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Brewers Association Releases Annual Growth Report

Discussion in 'Beer News & Releases' started by Todd, Apr 5, 2019.

  1. Todd

    Todd Founder (5,663) Aug 23, 1996 California

    Small and independent brewers deliver job creation and continued growth in 2018

    Boulder, Colo. • April 2, 2019—The Brewers Association (BA)—the trade association representing small and independent (1) American craft brewers—today released annual growth figures for the U.S. craft brewing industry. (2) In 2018, small and independent brewers collectively produced 25.9 million barrels and realized 4 percent total growth (3), increasing craft’s overall beer market share by volume to 13.2 percent.

    Retail dollar value was estimated at $27.6 billion, representing 24.1 percent market share and 7 percent growth over 2017. Growth for small and independent brewers occurred in an overall down beer market, which dropped 1 percent by volume in 2018. The 50 fastest growing breweries delivered 10 percent of craft brewer growth. Craft brewers provided more than 150,000 jobs, an increase of 11 percent over 2017.

    “Craft maintained a fairly stable growth rate in 2018 and continued to gain share in the beer market,” said Bart Watson, chief economist, Brewers Association. “Small and independent brewers continue to serve as job creators, strong economic contributors, and community beacons.”


    There were 7,346 craft breweries operating in 2018, including 4,521 microbreweries, 2,594 brewpubs, and 231 regional craft breweries. Throughout the year, there were 1,049 new brewery openings and 219 closings—a closing rate of 3 percent.

    “The beer landscape is facing new realities with category competition, societal shifts, and other variables in play. There are still pockets of opportunity both in terms of geography and business model, but brewers need to be vigilant about quality, differentiation, and customer service,” added Watson.

    Note: Numbers are preliminary. For additional insights from Bart Watson, visit Insights & Analysis on the Brewers Association website. A more extensive analysis will be released during the Craft Brewers Conference & BrewExpo America® in Denver, Colo. from April 8 - 11. The full 2018 industry analysis will be published in the May/June 2019 issue of The New Brewer, highlighting regional trends and production by individual breweries.

    (1) An American craft brewer is a small and independent brewer. Small: Annual production of 6 million barrels of beer or less (approximately 3 percent of U.S. annual sales). Beer production is attributed to the rules of alternating proprietorships. Independent: Less than 25 percent of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member that is not itself a craft brewer. Brewer: Has a TTB Brewer’s Notice and makes beer.

    (2) Absolute figures reflect the dynamic craft brewer data set as specified by the craft brewer definition. Growth numbers are presented on a comparable base. For full methodology, see the Brewers Association website.

    (3) Volume by craft brewers represent total taxable production.


    Roguer, FBarber, bbtkd and 6 others like this.
  2. JackHorzempa

    JackHorzempa Poo-Bah (3,901) Dec 15, 2005 Pennsylvania

    “…overall down beer market, which dropped 1 percent by volume in 2018.”

    And for the previous year (2017) the Brewers Association reported that the overall beer market declined by 1.2%.

    A declining overall beer market concurrently with 1,000+ new breweries opening per year sure appears to be a very competitive business environment to me.

    Bart Watson provides the ‘warning’ of:

    “The beer landscape is facing new realities with category competition, societal shifts, and other variables in play. There are still pockets of opportunity both in terms of geography and business model, but brewers need to be vigilant about quality, differentiation, and customer service,” added Watson.

    If I were an economist my ‘warning’ would be more strongly worded than the above.

    Best of luck to the 1000+ new breweries that open this year (plus the 1049 that opened in 2018) under these challenging conditions.

    Roguer, beergoot, woodchipper and 2 others like this.
  3. Sammy

    Sammy Poo-Bah (13,167) Dec 1, 2003 Ontario (Canada)

    I am an economist and the more competitive are an open secret.
  4. BayAreaJoe

    BayAreaJoe Crusader (731) Nov 23, 2017 California
    Society Trader

    Well, at least to the other 1,048 that opened last year that are still around, because one already shut down quick (although it looks like it may have been more of an issue with operations than with economics):

    meefmoff likes this.
  5. woodchipper

    woodchipper Meyvn (1,025) Oct 25, 2005 Connecticut

    Please expand.
  6. Sammy

    Sammy Poo-Bah (13,167) Dec 1, 2003 Ontario (Canada)

    more competitive geographic areas are known in the industry. overall lots of subsegment opportunities
    beertunes likes this.
  7. stevepat

    stevepat Zealot (526) Mar 12, 2013 California

    ya it seems like there still lots of room for growth outside of the biggest markets. Where I live there are 8 breweries for 130,000 people and I still see opportunity here. The most popular are also the newest.
    Junior likes this.
  8. Junior

