Beer Industry Indexes Slump as Craft Sales Stumble

The National Beer Wholesalers Association’s latest Beer Purchasers’ Index (BPI) highlights mounting strain in the U.S. beer sector. In April 2025, the BPI sank to 38 – well below the 50-point threshold indicating expansion – while an accompanying inventory index jumped to 54, signaling excess stock on hand. This combination has placed the industry firmly in contraction territory, with distributors pulling back orders amid softer consumer demand. Early data from May suggest little relief, keeping many beer executives in a “cautionary” mindset as peak summer selling season begins.

Digging into the numbers reveals broad-based weakness, especially for domestic beers. The NBWA’s April report shows major segments like premium light lagers and regular lagers sharply down from a year earlier (index readings in the high-30s, versus mid-60s in April 2024). Most dramatically, the craft beer index plunged to 20, indicating distributors are drastically curtailing craft beer purchases. By contrast, one brighter spot was flavored malt beverages (FMBs) and seltzers: that segment ticked up slightly year-over-year to an index of 43. Although FMB/seltzer orders are still below a growth threshold, it was the only beer category to improve versus last year – hinting at resilient thirst for alternatives like hard seltzers and canned cocktails even as traditional beer falters.

New production data underscore the challenging climate brewers face. The Brewers Association reports U.S. craft beer output fell by 4% in 2024 to 23.1 million barrels, marking the steepest drop outside of the pandemic and a third consecutive year of decline.

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“It’s declining… 2%, 3%, 5% year over year. It’s not growing like it used to,”

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observes Tyler Yarbrough, a San Francisco craft beer distributor, of the slowdown in craft sales. Industry analysts point to multiple factors: shifting consumer preferences (with some drinkers migrating to spirits, RTDs and non-alcoholic options), an aging core beer demographic, and market saturation in craft. Even normally buoyant occasions have underwhelmed; on-premise beer sales during the Memorial Day holiday weekend, for instance, flopped below expectations according to BeerBoard’s nationwide bar tracker, suggesting tepid demand even at the start of summer partying.

Strategic Insight: For beer brands and breweries, these warning signs call for a strategic recalibration. Innovation and diversification are becoming essential in a flat or contracting market. Many brewers are already expanding beyond classic styles – from launching non-beer offerings (e.g. hard teas, seltzers, non-alc brews) to emphasizing imported brands – to capture growth niches. Notably, import beers (led by Mexican lagers) remain relatively sturdy; the imports segment BPI of 51 in April still indicated slight expansion, reflecting the rise of labels like Modelo Especial (now the top-selling U.S. beer by dollar sales). At the same time, the craft shakeout presents an opportunity for strong regional players: “There’s a lot of niche room for small craft beers to…do a better job working with their customers… (and) thrive,” Yarbrough notes, suggesting differentiated local brands with loyal followings can still grow even as the overall craft category shrinks. The current downturn is also forcing a hard look at operations – right-sizing production, reducing at-risk inventory, and doubling down on core brands. Breweries that can adapt their portfolios to match today’s tastes (while improving efficiency) will be best positioned to ride out the lull. In short, the beer business of 2025 demands agility: aligning supply with cautious distributor demand, investing in trending segments, and sharpening brand value propositions to reconnect with consumers who have more choices than ever for their happy-hour dollar.