Growth for small and independent brewers in the U.S. is “stable” as production at craft beer companies grew 5 percent through the first six months of 2018, according to data from industry trade group the Brewers Association (BA).
The nonprofit group today shared its annual mid-year growth figures, noting that there were 6,655 active breweries as of June 30, up from 5,562 a year ago.
According to BA chief economist Bart Watson, “the market continues to show demand for small and independent craft brewers.”
“There are certainly industry headwinds, but this stabilized growth rate is reflective of the market realities that exist for brewers today,” Watson said, echoing statements made in 2017, when he commented that “the growth pace for small and independent brewers has stabilized at a rate that still reflects progress but in a more mature market.”
At this time last year, craft growth was also up 5 percent, according to the BA.
But not all growth is created equal.
In fact, Watson parsed the data further in a blog post on the organization’s website, noting that only 60 percent of the “regional” craft breweries (those making more than 15,000 barrels annually) who responded to the organization’s mid-year survey were growing.
Watson, who also looked at retail scan data from market research firm IRI Worldwide, wrote that companies that sold between 100,000 and 1 million cases were actually down about 1.5 percent midway through the year.
And it gets worse for those BA-defined craft beer companies selling more than 1 million cases at off-premise retail accounts. According to IRI, mid-year growth for those companies is down about 2.5 percent, collectively.
Conversely, those outfits selling 10,000 cases of beer or less at off-premise retail channels tracked by IRI – often referred to as “the long tail” – were up nearly 31 percent through July 1, 2018. And BA-defined companies selling between 10,000 and 100,000 cases were up about 5.5 percent during the period.
But even growth among those two groups has slowed, from 42.8 percent and 15.1 percent, respectively.
And while a large chunk of the craft beer volume flowing through the off-premise channel appears to be in decline, Watson believes the group’s 5 percent growth estimate is still accurate.
He explains: “Yes, breweries that sold 10,000 CEs or less in scan ‘slowed’ to 31 percent, but they continue to increase their share of craft, and so even smaller growth rates add up more as they represent more of the category.”
Watson added that off-premise scan data is “underestimating total company growth,” pointing to BA survey data that suggests different growth rates on-premise as well as in brewery-owned taprooms.
“My best guess is that independent craft is growing 3-4 percent, not including at-the-brewery sales,” Watson explained. “If we use the 90-10 ratio for outside-inside brewery sales, that gives a plausible growth range of 4.2-5.6 percent.”
And that would be consistent with the BA’s survey results.
Boulder, Colo., July 31, 2018 — Growth for small and independent craft brewers remained stable for the first half of 2018, according to new mid-year metrics released by the Brewers Association (BA)—the not-for-profit trade association dedicated to small and independent American brewers. Production volume for the craft segment increased five percent during the first half of 2018.
“While more mature, the market continues to show demand for small and independent craft brewers,” said Bart Watson, chief economist, Brewers Association. “There are certainly industry headwinds, but this stabilized growth rate is reflective of the market realities that exist for brewers today.”
As of June 30, there were 6,655 active breweries, up from 5,562 during a comparable timeframe last year. An estimated 2,500 to 3,000 breweries are in planning, based on active Alcohol and Tobacco Tax and Trade Bureau (TTB) licenses.
“The data demonstrate that 2018 is on pace to have the highest number of brewery openings and closings to date. However, even as breweries close, openings continue to far outpace the number that shutter,” added Watson. “New players looking to enter the space should be aware of the constructs of the current landscape, work to differentiate themselves and will need to make quality beer to succeed.”
Craft brewer definition: An American craft brewer is small, independent and traditional. Small: Annual production of 6 million barrels of beer or less (approximately three 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. Traditional: A brewer that has a majority of its total beverage alcohol volume in beers whose flavor derives from traditional or innovative brewing ingredients and their fermentation. Flavored malt beverages (FMBs) are not considered beers.
About the Brewers Association
The Brewers Association (BA) is the not-for-profit trade association dedicated to small and independent American brewers, their beers and the community of brewing enthusiasts. The BA represents 4,800-plus U.S. breweries. The BA’s independent craft brewer seal is a widely adopted symbol that differentiates beers by small and independent craft brewers. The BA organizes events including the World Beer Cup®, Great American Beer Festival®, Craft Brewers Conference® & BrewExpo America®, SAVORTM: An American Craft Beer & Food Experience, Homebrew ConTM, National Homebrew Competition and American Craft Beer Week®. The BA publishes The New Brewer® magazine, and Brewers PublicationsTM is the leading publisher of brewing literature in the U.S. Beer lovers are invited to learn more about the dynamic world of craft beer at CraftBeer.com® and about homebrewing via the BA’s American Homebrewers Association® and the free Brew Guru® mobile app. Follow us on Facebook, Twitter and Instagram.
The Brewers Association is an equal opportunity employer and does not discriminate on the basis of race, color, national origin, gender, religion, age, disability, political beliefs, sexual orientation, or marital/familial status. The BA complies with provisions of Executive Order 11246 and the rules, regulations, and relevant orders of the Secretary of Labor.