    Junior Zealot (544) May 23, 2015 Michigan
    Society Trader

    The most popular and successful may not make the best beer. When I was young, I though it was silly to drink much when I went out because the beer I had at home was much less expensive. Now I often think it is silly to drink when I go out because the beer I have at home is so much higher quality.
  9. stevepat

    stevepat Zealot (526) Mar 12, 2013 California

    I agree I just think in our area it highlights the fact that even places with established brewers might have unmet demand
    Junior likes this.
  10. HopsAreDaMan

    HopsAreDaMan Defender (658) Jul 28, 2015 Missouri

    That last part made me laugh. It's so true for me as well.

    But, now that I am exploring the lower ABV beers, I find there are plenty high quality brews on tap at bars and restaurants--just not very many of the 8 - 10% variety.

    My wife told me the other day while she was out with friends for dinner, she had a hankering for an IPA (she normally does not drink beer without me), and she asked what they had, and the very first beer they mentioned was one of the few local beers she likes: Modern Citropolis. I told her, The beer gods were smiling down on you once again!

    I know her one decision to buy a beer when she normally doesn't is not much but perhaps some of her friends will take note, and buy a beer at dinner (I don't think they normally do, if anything they drink wine) and they will tell two friends, and so on and so on. :stuck_out_tongue:
    Junior likes this.
  11. HopsAreDaMan

    HopsAreDaMan Defender (658) Jul 28, 2015 Missouri

    Is the brewers association doing anything to play up the recent medical evidence that indicates that it is not just having a glass of wine a day that can help with longevity, but it's any alcoholic beverage, including beer? https://www.mayoclinic.org/healthy-...-healthy-eating/in-depth/alcohol/art-20044551 All those years the public was duped into thinking a glass or two of wine a day was good for you (implying wine only, and not beer or liquor). https://www.livestrong.com/article/515297-the-effects-of-two-glasses-of-wine-a-day/ It is our turn now! The time for wine is over. The time for independent beer is here! :slight_smile:
  12. meefmoff

    meefmoff Zealot (573) Jul 6, 2014 Massachusetts
    Society Trader

    Holy cow that's quite a story - thanks for posting. Gives a whole new meaning to the term "infected" beer!

    "In addition, our inspection revealed that you were operating a microbrewery in space shared with your contract testing laboratory where you test OTC drug products and components. You prepared and stored microbiology laboratory media in the same area you use to conduct brewery operations.

    For example, our investigators observed a full fermenter located approximately 10 feet from the space where media is prepared, warmed, and stored. A brewery employee was also preparing beer kegs in this area. In addition, laboratory test media, open beer bottles, and brewing materials were co-mingled within the same refrigerator.

    These facility conditions pose unacceptable risks, including contamination of media during its preparation and compromised sample analyses. Conducting your testing operations in a space shared with a microbrewery is inappropriate and does not comply with CGMP. Your testing must be performed using facilities that are designed and controlled for drug laboratory testing."
    BayAreaJoe likes this.
  13. jayrutgers

    jayrutgers Initiate (187) Oct 29, 2011 New Jersey

    There's still plenty of room to grow. New Jersey itself could probably fuel all the growth the craft segment would need if it could get out of it's own way. It's the most densely populated state in the country with high GDP per capita and some nine million people, and yet it's 48th in breweries per capita. To match Vermont in breweries per capita, New Jersey would require 805 more breweries.

    I think there's plenty of room for more breweries. Maybe not much room for someone to get to Stone or Dogfish levels, or even Allagash levels, but plenty of room for small scale operations.
    islay likes this.
  14. JackHorzempa

    JackHorzempa Poo-Bah (3,901) Dec 15, 2005 Pennsylvania

    What is the issue here? Is it state regulations that are the problem here?


  15. jayrutgers

    jayrutgers Initiate (187) Oct 29, 2011 New Jersey

    Regulations, NIMBYs, politicians who think all breweries look like the gigantic Budweiser brewery we have, there's a whole host of reasons that someone like @augiecarton could probably expand upon more.
    JackHorzempa likes this.
  16. jesskidden

    jesskidden Meyvn (1,440) Aug 10, 2005 New Jersey

    Lots of info on this topic in Brewbound's coverage of the CBC -
    Slowing Growth in 2018 was ‘Not a Blip’
    Roguer and Junior like this.
  17. stevepat

    stevepat Zealot (526) Mar 12, 2013 California

    4% growth seems like great news for the industry honestly. I mean surely no one expected that double digit growth would just continue on up to 100% of the market.
  18. JackHorzempa

    JackHorzempa Poo-Bah (3,901) Dec 15, 2005 Pennsylvania

    You could pose that question to Green Flash, Smuttynose, Deschuttes, and other breweries that implemented expansions (or planned for them) and had to pull back. Green Flash had to sell their East Coast brewery, Smuttynose had to sell their new, expanded brewery, Deschuttes had to stop on building an East Coast brewery, etc.

