• The specialty espresso and craft beer industries have adopted related trajectories over the past 20 years, experiencing explosive development within the early 2010s.
• However right now, market consolidation, quickly altering shopper preferences, and rising retail costs are reshaping each.
• Six main manufacturers now produce roughly half of the world’s beer. In 2024, the variety of unbiased breweries that closed was better than the quantity that opened within the US alone.
• Gen Z consumes about one-third much less beer and wine than earlier generations, and can be shifting towards alcohol-free drinks at a considerably increased fee.
• There are classes from this for specialty espresso roasters; steadiness innovation with accessibility, premium positioning with worth supply, and novelty with consistency.

The specialty espresso and craft beer industries have lengthy shared a pursuit of high quality, innovation, and artisanal excellence – and thrived consequently. However lately, each have confronted related challenges which might be reshaping their respective markets.

Between 2024 and 2025, the UK alone misplaced over 100 unbiased breweries. Rising retail costs, market consolidation, and the surge in non-alcoholic choices as Gen Z curbs their alcohol consumption imply craft breweries are struggling greater than ever.

Specialty espresso, in the meantime, is grappling with related predicaments: file inexperienced espresso prices, provide chain volatility, a string of mergers and acquisitions, and quickly altering shopper calls for.

Inspecting craft beer’s latest struggles may then supply invaluable perception for specialty espresso’s future trajectory.

Erik Busch of LongStory Espresso, former head brewer Sam Jory, and Arne Jach of Braukon share their views.

You may additionally like our article on why craft beer and specialty espresso are extra related than we realise.

The parallel paths of specialty espresso and craft beer

The connection between specialty espresso and craft beer extends past occasional collaboration – assume espresso stouts or cascara sours, for example. Each industries constructed their foundations on high quality, small-scale manufacturing, and an appreciation for artisanal excellence.

Across the identical time Erna Knutsen coined the time period “specialty espresso” within the Nineteen Seventies, the microbrewery scene emerged, most notably in markets just like the US and the UK. At first, “microbrewery” solely referred to the scale of a enterprise, but it surely rapidly began to mirror a extra artisanal, intentional strategy to brewing – just like the ethos of micro and nano roasters, which proliferated within the early 2010s.

The time period “craft brewing” thus grew to become synonymous with “microbrewing”, representing small, independently owned industrial breweries that emphasise flavour and high quality – once more, very similar to specialty espresso roasters.

“Maybe the obvious similarity is that each industries produce two of the few broadly consumed authorized stimulants – caffeine and ethanol,” says Arne Jach, the Brewmaster Worldwide Assist Staff at Braukon in Seebruck, Germany, a brewing and beverage gear provider.

“The shopper bases additionally overlap. Many individuals who get pleasure from craft beer or specialty espresso are prepared to pay a bit of extra for higher high quality and sometimes desire to assist unbiased or native companies, particularly people who prioritise sustainability,” he provides.

Much like specialty espresso, many components affect the ultimate flavour profile of beer. These vary from the standard of the grains, hops, and yeast to the completely different processing strategies (together with the fermentation stage) that brewers use.

Moreover, there’s additionally a shared proclivity for extra fascinating, distinctive flavours. Simply as many craft beer fans get pleasure from fruity, herby IPAs and “funky” Goses, specialty espresso shoppers have more and more embraced modern experimental processing methods that end in extra unorthodox tasting notes. 

This shared shopper psychology has created a cross-pollination impact, with specialty espresso drinkers usually changing into craft beer fans and vice versa.

Why craft beer is struggling

Each specialty espresso and craft beer have lengthy been staunch advocates for high quality and flavour innovation, catering to shoppers in search of an alternative choice to mass-produced beers and low merchandise.

As specialty espresso proliferated within the early 2010s, craft beer additionally skilled a increase in consumption, and mainstream manufacturers noticed a possibility to capitalise on its success. One instance is Danish brewing big Carlsberg, which launched its Crafted vary in 2014 to safe a stronger foothold within the burgeoning craft beer market.

It was, nevertheless, an indication of pending harmful market rivalry. 

“At the moment, the craft beer business is going through points like market saturation, change in shopper preferences, and a menace from exterior related industries,” says Erik Busch, the proprietor of LongStory Espresso in Illinois, US. Erik can be a craft beer fanatic with over 5 years’ expertise working within the beer business.

Craft beer, as soon as heralded as an unstoppable drive within the beer business, has skilled important market consolidation lately.

In what was thought of the deal that triggered a wave of buyouts within the craft beer market, the UK’s Camden City was purchased by international drinks big AB InBev (which owns manufacturers like Budweiser, Stella Artois, and Beck’s) for over US$114 million in 2015.

This development has continued within the years since. Dutch brewer Heineken acquired a minority stake in Beavertown Brewery, whereas Danish brewing big Carlsberg and British pubs and cask ale agency Marston introduced a three way partnership in 2020.

The results of these mergers and acquisitions? Six main manufacturers now produce roughly half of the world’s beer. 

Whereas unbiased manufacturers profit from funding capital – they’ll scale rather more rapidly and attain a wider viewers – analysis from the American Antitrust Institute exhibits that important market consolidation can impede innovation and wholesome competitors. 

Certainly, craft beer is struggling. In 2024, the variety of unbiased breweries that closed was better than the quantity that opened within the US alone.

Altering shopper preferences

“Lots of people don’t drink as a lot beer as they did eight years in the past, or they don’t drink alcohol in any respect,” says Sam Jory, a former head brewer at a number one beer firm in Vancouver BC, Canada. “Breweries at the moment are pressured to supply alcohol-free variations of their beers, which isn’t simple.”

