The numbers indicate that small and independent craft brewers have maintained a steady growth of 5% in the first half of 2018.
The BA obtained its results through a mid-year production survey sent to hundreds of US breweries.
Market realities
The survey found that production volumes in 60% of regional craft brewers are up, and 76% of micros/brewpubs are up. It tends to get tougher for smaller breweries to succeed the larger and more widely distributed they are, according to Bart Watson, chief economist for the BA.
“While more mature, 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.
To verify the survey results, the BA combined data from the Alcohol and Tobacco Tax and Trade Bureau (TTB) and scan data from supermarkets and convenience stores. It then compared that to the survey growth numbers.
Watson found that “at-the-brewery sales look like they are growing at about the same absolute rate as 2017,” indicating 10% of craft volume is growing between 15-20% a year.
2017-2018: How is the market changing
In general, craft beer production was also up 5% in production volume and sales in 2017, while overall beer fell 1.2% in sales and 1% in production volume.
The mid year 2018 figures show slower growth rates across brewers of all sizes, when compared the same time last year. Breweries with less than 10,000 CE (case equivalents) increased by 30.78% in 2018 (compared to +42.8% at the mid-year point in 2017), while breweries with more than 1 million CEs fell 2.47% mid-year 2018 (compared to -0.5% mid-year 2017).
Despite this, the BA stands by the 5% growth figure for 2018 because the weight of each group is changing. The smallest size breweries are increasing their share of representation in the craft category which changes the significance of their numbers.
Watson also believes that scan data underestimates total company growth because of on-premise versus off-premise sales discrepancies. He estimates that independent craft is growing at 3-4% when not including at-the-brewery sales.
“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. 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,” Watson said.
US craft brewer defined
According to the BA's definition, a craft brewer is small, independent and traditional:
- Annual production of 6 million barrels of beer or less
- Less than 25% of the craft brewery is owned or controlled by an alcoholic beverage industry member that is not itself a craft brewer.
- 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.