Addressing thousands of beer industry professionals this morning at the convention center in Portland, Ore., Charlie Papazian, the president of the Brewers Association, detailed the significance of craft brewery self-reflection.
Kicking off this year’s Craft Brewers Conference, Papazian expressed the importance of brand development, cultivating an image and “knowing who you are and why you do the things you do” in order to succeed in a crowded marketplace that shows no imminent signs of plateauing.
“Never ever under-estimate the importance of defining yourself, your company, your brand and your uniqueness as a group of small and independent brewers,” he said. “Don’t let others define you.”
The BA, for its part, actually does define craft brewers. By their standards, a craft brewer must be small (producing less than 6 million barrels per year), independent (less than 25 percent owned by a company that is itself not a craft brewer) and traditional (the majority of a brewer’s total beverage output is comprised of traditional or innovative brewing ingredients).
While last year’s opening session focused heavily on maintaining quality, this morning, Papazian, alongside other BA executives, focused on the future, discussing not only identity building, but also legislative initiatives and the sudden influx of private equity money infiltrating the space.
Speakers during the general session also addressed legislative issues, specifically the Small BREW Act, a BA-backed tax initiative on Capitol Hill that aims to dramatically cut back the federal excise rate brewers pay on every barrel of beer they produce.
Katie Marisic, the BA’s newly appointed federal affairs manager, called for attendees to consider how such legislation would impact their businesses.
“I want you to think about what you’d do with that type of money,” she said. “Reinvest, grow your brewery, hire employees.”
Gary Fish, chair of the BA board and president of local Oregon stalwart Deschutes Brewery, reminded the audience, however, that such initiatives aren’t entirely unopposed.
“We face a barrage of opposition on Capitol Hill, all from within the beer industry,” he said.
The Beer Institute supports a competing tax cut proposal, the Fair BEER Act, which would benefit brewers of all sizes, not just those that produce fewer than 6 million barrels per year.
And then there’s increased frequency of dealmaking in the space, by global beer corporations, recognized craft breweries, and private equity firms alike. By BA director Paul Gatza’s calculus, over the past year, there’s been a deal of some sort about once per month on average.
What that all means, exactly, Gatza has yet to make heads or tails of, he said.
“When the large buys the small, there’s a bit of backlash,” he said. “But the private equity deals, I don’t really know how that’s going to play out.”
Gatza also touched on some of the other conflicts facing the industry, including intellectual property disputes, difficulties with distribution partners, and FDA labeling requirements.
Lastly, BA staff economist Bart Watson laid out some of the cold hard numbers, putting into perspective what this industry has wrought to this point:
- The U.S. brewing industry employs 115,469 people (64,068 full time; 51,401 part time).
- Craft beer volume grew 18 percent in 2014 while dollar sales increased 22 percent (22.2 million craft barrels sold)
- Meanwhile, overall beer was up a mere 0.5 percent (“Without craft brewers, the overall beer market would be lagging,” said Watson.
- U.S. Brewery breakdown: 1,871 microbreweries, 1412 brewpubs, and 135 regional breweries for a total of 3,418 craft breweries.
- There were 46 closings in 2014 (against 68 the year prior).
- Conversely, there were 615 openings in 2014 (1.7 per day).
- There are 2,051 breweries in planning in the U.S.
- The top five states for brewery openings in 2014 were Washington (83), New York (67) California (59), Colorado (55), and Florida (42).