Small and independent U.S craft brewers generated $79.1 billion in economic impact in 2018, which represented roughly 0.4 percent of the gross domestic product, according to industry trade group the Brewers Association’s (BA) 2018 Economic Impact Report.
The Boulder, Colorado-headquartered not-for-profit added that the $79.1 billion amounted to a 4% increase over 2017’s $76.1 billion in output. A similar report shared by the BA in 2017 concluded that the craft brewing industry generated $67.8 billion in economic impact in 2016. Another, in 2012, reported $33.9 billion in economic output.
The 2018 economic impact analysis pulled data from the BA’s annual Beer Industry Production Survey, the bi-annual Brewery Operations Benchmarking Survey and other government and market data. Craft brewers’ economic impact was derived from the total impact of craft beer through the three-tier distribution system, as well as sales of non-beer items such as food and merchandise at brewpubs and taprooms.
The release of the new analysis comes about a week before the BA’s largest consumer-facing event of the year, the annual Great American Beer Festival in Denver.
According to the BA, the craft brewing industry was responsible for creating more than 559,545 total jobs last year, with 150,055 jobs directly at breweries. The craft brewing industry also contributed more than $5 billion in direct wages and benefits to its workers.
The BA also broke down the economic impact in each state and released a list of the five states with the greatest economic impact. California — where 1,000 independent breweries are in operation as of August 2019, according to the California Craft Brewers Association — once again led the way with an output of $9 billion. Pennsylvania ($6.3 billion), Texas ($5.1 billion), New York ($4.1 billion) and Florida ($3.6 billion) rounded out the top five.
Meanwhile, on a per capita basis, Colorado ranked as the top state, generating $780 for every legal drinking age (21+) consumer, as well as $3.3 billion in total economic impact. Popular craft beer states Vermont ($362 million), Oregon ($2.1 billion), Pennsylvania ($6.3 billion) and Maine ($656 million) finished out the top five.
BA chief economist Bart Watson recently did a deeper dive into the state of the craft brewing industry in California during the annual CCBA Craft Beer Summit in Long Beach. Watson called California a contradictory market that is harder to sum up than it was about four years ago.
“I’m calling this the big contradiction,” he said.
Although the craft segment has “never been stronger” and there have never been more breweries, craft drinkers, market share and interest, those breweries are creating a more competitive landscape. And the competition is going to only increase as more breweries open their doors.
Nationally, the BA has said there are more than 7,500 breweries in operation, while the Alcohol and Tobacco Tax and Trade Bureau says there are more than 10,000 brewery permits. Within the BA’s database, California has 863 active breweries, 1,255 active brewery licenses and 1,293 active TTB permits. He called it “a virtual certainty” that more breweries will be operating in California than there are today.
“All indicators point to there being more breweries two years from now than there are right now, almost regardless of place,” he said.
Although more breweries continue to open than close, Watson said the gap between openings and closings is starting to close. However, he added the closing rate is still “tremendously low” at about 3%. In California alone, Watson said more than 100 breweries have closed between 2015 and 2018.
“The places where there are a lot of breweries, you’re going to see the most closings,” he said, pointing to Southern California and San Diego. “Don’t let you make the sky is falling. Any industry as it matures as you have lots of businesses coming in, some of them are going to close and that’s just part of what the market is going to look like now that it’s a real, developed, mature industry.”
Watson reiterated that 75% of breweries in the U.S. make just 0.6% of the beer that is produced domestically, not counting imports. Add in imports, and those companies sell one out of every 200 beers in the U.S., he added. The median craft brewer in the U.S. makes 400 barrels annually.
So can the U.S. support 1,000 to 5,000 more breweries? If they’re producing small amounts of beer, the answer is yes, Watson said. He noted that one out of every eight beers now sold in the U.S. come from small and independent craft brewers, and one of our of every four dollars are spent on craft beer.