    If I further reviewed things I could inform you about the layoffs (people losing their jobs) because of this change in growth.

    jesskidden likes this.
  19. stevepat

    stevepat Zealot (526) Mar 12, 2013 California

    good point, it does appear that some people in the industry did seem to think that major growth would continue for their brands.
    For the industry as a whole though 4% seems like a great sustainable growth rate. Assuming the BA graph is volume growth and assuming the 13.2% of volume number cited in the Stoner Berlin thread is accurate for 2018, holding steady and 4% would have craft hitting 15% in just a few years.
  20. islay

    islay Aspirant (243) Jan 6, 2008 Minnesota

    "The BA’s newly created taproom brewery class (companies that sell more than 25 percent of their volume on-site and do not offer significant food service) grew 40.2 percent — to 809,000 barrels in 2018 — and represented 24 percent of total craft growth.

    Growth was flat for regional breweries (companies producing more than 15,000 barrels) last year..."

    This is the key. Basically all of that 4% overall growth comes from newly opened breweries and tiny breweries, most of which are still in their infancy. The established players aren't growing in the aggregate, and I think future prospects for most such breweries are even dimmer, as they're forced to spend resources fighting to maintain market share instead of expanding and as they fail to achieve the revenue totals required to make past debt-fueled expansion profitable.

    I keep saying, there's still tons of room for many new, taproom-focused breweries, especially in suburbs, exurbs, and small towns (certain large cities seem closer to saturation), but that's precisely because there's still a large amount of market share to be seized from the regional craft players, not because demand for craft beer is growing at a healthy clip (it's not, and I wouldn't be surprised if it starts to shrink soon when craft beer inevitably loses its coolness factor).
    bubseymour, KarlHungus and JMN44 like this.
  21. JustinMcInerny

    JustinMcInerny Initiate (17) Sep 5, 2013 Maryland

    I run a small beer and wine store and here is what's playing out in my tiny, anecdotal, sample size. We only have room for roughly 120 beers. Of those 120 beers, about 20 are locked up by the macros for practical business reasons. I need to carry Corona, Miller Lite, Stella Artois etc. It's good cash flow so it helps me stay in business and it's what a lot of my customers expect me to have anyway. The other 100 beers are craft/crafty. On the craft side I used to need to have beer from California, Colorado and anywhere else - I am in the DC suburbs. New Belgium was a godsend when it showed up here. I used to have four Sam Adams products and four Sierra Nevada in stock at all times. Now it's all I can do to keep up with what's available from within 80 miles of me. I simply don't have room for multiple beers from New Belgium, Stone, Sierra Nevada, Sam Adams and and the like. Meanwhile, the hyper local, small, producers can not keep up with demand. In Maryland, breweries are allowed to self distribute (a big plus) which means it's not unusual for me to have beer that is delivered the same day it's canned. Fresh local beer is what it's all about, although I do enjoy bottle conditioned Belgian and Belgian inspired beers which usually have pretty long shelf lives.

    For what it's worth, I look at these little local breweries the same way I look at a good, small local bakery. The bakery makes great fresh bread. The bakery is not looking to expand beyond its immediate area. The bakery stays in business. The bakery owners aren't making a ton of money but they have a decent lifestyle and, for the most part, enjoy what they are doing.
    FLBeerGuy, Roguer, drtth and 5 others like this.
  22. JackHorzempa

    JackHorzempa Poo-Bah (3,901) Dec 15, 2005 Pennsylvania

    Do your customers ever ask about these beers? If they want them will you special order it for them?

