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Tuesday, March 27, 2012

Are You Afraid of Heights?

Then don't look at the trend line for craft beer growth--it's as steep as a Himalayan mountain. From the annual Brewers Association report:
Craft brewers saw volume rise 13 percent, with a 15 percent increase in retail sales from 2010 to 2011, representing a total barrel increase of 1.3 million. In 2011, craft brewers represented 5.68 percent of volume of the U.S. beer market, up from 4.97 in 2010, with production reaching 11,468,152 barrels. With 250 brewery openings and only 37 closings, the BA also reported that 1,989 breweries were operating in the U.S. in 2011—an 11 percent increase from the previous year.
A few things to add context:
  1. Craft beer is a narrow definition and does not include all good beer. The Craft Brewers Alliance is excluded, for example. It doesn't include good imports. It doesn't include non-lager beers like Blue Moon or Shock Top, which, however much you may dislike them, are not macro lite beers. So the BA numbers substantially low-ball a more expansive definition of the ascent of "good beer."
  2. Numbers like 13% growth are now routine, but keep in mind that 13% growth this year means more beer than 13% growth would have last year. Here's the absolute growth in barrels by year since 2005: 800,000, 900,000, 500,000, 600,000, 1,o00,000, 1,500,000. Craft brewing has nearly doubled in barrels since 2006.
  3. Overall beer sales declined 1.3% last year, which will hasten the exodus toward Shock Top-like brands. The US may not be a minority light-lager country in the next few years, but long term? It could easily happen.
  4. The BA reported 9,950,000 barrels last year and then revised the total up to 10.1 million. Could be that the growth has been even more pronounced.
The beer world, it is a'changin'.

1 comment:

Pete Dunlop said...

I look at the numbers and can't help thinking craft is a slow moving tsunami. The big boys seem unable to stem the tide. The biggest risk for craft brewers is over-saturation in key markets (like Portland) and overpricing. Both of these risks are in play.

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