Usually described because the “soberest technology but”, Gen Z consumes about one-third much less beer and wine than earlier generations, and can be shifting towards alcohol-free drinks at a considerably increased fee. Rising consciousness of well being, well-being, and metacognition (or an consciousness of 1’s personal ideas), in addition to altering social patterns, are driving the low and no-alcohol traits.

“Craft beer drinkers are beginning to drink much less beer and transfer in direction of non-alcoholic drinks, canned cocktails, and seltzers,” says Erik.

Assembly the rising demand for well being and comfort, gross sales of RTD laborious seltzer skyrocketed within the late 2010s. Manufacturers like White Claw and Actually – containing roughly 100 energy and fewer than 5g of sugar per can – captured 75% of gross sales between them in 2021.

Though probably profitable, diversifying into different beverage markets has proved troublesome for a lot of breweries.

“Many smaller breweries don’t have the capability to supply these different drinks, so that they have both closed or are struggling, except they’ve a powerful loyal following,” Sam says.

Different causes for the shift are value sensitivity and familiarity. Extra persons are seemingly turning away from craft beer, with its increased price ticket, in favour of cheaper, extra “conventional” choices.

The “uncommon” flavours that when served as distinctive promoting propositions for microbreweries are shedding their attraction amongst some beer drinkers. Customers are gravitating towards extra conventional beer kinds, in search of acquainted consolation slightly than adventurous experimentation.

Financial downturn usually predicts this shift. Analysis from Euromonitor exhibits that throughout instances of uncertainty and stress, folks sometimes go for acquainted, nostalgic meals and drinks to offer a way of consolation and stability.

Specialty espresso is coping with the identical challenges

We will draw many parallels between the challenges that each specialty espresso and craft beer face.

Mergers and acquisitions have been a standard theme within the espresso business because the mid 2010s. Firms like JAB Holdings and Nestlé bought majority stakes in pioneering third wave roasters, together with Stumptown, Blue Bottle, and Intelligentsia, throughout this time.

During the last couple of years, rising rates of interest and shrinking revenue margins have additionally pushed the development of consolidation within the inexperienced espresso buying and selling sector. Main gamers have acquired smaller merchants to increase or arrange their very own specialty-focused operations.

This paints an identical image to the beer business. Based on the Worldwide Commerce Centre’s Espresso Information, “the ten largest roasters management greater than 35% of all espresso gross sales” and are more and more buying specialty manufacturers “as a part of a method to determine a presence in all high quality segments of espresso”.

Espresso shopper behaviour can be altering quickly, particularly amongst youthful generations. Whereas older generations primarily follow black espresso and conventional milk-based drinks, Gen Z shoppers are choosing chilly espresso, matcha, and RTD drinks, which all function the perfect canvas for customisation, creativity, and self-expression, successfully altering how they expertise espresso.

Concurrently, as retail costs rise, extra espresso drinkers are in search of cost-effective choices that present acquainted flavour profiles. The countless pursuit of experimental processing strategies and “rediscovered” varieties could have reached a saturation level, with shoppers displaying indicators of fatigue from fixed innovation.

“It’s the identical in craft beer; selection was once the driving issue,” Erik explains. “Customers would cease at breweries and wish to strive what was new. With consumption declining, shoppers are in search of a protected choice.

“This implies a latest uptick in lagers and easy IPAs. Customers are now not in search of a fruity bitter that was fermented with an obscure yeast pressure. Now they need a crisp, clear, easy lager once more,” he provides. “This isn’t to say they’re switching to the macro breweries’ mass-produced lagers, however are as a substitute asking their native breweries for extra lagers.”

What can specialty espresso be taught from craft beer’s struggles?

The important thing takeaway for espresso roasters is recognising when innovation reaches diminishing returns. Simply as craft beer shoppers are returning to traditional kinds, specialty espresso could profit from refocusing on conventional excellence slightly than novelty. This doesn’t imply abandoning innovation however slightly guaranteeing that high quality and consistency stay the inspiration upon which to construct creativity.

Within the context of specialty espresso, this interprets to growing distinctive blends alongside strong single origin choices, sourcing from cheaper and constant origins like Brazil, and diversifying merchandise to incorporate chilly and RTD choices.

“Many profitable breweries at the moment are specializing in effectivity, price management, and sustainability. There’s a rising shift in direction of producing bigger volumes and interesting to broader audiences, slightly than specializing in area of interest kinds of a small group of craft beer fans,” Arne says. “A reliable buyer base shopping for beers with decrease margins can usually be extra sustainable than chasing high-margin, trend-driven merchandise.”

The polarisation noticed in craft beer consumption – loyalty to both bigger manufacturers or small native operations – means that specialty espresso companies could must outline their market place extra clearly. Mid-size operations, specifically, could wrestle in an more and more polarised market, making it essential to both scale sustainably or double down on area people engagement.

For espresso outlets and roasters, this implies strengthening group ties, personalising buyer experiences, and constructing real relationships that transcend transactional interactions. In the meantime, for bigger operations, it emphasises the significance of sustaining high quality and values whereas reaching scale.

The craft beer market is in a state of flux, and breweries must pivot in considered one of two instructions: concentrate on delivering excessive worth to a distinct segment shopper phase or diversify their choices.

Specialty espresso stands at an identical crossroads. If it desires to thrive over the subsequent few years, there are lots of classes to be realized.

“I consider the specialty espresso business is 5 to 10 years behind the craft beer business, and one of the simplest ways to make it possible for we don’t make the identical errors is to bear in mind,” Erik concludes. “With regards to shopper traits, all we will do is put together for them, not stop them.”

Loved this? Then learn our article on whether or not model partnerships at all times assist roasters develop.

Photograph credit: LongStory Espresso

Excellent Day by day Grind

Need to learn extra articles like this? Join our publication!