  23. Witherby

    Witherby Initiate (102) Jan 5, 2011 Massachusetts
    Society Trader

    The Alchemist (John Kimmich) model. If you make good beer and/or provide a good place to hang out, you stand a chance of succeeding--if success is not defined by getting rich, but rather making a living. Unsustainable growth is, well, unsustainable.
    John1985 and Roguer like this.
  24. stevepat

    stevepat Zealot (526) Mar 12, 2013 California

    I'm not sure about your analysis here. The quote shows taproom breweries representing 24% of the growth, or 1%. And the regional breweries flat. That means that the other 3% of that growth came from localish distributing breweries biting into macro beer sales. It seems to me that there is lots and lots of room to elbow into the macro market. The people that I know who drink macro exclusive are either older and set in their ways, or very young and very price conscious. These older people are going to decline in consumption over time which won't hurt micro sales but might reduce the total volume of beer sales (which itself, all else being equal, would increase the craft share of the market). These young people are likely to become less price conscious over time and don't often have an overt aversion to craft, in fact many of them that I know already go to that segment for special occasion or treat type of drinking. Especially with the increase of lighter styles that craft brewers are putting out I don't think we're going to see a reversion to contraction in the market.
    meefmoff and drtth like this.
  25. JustinMcInerny

    JustinMcInerny Initiate (17) Sep 5, 2013 Maryland

    Customers aren't asking for these beers. I always have New Belgium Fat Tire and Voodoo Ranger. I always have SNPA and Sam Adams Boston Lager. Sierra Nevada consistently makes things which I like but people just don't ask for them. Now that I think about it, Sierra Nevada is vaguely local as they have been in North Carolina for a while now, Sam Adams is not too far from here either as I believe a lot of its production is done near Allentown, PA. I special order beer and wine all the time, or put beer and wine in the regular rotation that asked for by my customers. However, if nobody is trying to buy it from me, and nobody is trying to sell it to me, and I don't have a special affinity for the beer or wine, then I don't have a reason to carry the beer or wine. We aren't a big beer geek store so there are lots of beers which I don't carry even though I like them because I only have so much space and I do not want beer to go out of date.
    drtth, Squire, Junior and 1 other person like this.
  26. drtth

    drtth Poo-Bah (3,778) Nov 25, 2007 Pennsylvania

    I think we can add Constellation to that list. They paid that billion for Ballast Point in 2015 while overall growth was still in double digits and are now pulling back as well.

  27. stevepat

    stevepat Zealot (526) Mar 12, 2013 California

    I definitely think the era of national craft brand expansion is coming to a close. However I think it's just because those brands are going flat, not actively losing ground. Like you mention, their debt loads were based on double digit expansion so 3% growth is a 'loss' financially and might very well make earlier plans for expansion too expensive.
    I still don't see the better beer brands losing market hold overall, it's just going to slow down dramatically and be largely static outside of the super micro local taproom model. There seems to be a lot of beer belly to still carve from the big boys.
    The one exception to that I could see is if someone like NB or SN or SA went hard on a light lager brand that they priced to compete with bud and the like. In a couple more years I could see a craftier light lager that was competitively priced growing pretty fast.
    drtth likes this.
  28. Roguer

    Roguer Site Editor (3,990) Mar 25, 2013 Georgia
    Society Trader

    Most of the report focused on the expansion of production - both capability, and output. However, that doesn't address how many craft beers languish on shelves, or are eventually returned to the brewery.

    More and more craft breweries, expanding their reach further and further, is simply not sustainable. We've all seen this, and I agree: the warning seems to be on the optimistic side.

    I think this is key for long-term survival. Going from 3000 to 8000 breweries is awesome .... but not if each one of them sees "expansion" as the necessary sequel to profit. It's natural in business to feed some of your profit back into capital, funding further expansion and further profits in the long term. However, obviously no market can support indefinite expansion.

    I hope some of these breweries learn to "settle" for being local. I don't need to see every single brewer's IPA rotting away on my local shelf.
    John1985, Witherby, meefmoff and 2 others like this.
  29. bubseymour

    bubseymour Poo-Bah (2,379) Oct 30, 2010 Maryland

    So I live up in Frederick County, and I see a flood of all the local offerings now taking up a large percentage of the store shelves (mostly IPA overload). In your stores are you noticing more consumers buying these beers over the regional/nationals now? For me it's too high-risk. Most of the locals don't have any buzz/good ratings to these beers and they are priced very high so I'm leary to gamble on a 4pack/6pack. Some of the reputable MD brewers (RAR, Burley, Brewers Alley, Union, Manor Hill, etc mixed in with big boy brewers DFH, Flying Dog, Stone, Sierra Nevada, etc) sure I'm buying their offerings fresh, but the locals, if I can't buy a single can for $4-$5 to try out, I'm not buying them. Will gamble on a pint from a pub, but not from stores. I guess I'm just thinking these locals in the stores aren't moving well based on my buying habits (and discussions with others) but maybe they are and I'm the odd consumer.
    meefmoff likes this.