Beer Marketer's Insights
Beer sold directly to consumers on-site at breweries grew about 13%, 400K bbls to 3.6 mil bbls last yr, according to TTB "premises use" stats. But there will "probably be revisions upward" thru end of 2020, Bart reminded. Premises-use volume across all US breweries jumped some 3 mil bbls in last 5 yrs, expanding by around 6X. Growth in taproom model and on-site sales "definitely driven by increased demand," Bart thinks. Yet total US draft beer production not as healthy. It hovered around 19 mil bbls for a few yrs, but down closer to 18.5 mil bbls in 2019, Bart showed. Premises-use sales not just draft, of course. But those sales now equal to over 19%, close to 20% of total domestic draft volume. Up from about 10.5% of draft in 2016 and more like 3-4% in 2014.
Microbreweries are "the most forgotten business model," in a way, sez Bart. This was 1st year BA separated out "taproom" breweries, cos with 25% or more of volume sold at the brewery, from standard microbreweries under 15K bbls. Nearly 3K taproom breweries collectively grew 26%, nearly 340K bbls to 1.6 mil bbls, Bart shared. That's 37% of total BA craft growth last yr. Just ~5% of total BA craft volume. Up until mid-March 2020, this was the "preferred" model for many newcomers opening up shop in recent yrs, adding lots of growth to craft overall. Meanwhile, microbreweries put up "fairly solid" growth collectively, up 6%, +275K bbls to 4,889,000 bbls in 2019. But this group has "their own challenges," Bart noted. Median growth of this group of 2K plus breweries was only 1%, suggesting that "a few high growing microbreweries are driving the growth." For most micros, it's "more middle of the road," as many are "squeezed" between larger cos with better distribution/scale and smaller local cos focused more on their taprooms.
Regional brewers (15K bbls/yr or more) "have had a challenging environment" for a while now, with "crowded" distribution, dealing with both local competitors and "biggest global competitors," Bart acknowledged. But they collectively "did improve" to +1% growth by volume, up 180-190K bbls, reaching 17,919,000 bbls, he detailed further during the State of the industry presentation. That was 21% of total craft growth last year vs negligible growth (or worse) in recent yrs.
COVID-19 Brought "Revolution" in Distribution Laws "Overnight," Sorini Sez; CBC Govt Affairs Update
Coronavirus crisis created enormous hardship, including for small US brewers. But among those short-term law changes created to assist impacted bizzes, "overnight," breweries in many states could suddenly start delivering and/or shipping their beers directly to consumers, a previously prohibited privilege. "What a revolution," industry atty Marc Sorini reflected during first virtual Craft Brewers Conference seminar yesterday. Tho these changes "only temporary," he reminded, potential lasting effects will depend on how long "temporary" lasts.
BA Craft Grew ~4% to 26.35 Mil Bbls in '19; 942 Opened Vs 294 Closed; Tuff 2020 Setbacks
Prior to massive disruption from COVID-19, Brewers Assn-defined craft beer continued to grow and gain share of total beer biz in 2019. BA craft beer grew "just under" 4% to 26.35 mil bbls last yr, up ~900K bbls vs 2018, chief economist Bart Watson shared on media conference call following annual growth report released earlier today. Excluding exports, US sales reached 26.081 mil bbls. And retail $$ grew 6% to $29.3 bil, Bart estimates. So BA craft gained 0.6 share of total beer production to 13.6 and increased to 25.2 share of $$ as total beer volume slipped 1.9%, according to BA. Tho keep in mind, BA excludes FMB/hard seltzers/ciders from its total, inflating craft share numbers a bit. BA craft more like 12.6 share of total US beer/FMB/cider shipments last yr, which grew 0.3% to 206.233 mil bbls (after TTB revised shipments upward). Indie craft's growth and share of total biz continued to tick up regardless of how you slice it, but less so when including FMB/seltzers.
In early weeks of COVID-19 pandemic hitting NYC, with pantry loading already in full effect, total beer $$ grew nearly 14% in NYC metro IRI multi-outlet + convenience data YTD thru Mar 22. But craft, along with several other segments, are losing heaps of share here. Craft beer sales grew 4% to $9.1 mil YTD thru Mar 22, but shed 1.4 share of total beer $$ to 15.4. Even imports (+5%) and superpremium (+6%) are shedding share for the yr, tho keep in mind that imports still hold a whopping 40 share of NYC beer $$ even as it lost 3.3 share YTD. So what's gaining ground? FMBs (+160%) and non-alc beer (+67%) are the only share gaining segments here, as FMBs jumped a whopping 9 share to 15.8 YTD with over 85% of total gain driven by White Claw.
On average, the Small Biz Admin loaned a small US brewer almost a half-mil $$ over the last 10 yrs. SBA issued total of $1.57 bil in loans to small brewers over last decade, according to analysis by Business Journals publications, now published widely across regional outlets. It's part of broader analysis of SBA loans in light of new programs created as part of economic stimulus packages following coronavirus-related restrictions. Dire tone and potential impact on craft beer played up with familiar results of Brewers Assn impact survey. Also cites much broader finding that over a quarter of $75 bil in all small biz loans issued by SBA over last 3 fiscal yrs exceeded the agency's guarantees, adding to broader financial risk.
Another fast week of off-premise sales to kick off April followed slower wk at end of Mar. Total craft $$ up 19.6% for 1 wk thru Apr 5 in additional IRI multi-outlet + convenience data provided by Bump Williams Consulting. Recall, craft growth peaked near +30% for wk ended 3/22. "Slowed" to +12.5% wk thru 3/29. Segment now +18% for 5 wks since early Mar when COVID-19 driven off-premise ramp up began. Craft $$ +7.6% YTD thru 4/5 in IRI MULC. Volume trends so far slightly faster during pantry-loading period, +19.8% for 1 wk.
"This is the most difficult thing we've had to deal with in our 40-year history," Sierra Nevada founder Ken Grossman told CBN late last week. "We've had fires, we've actually had floods," but nothing compares to effects of COVID-19. Yet Sierra Nevada has not had one COVID-positive employee. And Sierra Nevada never laid off employees previously and "we haven't laid anyone off as of now," said Ken.
5-Wk Virtual CBC Starts Next Monday!
In case you missed it, Brewers Assn is now offering "a five-week virtual Craft Brewers Conference," in place of its annual conference that would have been held in San Antonio later this mo. BA is making all seminars available for free as 5 wks of seminars begin next Monday, Apr 13. Check out the schedule on the CBC website.