US Craft Beer Industry Faces Decline but Reveals Growth Niches
The US craft beer market in 2025 continues to grapple with contraction, as the number of operating craft breweries declined by 1% from the previous year to 9,269, according to the Brewers Association’s Midyear Report (Craft Brewing Business, 2025). Microbreweries experienced a steeper 3% decrease, while taprooms dipped by 1%. Production volume nationwide shrank, with estimates showing a 5% year-over-year decline, largely affecting distribution-focused breweries. Conversely, taprooms and brewpubs maintained slightly better production performance, outpacing distribution peers by 1 to 2 percentage points.
Small-Scale and Hyperlocal Brewers Thrive
Notably, approximately half of surveyed craft brewers reported growth despite the downturn, with smaller breweries producing under 1,000 barrels annually faring best, as half saw production gains versus 43% in decline (Craft Brewing Business, 2025). Hyperlocal brewery models with on-site taprooms and brewpubs, which constitute 73% of craft businesses but only 15% of volume, reveal greater resilience amid the broader market contraction. This suggests localized consumer engagement and experience-driven sales models offer a competitive edge.
Cincinnati’s Third Eye Brewing Defies Industry Trend
An example of localized success is Cincinnati-based Third Eye Brewing Co., which expanded production by over 160% in 2024, increasing from 1,273 barrels to 3,385 barrels (Cincinnati Business Courier, 2025). Founded in 2020, Third Eye leveraged strong local community ties and rapid expansion to leap from the 16th largest brewery in the region to the 9th, outperforming many peers during a time of industry-wide challenges.
Rising Health Consciousness Spurs Demand for Low- and Non-Alcoholic Beers
Health trends continue shaping craft beer consumer preferences globally. There is growing demand for lower-alcohol and non-alcoholic craft options, driven by increased health awareness and wellness priorities (IMARC Group, 2024). Craft brewers agilely respond by developing light beers and artisanal non-alcoholic variants that maintain flavor depth. Reports indicate that health consciousness metrics rose by 0.5% to 111.4 index points in 2024-25, correlating with reduced smoking rates and moderate alcohol intake. This shift broadens beer’s appeal among those previously inclined to avoid alcohol, strengthening a new consumer segment.
Consumer Trends Favor Premiumization and Value
In the on-premise beer market, consumer behavior in 2025 shows strong visitation rates, with over 75% dining out and half visiting bars monthly (Craft Brewing Business, 2025). Key drivers include a preference for premium quality products and health-conscious options. About 20% of consumers plan to spend more on higher-quality food and beverages, while nearly 50% prioritize value for money, and 30% seek deals and promotions. Craft brewers have growth opportunities by pairing unique food and beer experiences, aligning with current consumer priorities.
Illinois Highlights Local Ingredient Focus with Farm Progress Show Collaboration
On the innovation front, Illinois-based Riggs Beer Company, partnered with the Farm Progress Show to launch a limited-edition lager showcasing locally grown grains and hops, debuting at the event from August 26-28 (Farm Progress Show, 2025). This initiative underlines the industry’s focus on provenance and agricultural collaboration to enhance product storytelling and consumer connection.
Cannabis-Infused Beverages Emerge as an Adjacent Trend
Although data remains preliminary, cannabis-infused drinks are poised for growth in the US market, blending with craft beverage culture (Hop Culture, 2025). New laws, like Minnesota’s permission for taprooms to serve THC-infused drinks, are expanding product categories and consumer choice. This nascent “fifth category” reflects broader shifts toward relaxation and hangover-free alternatives, potentially affecting future beer consumption patterns.
Overall, while the craft beer landscape encounters contraction challenges, consumer-driven innovations, localized business models, and health-aligned product development signal areas of continued vitality and market adaptation in 2025.