A lot has happened in the last month that has entirely upended the craft beer landscape and beyond. With Part II of our Craft Update 2020 webinar series coming in just 3 weeks, you will get an up-to-the-minute overview of where US craft beer stands amid COVID-19 outbreak, and much more. We'll also provide in-depth analysis of state and market-level 2019 data you can't get anywhere else, including top craft brewer shipments in select states, off-premise craft trends in key cities and states, on-premise highlights, and cannabis trends vs beer in key states.

Gambrinus/Shiner is latest co to donate generously to help local restaurants and their employees get thru challenging times, donating $500K to the Texas Restaurant Relief Fund established by TX Restaurant Assn. co announced. Fund provides up to $5K per restaurant unit for "immediate financial relief to Texas independent restaurants and their employees impacted by COVID-19." Co's also encouraging social media followers to donate to TX Restaurant Relief Fund in order to help it reach goal of raising $10 mil.

Largest US state represents 12-13% of total US breweries on its own. And California among first states to shut on-premise bizzes down, call for residents to shelter-in-place to reduce spread of coronavirus. So CA craft brewery sales down an average of 43%, according to 230 responses to Calif Craft Brewers Assn impact survey, org shared. Full 99% of the state's almost 1,040 craft breweries impacted negatively, natch. Before the virus, survey respondents sold half their beer thru their tasting rooms and another 20% on draft at restaurants and bars. All that volume slashed. Many CA brewers, including some of largest, laid off or furloughed hundreds of workers, recall. Among all employees at responding breweries, 29% already laid off and 31% furloughed, according to CCBA.

COVID-19 is unlikely to have much of an effect "longer term" in Bart's view, he shared during Q&A while taking a more optimistic tack. Humans have "incredible ability to forget these things" over the long term. Yet "medium term, draft takes a hit," Bart stated. There are an "incredible number of restaurants closed" and bars are closing at "fairly similar" rates. "Some volume goes to accounts that stick around," but not all will, especially since bars won't be "packed" anytime soon. But "the system proved pretty resilient" in the past and humans are "social animals," Bart added. Long term, however long that may be, there's likely "no effect really." On-prem will "bounce back closer to where it was."

For the 8,386th time, the vast majority of US breweries are not just small, but tiny. The average craft brewery in the country produces just a few thousand bbls per yr. But the median brewery (that is, if you lined up all the breweries in the country in order of production volume, the one right in the middle) sold less than 400 bbls last yr. Almost 1,700 breweries in this country sold less than 119 bbls in 2019. Another 1,700 or so sold between 119 bbls and 260 bbls, Bart showed. "Small breweries are very, very small," he reiterated. On the flip-side, the largest 1% of breweries shipped 40K bbls or more. The largest 5% sold around 8K bbls or more. Recall, the volume threshold for breweries that can file fedl excise tax returns annually is 7,143 bbls. That covers very close to 95% of the breweries in the country. Indeed, 80% of US breweries sold under 1,500 bbls last yr. This is important for a number of reasons, but Bart urged folks to remember these facts later this year and into next when discussing the number of breweries that close due to impacts of COVID-19. "The toll is probably going to hit the smallest breweries the most," Bart suggested. So if a thousand or even a few thousand breweries close, that's "not going to be a huge chunk of craft brewing volume."

Secondary locations for existing breweries make up a growing portion of total new breweries counted by BA, Bart showed. There were 362 secondary brewery locations that opened over the last 3 yrs, including 97 in 2017, 134 in 2018 and 131 in 2019. As total new brewery count slowed, secondary locations rose from 9% of total new breweries in 2017 to 12% in 2018 and 14% last yr, Bart shared. Indeed, many established craft breweries built new taproom-focused locations, often in urban areas, to compete with the surge in tiny taproom breweries and further develop their innovation and on-site capabilities. But rise in secondary locations will likely be "delay[ed]" by COVID-19 moreso than new brewing cos, he thought. New breweries that secured funding, equipment and location have little choice but to open and generate as much revs as possible regardless of current mkt conditions. Secondary locales can wait. Plus, secondary locations are facing many of the same challenges as small breweries that fear they'll need to close if mkt conditions and/or level of assistance doesn't improve soon.

Another aspect of the more challenging environment for craft brewers is pricing. BA craft avg price gains slowed each yr since 2015 in IRI multi-outlet + convenience data, from +3.2% in 2016 to up just 1.1% to $39.33/case in 2019. Craft 6pk prices slowed at similar rates, from +3% in 2016 to +1.4% in 2019. Either way, last yr was the first time pricing rose less than inflation, Bart noted. So brewers are "making a little less money on every 6-pack they sell." BA craft pricing was healthier in on-prem chains, +3% in Nielsen CGA. But price gains were slower "even in taprooms and brewpubs," said Bart.

There is "plenty of excess capacity out there," Bart acknowledged. But the "distribution of capacity is uneven." It isn't always in the right place. Total craft capacity north of 45 mil bbls in 2019, he estimates, about where it was in 2018. Capacity up low-teens since 2016. Up over 10 mil bbls, close to 35%, since 2014. The production-to-capacity ratio is down considerably since 2014, when craft production utilized close to 2/3 of available capacity. Utilization rate dropped to about 60% for next 2 yrs. But steady as she blows since then, stable at about 56% for last few yrs, Bart showed.

Breweries founded in just the last 5 years got almost all of BA-defined craft brewer growth in 2019, Bart showed. The 3,000+ breweries founded in 2014 or earlier got just 6% of a little over 900K bbls of total BA craft growth. A grand total of 50-60K bbls. Since these breweries represent vast majority of craft volume, suggests craft breweries aged 5 yrs or older barely did better than flat in 2019 as a group. Instead, breweries founded between 2015 and 2017 got 46% of BA-defined craft growth. And the youngest breweries in the country, founded in just the last 2 yrs, represented fully 48% of craft growth last yr, in realm of 425-450K bbls. World may be turned on its head more recently. But that really "shows the challenges of existing breweries out there," Bart said.

Bart took a moment to reflect on just how much the brewery count in the US has skyrocketed over the last decade. In 2010 there were less than 2K breweries operating in the country. By end of 2019 there were nearly 8,400, according to the BA. More than 5K breweries opened in just the last 5 yrs thru 2019 including another 1K new breweries in 2019 (once BA's tally is finalized, Bart suspects). This was "perhaps a unique moment in brewing history" that "we haven't seen before and may not see again," Bart stated, dubbing this decade the "'at-the-brewery' era." But now "we've reached a point where maybe that's ending," and "even prior to the pandemic shock we're in right now," there were signs of slowing down that "shows where the industry is going." Brewery closings "will happen more rapidly," and in more mature craft mkts like OR or MI, number of brewery closings and openings were already "closer together" last yr, Bart shared. At same time, there are still thousands of breweries in planning; BA counts 8,146 active breweries right now and 11,827 active TTB brewery permits thru Mar 2020. Many might not continue with plans to open "given the current state of the market." But "a lot are still interested and see opportunity," Bart reiterated. There will be "an elevated number of breweries for a while."