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Niche fans create following for local, smaller brewers

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Craft beer is still the engine driving the beer category. Craft beer dollar sales grew 17%, while volume surged 15% in 2012, according to the Brewers Institute. Craft beer dollar share has jumped to 10.2% of overall beer category sales. Mintel forecasts that the segment will grow to $18 billion by 2017 — a result that will see the segment tripling from 2007 and 2017.

While sales of big brand brews, such as Budweiser and Michelob, continue to dip, sales of pricier smaller brands are wooing consumers with new flavors and styles. Mintel beverage analyst Jennifer Zegler said: "Unlike its domestic and imported beer counterparts, craft beer has been able to defy overall beer market trends and continue expansion during the economic downturn and subsequent slow recovery."

"Brewers big and small are delivering innovations both for premium beer drinkers, and for drinkers looking for something more upscale,"said Joe McClain, president of the Beer Institute.

Craft brewers have created a food culture niche for their products by stressing that, like wine, these beers can be paired with foods and consumers should choose different brews for different occasions.

"One of the things driving craft is its diversity. There are a huge number of styles and flavors to choose from," said Bart Watson, staff economist at the Brewers Association. "Ales, particularly IPAs, have been at the forefront of growth. Seasonal beers are another important category for craft, though they haven't seen the same growth as IPAs over the past year." Ciders and flavored malt beverages also have seen significant growth.

Small, local brands have been a huge driver of craft growth. In fact, 78% of market share growth from 2011 to 2012 was driven by brands outside the top 10 craft producers, according to Watson. "Consumers are excited about local products, allowing craft brewers opportunities in local markets," he said. "Local growth has offered regional opportunities for many craft brewers."

Mintel research found that 50% of overall craft beer drinkers express interest in locally made beer, suggesting that retailers could benefit from including more local varieties in their mix.

Craft beers have wide appeal among younger consumers. Mintel's recent study found that 49% of millennials and 40% of Gen Xers said they drink craft beers. "These consumers are constantly looking for new flavors and experiences," Watson said. "And current flavors may just be the tip of the iceberg, as craft brewers tend to love experimentation and innovation."

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