means everyone is always being creative and morphing styles together.”

Central to this connectivity is the annual Great American Beer Festival, first held in 1982. The Denver event is part trade show, part Academy Awards, and part college class reunion (with the requisite drinking sessions), but the focus is on what’s happening in craft beer. The festival is about exchanging ideas, tasting products, and then going home and making something different. Hundreds of breweries and tens of thousands of people attend every year, even in a down year like 2023.

Too Much Success?

The reasons for the decreased attendance at the 2023 festival, complicated and tangled, highlight where craft beer is today, how it got here, and what comes next.

“The last 10 years, there has been a bit of a roller coaster,” says Kary Shumway, the chief financial officer for Wormtown Brewery, in Worcester, Massachusetts. “It used to be easy for folks to make money. Nowadays, it’s still a good business, but the consumer is more fickle than ever before, and they’re less loyal, and they seem to be less interested in exploring.”

Beer Association figures reflect this change. The number of craft producers may have finally leveled off at almost 10,000, after nearly 30 years of growth. For the first time in craft’s history, the number of businesses that opened and closed in 2022 was roughly equal. Production and volume sales were flat between 2022 and 2023, and, although dollar sales increased by 5%, the association credits that to price increases and growth in on-premise beer sales, which reflect a higher markup. The craft beer industry is facing some of the same pressures as other alcoholic beverages: an aging customer base, a decline in drinking among younger consumers, higher prices, and too many choices.

This is not the first time craft beer has stumbled, of course. At the turn of the century, around the time the dot-com bubble burst, the chain brewpubs that intended to bring craft to the masses—companies such as Rock Bottom, Gordon Biersch, Iron Hill, and BJ’s—imploded. It was possible to buy restaurant equipment for pennies on the dollar, says Bruce Allar, who edited a restaurant trade magazine at the time. It might have been the recession that led to these failures, or it might have been a poor business model requiring pricey equipment that sales couldn’t support.

In one respect, industry veterans like Owens were glad to see the chains go, considering them more a hindrance than a help. But, as many analysts noted at the time, the chains provided the craft beer business with a promising national footprint. As Jim Vorel, a beer journalist, wrote recently, “In the 1990s, these places were often bastions of beer culture, islands of eclectic choice in a sea of casual restaurants that were entirely ignoring the growing craft beer industry.”

And yet, by 2010, the industry had recovered so well that Big Beer, faced with flat sales and a declining customer base, figured the easiest fix was to buy, buy, buy. Anheuser-Busch purchased Goose Island for $38.8 million in 2011; it would later spend $221 million for several other craft companies. Constellation Brands bought Ballast Point for $1 billion in 2015. Also that year, Heineken bought half of Lagunitas Brewery for as much as $500 million. Finally, the Japanese giant Sapporo Holdings acquired Anchor Brewing, the corporate successor to Maytag’s Anchor Steam, for approximately $85 million in 2017.

That craft and Big Beer weren’t a good fit seems obvious today, especially after most of those deals backfired. Anheuser-Busch sold most of its craft purchases, Constellation unloaded Ballast in one of the greatest debacles in the company’s history (receiving what one analyst estimated as just $100 million), and Sapporo closed Anchor—without, apparently, even trying to find a buyer.

There were many reasons for these failures, explains Jon Reynolds, a beer marketing consultant: top-down Big Beer business methods that conflicted with the much more independent practices of craft beer founders; overpayment for businesses that would never be able to recoup the money (a key criticism of the Constellation-Ballast deal); and perhaps even resistance from the craft beer audience. If craft beer existed as an alternative to Big Beer, why would aficionados buy a craft beer made by Big Beer?

Still, says Herz, that was hardly the end of craft. And, she says, neither are the current troubles, because there are qualities about craft that endure: “We’re local, and there is an integrity to that. And our customers know that and appreciate that.”

Marketers say the business is hardly moribund. There is too much innovation, and too many people who care deeply and passionately about the product, for craft beer to fail. Despite modern challenges, they believe craft beer is better positioned to navigate its problems than wine, spirits, and Big Beer. Its audience, if fickler than it once was, still champions craft as more unique than other beverage categories.

And, perhaps, the next sort of hazy, almost Wisconsin-style IPA to reinvigorate the market is just around the corner.

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Solomon, Brian. “Lagunitas Brewery Sells 50% Stake to Heineken to Fuel IPA Ambitions.” Forbes, September 8, 2015.

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