The association – which represents small and independent US brewers – this week released its annual growth figures. Craft brewers collectively produced 26.3 million barrels of beer and realized just under 4% total volume growth in 2019, increasing craft’s overall beer market share by volume to 13.6%. This represents similar growth to the previous year; while also edging up the category’s overall market share (up from 13.2% in 2018).
In value terms, retail dollar value was estimated at $29.3bn, representing a 25.2% market share and 6% growth over 2018.
“Although craft brewers entered 2020 on a solid foundation, the beer landscape is dramatically different today than it was just a few months ago,” said Bart Watson, chief economist, Brewers Association.
“Breweries will be facing new realities due to the pandemic with extended closures, tight cash flow, societal shifts, and other economic variables in play. These 2019 figures will allow us to see how much COVID-19 affects small brewer production and jobs.”
The craft beer market was already changing...
A craft brewer is defined by the Brewers Association as one that is small (annual production of 6 million barrels of beer or less) and independent (less than 25% of the brewery is owned or controlled by an alcoholic beverage industry member that is not itself a craft brewer).
In 2019, there were 8,275 craft breweries operating in the US – up from 7,346 in 2018. This total includes 2,058 microbreweries, 3,011 brewpubs, 2,966 taproom breweries, and 240 regional craft breweries. Throughout the year, there were 942 new brewery openings and 294 closings.
Craft brewers provided more than 160,000 direct jobs, an increase of 7% over 2018.
The US craft beer category has been turning into a more mature market: no longer seeing the heady growth rates of the past. This means brewers have needed to adjust business models accordingly, planning their strategies around a much more dense and competitive market.
And yet 4% growth is still high when compared to the overall beer category in the US, which has been declining in recent years.
Coronavirus impact: 'The numbers aren't pretty'
But the coronavirus pandemic means that 2020 could shape up very differently. A survey conducted by the Brewers Association of its members up to March 25 summarised that ‘the numbers aren’t pretty’: 95% of respondents expected YoY sales for April to be down; 89% had either stopped or slowed production; and 61% expected that they would have to lay off employees.
Being small businesses by definition, craft brewers are among the most vulnerable companies. Because so many breweries sell a high percentage of their beer through their taproom or brewpub, and draught sales make up roughly a third of craft production, the rapid shuttering or restriction of breweries, bars, and restaurants has drastically cut short-term cash flow as well as production in the medium-term.
The vast majority of craft breweries (90%) said that their onsite sales had already been affected (around 87% had already closed their taproom or brewpub when they responded); as well as seeing an impact on distributor orders (59%) and cancelled events (88%).
On March 27, the US passed a $2.2 trillion stimulus package for economic relief from the coronavirus pandemic. The Brewers Association saw this as a positive move but warned that the impact on brewers would be wide-ranging: “While this is a significant step forward that provides much needed relief for small and independent breweries who are facing dire economic challenges, there is more work to be done.”
For its members, the BA is hosting frequent free webinars about the legislation and its impact on brewers. This week’s topics include the specifics of CARES, small business loans and forecasting cash flow needs.