Craft Production Volume and Brewery Growth: Trouble Brewing?

If you're a beer geek, you're well aware that the craft beer industry continues to boom across the country. New breweries continue to open at breakneck pace. Every day new taprooms, brewpubs, and growler fill stations are serving the insatiable demand. The Brewers Association recently released data that shows the extent of the growth in the craft beer market (see the end of this post for the BA definition of "craft").

Production Volume:  Total mid-year craft production volume grew to 12.2 million barrels. This represents a 15.1% increase from last year.

Brewery Count:   699 new breweries opened their doorsa whopping 23% increase from last year! This is an incredible figure, especially if you consider that the growth rate has been accelerating for the past four years. In addition, 1755 breweries are in the planning stages.

Not So Professional Analysis:  This data released by the BA shows incredible growth. But is volume growth strong enough? If you look at the data in a slightly different way, it reveals a fact that may cause concern from some brewers. According to my simple math, comparing 2015 to 2014, each brewery (on average) is making 6.4% less beer.

In addition, consider that fact that 1755 new breweries are in the planning stages. That's a huge number! If they all open, it implies a total of nearly 5,500 breweries, or a 46% increase from current levels. We don't know when (or if) these breweries will eventually open, but if we assume a flat 2015 level of production (3,263 barrels per brewer), the market would have to grow to 17.9M barrels just for each brewery to maintain production at 2015 levels.

In closing, it's important to point out that there is no average brewery. Some produce more volume, some produce less. Some make amazing beer, and othersnot so much. Can the market sustain all of these new breweries? Time will tell. Regardless, if you're a consumer, I believe this data means good things for you and your beer glass. It will be very interesting to see how this plays out. I'll look forward to revisiting this analysis next year...

What are you thoughts on the BA's data, or my interpretation of it? For more details, please review the BA's full press release below.

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Brewers Association Reports Big Gains for Small and Independent Brewers
Mid-Year Measurements Reveals Sustained Craft Brewing Industry Growth

Boulder, CO • July 27, 2015—The craft brewing industry has continued a strong pace of growth in the first half of 2015, according to new mid-year data released by the Brewers Association (BA)—the not-for-profit trade association dedicated to small and independent American craft brewers.American craft beer production volume increased 16 percent during the first half of the year.

From January through the end of June 2015, approximately 12.2 million barrels of beer were sold by craft brewers, up from 10.6 million barrels during the first half of 2014.

“Industry growth is occurring in all regions and stemming from a mix of sources including various retail settings and a variety of unique brewery business models,” said Bart Watson, chief economist, Brewers Association. “The continued growth of small and independent brewers illustrates that additional market opportunities and demand are prevalent, although competition in the sector is certainly growing and the need for brewers to differentiate and produce world class high quality beer is more important than ever.”

As of June 30, 2015, 3,739 breweries were operating in the U.S, an increase of 699 breweries over the same time period of the previous year. Additionally, there were 1,755 breweries in planning. Craft brewers currently employ an estimated 115,469 full-time and part-time workers, many of which are manufacturing jobs, contributing significantly to the U.S. economy.

“More and more Americans are discovering the joys of enjoying fresh beer produced by their neighborhood brewery. By supporting local, small and independent craft breweries, beer lovers are gradually returning the United States to the system of localized beer production that existed for much of our nation’s history,” added Watson.
Craft brewer definition: An American craft brewer is small, independent and traditional. Small: Annual production of 6 million barrels of beer or less (approximately 3 percent of U.S. annual sales). Beer production is attributed to the rules of alternating proprietorships. IndependentLess than 25 percent of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member that is not itself a craft brewer. Traditional: 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. Flavored malt beverages (FMBs) are not considered beers.
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About the Brewers Association
The Brewers Association is the not-for-profit trade association dedicated to small and independent American brewers, their beers and the community of brewing enthusiasts. The Brewers Association (BA) represents more than 70 percent of the brewing industry, and its members make more than 99 percent of the beer brewed in the U.S. The BA organizes events including the World Beer Cup®Great American Beer Festival®Craft Brewers Conference & BrewExpo America®SAVOR℠: An American Craft Beer & Food ExperienceAHA National Homebrewers ConferenceNational Homebrew Competition and American Craft Beer Week®. The BA publishes The New Brewer magazine and its Brewers Publications division is the largest publisher of contemporary and relevant brewing literature for today’s craft brewers and homebrewers.

Beer lovers are invited to learn more about the dynamic world of craft beer at and about homebrewing via the BA’s American Homebrewers Association. Follow us on Twitter.

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