Europe is the number two producer of beer worldwide. However, the quantity of beer sold in Latvia in the last decade did not increase considerably, and the average quantity of beer consumed per capita rose very slowly. Even though beer consumption was stable in Latvia, the quantity of beer supplied to the market was approximately three times greater than the quantity of the other kinds of alcoholic beverages combined, totalling about 15 million dekalitres. Besides, in recent years in Latvia the segment of craft beers tended to increase, which became increasingly popular in Western Europe and the number of small breweries sharply increased there. In Latvia, the number of small breweries increased at a slower pace, therefore, the research aim was to examine the factors influencing the development of small breweries in Latvia. The research found that most of the breweries in Latvia qualified for the status of small brewery, the output of which did not exceed 50 000 dekalitres per year. Although small breweries produced craft beers, yet their performance and development were considerably influenced by the activity of the large breweries and the purchasing power of consumers. Small breweries positively influence the beer drinking traditions of Latvians, which can contribute to the stable development of the small breweries. Small breweries have their competitive advantages in the market, which is due to the quality and assortment of their products, as well as they perform extra economic activities that contribute to their recognition.