A Very Good Year for Beer

There's no doubt that we're in a beer economy--but it turns out no matter how tough the times, Americans have grown picky about their brew.

Sales of premium craft beers grew almost 6 percent last year, according to the Brewers Association, while imported beer sales dropped 3.4 percent, and mass-market domestic brands grew just 0.6 percent.

"Craft beer is an affordable luxury," says Dave Thibodeau, president of Ska Brewing in Durango, Colo., who reports a 41percent increase in Ska's bottled and canned beers this year. "And with craft beer, once you've been there, it's pretty hard to go back."

Thibodeau says the increase in sales of canned and bottled beer is much higher than that for Ska's draft, which is up just 14 percent--the result, he says, of customers choosing six-packs over more pricey drafts at the bar.

Another part of the appeal, says Julia Herz, director of the craft beer program of the Brewers Association, is that "younger generations identify with the brand in their hand, and people are relating to locally produced beers. Imports had to travel far to get here, and people are making the choice to lessen their footprint."

While it's all foamy good news for now, craft brewers endured hard times not long ago, starting in 2007, when they were hit by what Herz calls the perfect storm: The price of hops went up nearly 500 percent, while malts' increased nearly 100 percent. Glassware also got more expensive.

Craft beers' rising sales have come just in time for many small brewers, who may be the only ones raising a glass to the sagging economy.

This article was originally published in the October 2009 print edition of Entrepreneur with the headline: A Very Good Year for Beer.