Beer by the numbers: State of the Craft Beer Industry

Written by on April 10, 2019 in Beer, News - No comments

Growth in the craft beer industry¹ may be slowing down but it’s certainly not stopping according to data presented this morning at the 2019 Craft Brewers Conference in Denver.

The highlights: Craft beer sales are at an all time high. About 15% of all draft beer in the US was sold directly from breweries last year. And 1 out of every 4 dollars spent on beer in 2018 was spent on craft.

Growth for the craft beer industry occurred in an overall down beer market, which dropped one percent by volume in 2018. Craft beer production increased by about four percent, about the same as the previous year’s growth rate, resulting in almost 26 million barrels produced in 2018 by the country’s 7,346 craft breweries. “Craft beer,” as defined by the Brewers Association¹, comprised about 13.2% of the beer market’s volume share and 24% of the beer market’s dollar share. At-the-brewery sales grew to over three million barrels, representing 40 percent of craft growth.

Most of that growth comes from newer and smaller breweries. The median age of a brewery in the United States is now less than four years old, and new breweries — those that have been open for less than three years — made up the bulk of the production growth by increasing their barrel production by 52.2%. Breweries founded in 2014 or earlier only upped their barrelage by about 0.5% with the per-brewery growth rate dropping to just over 100 barrels per brewery, the lowest since the early 1990s.

Smaller microbreweries accounted for more than 80% of the craft category’s total growth with larger, regional breweries remaining stagnant. Of the 7,346 craft breweries operating in 2018, 4,521 are classified as microbreweries, 2,594 as brewpubs, and 231 regional craft breweries.

“One of the challenges [for regional breweries] is that we aren’t seeing distribution grow as it once did,” said Bart Watson, Chief Economist for the Brewer’s Association. “Stores aren’t adding more shelf space and bars aren’t adding more tap handles… 2018 was the slowest growth for distribution of craft in a long time.”

Last year also saw the most brewery closings ever at 219, up from 195 in 2017 and 117 the year prior.

“But 219 closings with more than 7,000 breweries means less than 3% of the total industry,” said Watson. ”That’s much lower than almost any comparable industry… as more than half of all businesses fail within their first six years. As we have more breweries, we’re going to continue to see that closing number rise.”

Those closures aren’t scaring off new breweries from emerging, though; More than 1,000 new breweries opened in 2018, and with more than 10,000 currently active federal brewers permits, there are at least another 2,500 active breweries in planning.

Ohio has 298 breweries currently operating in the state with another 50 or so in planning according to the Ohio Craft Brewers Association.

The slides from the State of the Industry presentation can be downloaded here.

¹ The Brewers Association (BA) defines a “craft brewery” as one that is 1) small: produces less than six million barrels of beer annually and 2) independent: is less than 25 percent owned or controlled by a beverage alcohol industry member that is not itself a craft brewer. All data cited includes only breweries that meet this definition. In a statement issued shortly after the presentation by Thad Fisco, owner of equipment manufacturer Portland Kettle Works, Fisco estimates that from 2014 to 2017 approximately 1.5 million barrels of craft beer were removed from the BA’s defined craft market sector as a result of big breweries acquiring smaller breweries, making them no longer “independent” by BA standards. According to Fisco’s statement, these breweries that had been previously defined as “craft” controlled roughly 4.9% of the overall market share, making the total craft sector by volume in 2018 closer to 18% if those breweries with factored in; the BA cites 13.2% as the craft volume share by their narrow definition of “craft.”

About the Author

Cheryl Harrison. Editor of Drink Up Columbus. Co-Founder of the Columbus Ale Trail.

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