How is the Beer Industry Doing?
The Brewers Association is busy putting out the latest stats for the segment of the beer industry they represent, and today economist Bart Watson walked the media through 2021’s initial findings. The Brewers Association looks at the performance of member breweries and a list of “craft” brands the organization tracks. (We’ll get to that in a moment.) 2021 marked a bounce-back year from the depths of Covid, and the topline numbers were positive:
“In 2021, small and independent brewers collectively produced 24.8 million barrels of beer and realized 8% growth, increasing craft’s overall beer market share by volume to 13.1%, up from 12.2% the previous year. The number of operating craft breweries continued to climb in 2021, reaching an all-time high of 9,118, including 1,886 microbreweries, 3,307 brewpubs, 3,702 taproom breweries, and 223 regional craft breweries. The total operating brewery count was 9,247, up from 9,025 in 2020. Throughout the year, there were 646 new brewery openings and 178 closings.”
To temper these numbers, however, that 8% growth in 2021 followed a 10% dip in 2020. So breweries are still digging out.
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What is Craft?
It’s become an almost Talmudic exercise to guess which breweries will appear on the list. The reason, of course, is that fewer and fewer of the large, established breweries in the craft era are independent. Of this year’s top ten, only three qualify. Kirin purchased Bell’s, which will go away next year. A few are collectives, SweetWater is owned by a weed company, two are old regional lager-breweries, and even the charter member, Boston Beer, is a publicly-traded giant that mostly doesn’t make beer (basically a smaller, less beery version of Anheuser-Busch circa 2000, the Brewers Association’s longtime bête noire).
One in the top ten is both a collective AND owned by a big corporation: Canarchy, which Monster recently purchased. Bart acknowledged that the tangled ownerships are challenging for a trade organization purportedly representing independent breweries. Reflecting on Monster/Canarchy, he said “This is something I know the Brewers Association board is discussing. Whether the definition needs evolution/modification in a world where we have very, very large beverage companies that are now investing in the craft brewer space. This isn’t something that anyone would have expected five or ten years ago.”
It would be great if we had more comprehensive figures on what civilians think of as craft beer: basically, everything that’s not a domestic light lager or an import. That is a stable product category, and it would be useful to know how it’s doing at a granular level. (I’d also love to see a separate accounting of the BA’s membership solo, but since it continues to lose its biggest members each year, that would presumably be a melancholy figure to track.) That’s not going to happen anytime soon, of course, so we’re left with this strange kabuki each year.
Finally, it’s worth mentioning those brewery-growth figures, which the BA has long touted with pride. Once again, new breweries far outpaced breweries that closed. Yet that very growth has made the whole industry a lot more precarious, as the number of distributors continues to decline, and after a period when retailer outlets fell. It’s just going to be a lot harder to sell beer going forward, and some are predicting a “reckoning.” If the overall market for beer is shrinking, the craft segment is stagnant, and the number of breweries grows briskly, things could get tough. Stay tuned.
Largest breweries
The Brewers Association also released their largest US breweries list today. It contained a number of surprises, one of which was how little movement there was at the top of the list. You have to go to the 15th spot before finding something dramatic. That’s good news for breweries like Stone and Deschutes, which have shed sizable volume in recent years. In that 15th slot is Gordon Biersch, up a whopping 12 places. (I have no idea what’s going on there. It’s not a post-Covid snapback to on-premise drinking; in 2019, Gordon Biersch was 32nd, and managed to climb the list in 2020.) If you’d like to see the whole list, including movement from last year, click here for a pdf. Below see the top 20.
A few breweries did register pretty big drops. Harpoon tumbled six places to 21st, Schell’s fell seven places to 30th, as did Ninkasi, to 30th, and Modern Times—even before the recent closures—fell eight places to 48th. Allagash, by contrast, climbed six places to 23rd, and Creature Comforts shot up seven places to 41st. Six breweries debuted on the list, meaning six departed. They were: BrewDog (41), Toppling Goliath (43), Two Roads (44), Fremont (45), Montauk (49), and New Holland (50).
Of those debuts, none was more dramatic than non-alcoholic producer Athletic, which landed at 27th. Now a major player in beer, the company has ads all over the country, and even aired TV spots in the recent NCAA basketball tournament. The company now sells more beer than the likes of Rogue, Surly, and Shipyard.
This success has sparked a land grab among other non-alc specialists and regular breweries in the non-alcoholic space, but man, I’m not sure it’s really a growth market. Watson addressed that this morning. “The N/A sector … took share within off-premise sales,” he reported. “[However] it’s still a pretty low share. In IRI scan data the last time I looked it was about .6 share, so a little bit more than one out of 200 beers sold are non-alcoholic beers. That’s up a tenth of a point—20% share growth from the year before.” That’s … not a lot of actual growth. (Please compare to FMBs/seltzers.) And it looks even worse when you see that one company appears to be hoovering up most of the new sales. It could be that we’re seeing an “Angry Orchard effect” happening, where massive sales by one company mask the weakness of a category overall.
Stay tuned for more as Watson continues to compile more data and revise these figures. Overall, basically good news, but one that reflects the reality of a mature market for craft beer, one expanding slowly if at all, but also one that seems to have weathered the Covid storm. Two years ago I wouldn’t have believed this report. In that light, it’s nothing short of miraculous.