Trends in American Drinking Habits and Financial Tools for Breweries
The craft brewing industry has long been a symbol of innovation, creativity, and community spirit in the American beverage landscape.
Yet, as with any market, the landscape continues to evolve, and breweries must adapt to new trends and financial realities in order to remain competitive and sustainable.
Shifting Trends in American Drinking Habits
In recent years, American drinking habits have been changing, particularly in terms of alcohol consumption. According to the Gallup Poll, Americans are drinking less overall, especially among younger demographics.
This trend is largely driven by an increasing awareness of health and wellness, which has led many consumers to reduce their alcohol intake or seek alternatives to traditional alcoholic beverages.
Health and Wellness Focus
The desire for healthier lifestyles is at the forefront of many consumers’ minds. As the Gallup Poll has highlighted, more Americans are actively choosing to cut back on alcohol for health reasons
In fact, the percentage of U.S. adults who report not drinking at all has been steadily increasing. Craft breweries are noticing this shift, with more breweries focusing on offering lower-alcohol options, non-alcoholic beers, and beverages that cater to the health-conscious drinker.
The Rise of Low-ABV Beverages
Low-alcohol beers (under 5% ABV) have become a popular category in the craft beer world. With consumers opting for drinks that allow them to stay social without over-indulging, breweries are responding by offering more sessionable beers, which are lower in alcohol but still pack a punch in flavor.
A 2022 Statista report showed that 22% of beer drinkers under 30 preferred low-alcohol options, and breweries are capitalizing on this growing trend with lighter lagers, pilsners, and refreshing IPAs that offer full flavor without the high ABV.
3. Non-Alcoholic Beers and Alternatives
The surge in non-alcoholic beers and spirits is another trend that has been transforming the craft beverage sector. According to Nielsen, sales of non-alcoholic beer grew by 32% in 2021, a clear indication that consumers are looking for alcohol-free alternatives without sacrificing taste.
Craft breweries are meeting this demand by experimenting with innovative brewing techniques to create delicious non-alcoholic options that cater to a growing audience of people choosing to avoid alcohol.
4. Sustainability and Local Sourcing
Another notable shift in consumer preference is the demand for sustainability. A 2020 study from Mintel indicated that 65% of Americans consider sustainability when making purchasing decisions. Craft breweries are well-positioned to meet this demand, as they often focus on local sourcing, eco-friendly packaging, and sustainable brewing practices.
Many breweries are also championing the use of organic ingredients and collaborating with local farms to reduce their environmental impact.
Financial Tools for Breweries to Remain Financially Strong
While adapting to changing consumer preferences is crucial, craft breweries also need to be mindful of their financial health to thrive in an increasingly competitive market. Fortunately, there are several financial tools and strategies that breweries can utilize to stay financially strong.
1. Access to Capital through Small Business Loans
Small business loans, particularly those offered by the Small Business Administration (SBA), are a valuable resource for craft breweries looking to expand or manage their operations.
The SBA 7(a) loan program, for example, offers low-interest loans for working capital, equipment purchases, or even refinancing existing debt. With interest rates remaining relatively low, it’s an option that can provide breweries with the financial flexibility they need.
2. Securing Grants and Funding Opportunities
Craft breweries, especially those with a focus on innovation, sustainability, or community impact, can often qualify for grants and funding opportunities. Organizations like the Brewers Association offer grants for brewers engaged in sustainability and technical research. Local and state governments also sometimes offer grants to encourage economic development or preserve local businesses.
3. The Federal R&D Tax Credit
One of the most beneficial financial tools available to breweries today is the Federal Research and Development (R&D) Tax Credit. This credit is available to businesses that invest in improving their products, processes, or technology.
For craft breweries, this means that investments in developing new beer recipes, improving brewing techniques, or creating non-alcoholic alternatives may qualify for tax credits.
Notably, many breweries are already engaged in R&D activities but may not be aware that they can receive a tax credit for these efforts. The R&D tax credit allows businesses to offset a portion of their costs associated with product development and innovation, which can be a significant boost to a brewery’s bottom line.
4. State-Level R&D Tax Credits
In addition to the federal R&D tax credit, many states offer their own R&D tax incentives, which can be combined with the federal credit for even greater financial savings.
States like California, Georgia, New York, Massachusetts, and Florida are well-known for providing state-specific R&D tax credits. Each state has its own set of requirements and eligible activities, so it’s important for breweries to research local opportunities.
For example:
- California offers an R&D tax credit that is similar to the federal credit but can be more generous in certain cases.
- Georgia provides a state R&D tax credit that businesses can apply against their state income tax.
- New York offers an R&D credit for businesses involved in technological advancements, including those in the food and beverage industry.
By leveraging these tax credits, breweries can significantly reduce their tax liability while reinvesting in research and development, helping them stay competitive in the market.
How Bowers R&D Associates Can Help
Navigating the complexities of R&D tax credits can be a challenge, especially for small and medium-sized craft breweries that may not have dedicated financial teams. That’s where Bowers R&D Associates comes in.
With extensive experience in the brewing industry and a deep understanding of R&D tax incentives, Bowers R&D Associates specializes in helping craft breweries claim the credits they deserve. We offer a free consultation to evaluate your brewery’s R&D activities and help you understand how the federal and state R&D tax credits can benefit your business.
By taking advantage of these credits, you can free up valuable resources to reinvest in the growth and innovation of your brewery. Don’t miss out on the financial support that’s available to you.
Contact Bowers R&D Associates today to schedule your free consultation and explore how you can maximize your savings through the R&D tax credit.