California craft brewers had a rougher 2020 than the overall industry, as in-state volume production declined 11% compared to 9% nationwide, Brewers Association (BA) chief economist Bart Watson reported last week during his presentation at the California Craft Brewers Association’s spring summit.
Watson broke down the volume declines for each type of brewery, both nationally and in California:
- Brewpub volumes declined 19% nationally as well as in California;
- Taproom volumes were flat nationally, and down 8% in California;
- Microbrewery volumes were down 12% nationally, and down 14% in California;
- Regional brewery volumes declined 9% nationally, and dipped 11% in California.
Looking at keg production, Watson, citing data from the Alcohol and Tobacco Tax and Trade Bureau (TTB), found production in California draft sales declined 63% compared to a 50% decline nationwide.
Watson, citing the BA’s survey of brewery onsite sales (for breweries that provided data in 2019 and 2020, not including new brewery openings in 2020), shared that at-the-brewery sales were down 13%, while California breweries reported a 22% decline.
“This number is actually pretty good,” he said. “If you look at the draft sales at bars and restaurants, they’re certainly down more than 13%, and so it reflects breweries’ ability to pivot and sell more beer to-go.
“California breweries, even though their sales were weaker, it suggested that they pivoted even more and that they were more able to offset lost sales than breweries nationally,” he continued, “probably out of necessity, given the tough on-premise work and in California.”
Nevertheless, the weaker trends in California also reflect the strong response by the state’s government to the pandemic, with on-premise shutdowns and stay-at-home orders.
“Obviously the government response was tighter in California, but you’ve also just got a more urban population that probably was less likely to move around anyway, and those, in combination, lead to weaker trends,” Watson said.
Watson estimates that revenue losses for craft breweries last year were in the “billions” of dollars. In fact, the average revenue per barrel sold onsite was 7.5% lower in 2020 compared to 2019, with pint sales at-the-brewery lost for most of the year. And that doesn’t even factor in profits, which likely also dropped.
Watson also walked through point-of-sale data from Arryved, which showed that revenue per site consistently outperformed visitors per site, indicating that the average spend per visit has increased year-over-year, likely indicating that consumers buying more 6-packs or cases to-go versus pints.
Watson said he’ll be tracking average spend per visit in 2021 to see if those to-go sales numbers stick.
“As customer traffic returns, how much does that pull down the average spend versus can a brewery keep that average spent high with good sales strategy, good customer service, a special a month to-go, things like that, and keep some of that spend high even as the customer returns,” he said.
Moving forward, Watson said rebuilding the on-premise “with a vibrant at-the-brewery side but also a vibrant distributed draft side is going to be really important for a lot of breweries to get back to where they were.”
Watson also briefly touched on the much-discussed beyond beer category. He said 33% of craft breweries that answered the BA’s survey said they’re now making something in bev alc that isn’t a beer. Those companies reported that those offerings made up 3.4% of their beer volume in 2020, up from 1.2% of their volume in 2019.
“So obviously very, very strong growth,” Watson said. “You can understand why people are making these things. Growth in beyond beer made up 40% of the beer loss of the total group and more than made up for beer loss for the group that produced some of these.”
Watson added that the companies that are making these products aren’t just regional craft breweries making hard seltzers.The median size of breweries making these products was 550 barrels overall, and the median brewery reported making 20 barrels of beyond beer products.
“So we’re starting to talk about pretty small breweries that are dipping their toe in this,” he said.
Although the industry is starting to see signs of a return to normal, it’s not quite there yet, according to Watson. BeerBoard and Open Table data is trending up, but not recovered. California is running behind the national averages, but starting to catch up, he added.
In the short-term, brewpubs are likely to fare better than taprooms, as food numbers have recovered more strongly than drink numbers, Watson said.
One good sign for California breweries, Google searches for “brewery near me” hit a high point in April 2021, matching July 2019’s numbers, Watson said. Although Google searches aren’t a perfect measure, they’ve been a good forward-looking indicator of at-the-brewery sales, he added.
“People are clearly starting to get more ready to go back out,” he said. “We see in the mobility data … that people are going back out more and more and more.”
As people move around more, and more get vaccinated, Watson said he’s growing more optimistic that the industry is in line for a good summer and possibly a better fall and winter than last year.