Tuesday, February 20, 2007

Craft Beer Continues to Rocket in Growth

The Brewers Association released preliminary annual figures today, showing growth of 11.7% by volume for the craft beer category in 2006. That's a real growth of 1.5 millon 31-gallon barrels in the three years since 2003. The total sales of craft beer in 2006 was $4.2 billion.

What's that mean? Well, I'd really like to take a look at the full set of figures that will come out in April (and that I'm supposed to get in about a week so I can write an article about all this for New Brewer magazine), but I suspect that what I'm going to see is growth across the category, with the only declines coming in damaged companies. We are well into the Second Breath of Craft Brewing, and so long as the economy holds up, I can't see things falling apart. Brewers are doing the right things: innovating, creating new beers, opening new markets, reaching new customers, and perhaps most importantly, growing with an eye on financial realism.

This may well be the Golden Age of American brewing. Are you concerned about the big brewers trying to take it over or throttle it? Don't be. As Stan puts it so plainly: we own the niche. "It belongs to us, not the brewers. Not even the ones we really like." Right you are, sir.

22 comments:

Stonch said...

Lew, I've asked this question on the BeerAdvocate forums but am still not sure of the answer. What exactly is "craft beer" in the US context? Does it simply mean anything that isn't a pale lager of the Bud/Miller/Coors variety, regardless of who brews it? Does it mean any beer brewed by a microbrewery, regardless of style? I suspect the answer is neither but I'd appreciate your insight. For historic reasons it isn't a term that gets used much in the UK, hence my confusion.

Loren said...

A local slant on this growth.

http://www.businessnewhaven.com/article_page.lasso?id=40706

Hopefully this means a new brewery or brewpub in some of the more starved areas of CT, like freaking Foxwoods people! Oy vey...talk about a gold mine situation just waiting to happen. Gordon Biersch maybe? Or maybe someone can revamp the pathetic extract brewpub at Mohegan Sun.

Onward and upward!

Cheers!

Stan Hieronymus said...

Where did growth come?

The little box on the right at beertown.org says microbrewery growth was 17%.

(And aside to Stonch and others. The BA has specific definitions of microbrewery - less than 15,000 barrels per year - and "craft" beer.)

Growth at the micro level is usually locally oriented, a sign that the grass roots are growing deeper. Breweries like Blue Point are blasting right out of "micro" into "regional."

Lew Bryson said...

Stan:

Eagle-eyed as always. 17% growth in the microbrewery segment -- once breweries grow past 15,000 (31-gallon) barrels a year production, they are classed as "regional specialty breweries" -- does have a specific link to local acceptance of craft beers.

These smaller brewers usually have a smaller distribution region -- there are exceptions. Most of the micro-level brewers I've talked to are experiencing strong growth right in there home market...which backs up what I'm seeing out in the bars. Craft beers are showing up in a lot more bars, and they're selling.

This is the answer to a frustration I remember feeling strongly in the 1990s, when I would ask a bartender why he had no micros (we didn't call them 'craft beers' then...), and he'd say, "We don't have them, they don't sell." Well, not if you don't have them, of course not! Now they do, and lo and behold, they're selling.

I'll go one further on what that 17% growth in the micro category means. I've been writing the New Brewer's annual update article for this category for a few years, and one year I likened it to minor league ball: you never see any really good teams here, because whenever a player gets hot he moves up to the Bigs. The micro category never showed really good growth, because the players moved past that 15,000 bbl. level and left the category: there was a constant loss of big volumes at the top end.

But 17% growth, despite that loss? Wow. That means a broad growth in the lower and middle bands of the category. That's a great thing, it means the younger breweries are thriving, the older breweries that struggled are finally catching on.

Great stuff.

Lew Bryson said...

Stonch:

The definitions are here: http://www.beertown.org/craftbrewing/statistics.html

But I'm not that taken by them. For instance: "Craft beer comes only from a craft brewer." A craft brewer is defined as small, independent, and traditional. Those are all good things, but...they're business definitions, not beer definitions. When I have a beer in front of me, with no label, no bottle, no identification, I don't know if it's from a brewery that's small, independent, or traditional. All I know is what it looks, smells, and tastes like.

What would I say? Something else. But once again, that sounds more like something I'd rather write about as a salable article -- sorry! -- or perhaps a full post here on STAG. Something I could get my teeth into. So that's two I owe you...

Steven said...

Lew, when you say, "Craft beers are showing up in a lot more bars," are you talking about urban areas? Because the craft brews rarely show at bars in suburban Chicago and you can't blame our shoddy distribution because I can find plenty of craft in the local stores.

There doesn't seem to be enough knowledge or enthusiasm for craft brew out here in the 'burbs to push demand toward anything but specialty bars - and there aren't too many of those.

Lew Bryson said...

Steven,
I guess what I'm talking about is bars I've been in lately...which is eastern Pennsylvania, upstate New York, Idaho, Metro DC, and Richmond. Not quite provincial, but I'll grant you, not exactly universal, either.

It's not that surprising that Chicago's so hot and Chicagoland's not. Philly is one of the best beer towns in the country (not just in my opinion, either), but southern New Jersey and Wilmington are two of the deadest areas between DC and Boston for craft beer. Dunno why.

Alan said...

I would suggest that the same is true for Canada - most bars are macro crappist with a few specialty bars here and there. Where there are in-roads by small brewers there is also some pattern of fairly low risk beers like pilsners and...ummm...pilsners.

I would also suggest that microbrewery and craft brewery describe different things. The first is objective and about scale, the second is about quality and in the eye of the beholder. If someone claims their infected, stale or dull brew is indicative of "craft" I will beg to differ regardless of the size of the place.

Lew Bryson said...

Alan,
"macro crappist", is that some new monastic order that brews light lagers?
Seriously, as to the diff betwixt "micro" and "craft" brewery...this is why I think that neither one is a really accurate term. They're compromised. They are useful in the same way that "beer geek" is: there isn't a better term. Yet.

Alan said...

I went on more at Stan's. There is a better phrase - great beer.

Anonymous said...

Right, Lew! It's pronounced crappeest!

jakester

roan22 said...

Lew,

Maybe Southern NJ is just not populated enough by youth for restauranteurs or brewers to want to take a chance on it. And Wilmington has always felt weird to me, too. It lacks an identity, its just kind of a blah place. Now maybe Newark where the university is would fare better for craft beer biz. I swear go with the youth or the gay or the Irish. More open palates, more trainable and more willing to shell out dollars for pricier beers. What do you think?

Lew Bryson said...

Roan,
Actually, craft beer has shown a tendency to to skew towards older, wealthier drinkers. Not that there aren't young craft drinkers -- I know YOU are! -- but southern NJ should be right in the middle of their sweet-spot. Wilmington, on the other hand: you pegged them. I suspect Iron Hill probably has 85% of the folks who will come out for craft beer in that town. As for your other prop...Youth, yeah, but the Irish drink Guinness and gayfolk tend to drink wine and light beer. I've talked to gayfolk about beer, and mostly what we talk about is "Why don't gayfolk like craft beer?" Baffling. I can think of stereotyped reasons -- because they're more concerned with body image, so they drink light beer -- and that's all I've ever heard. I think it's got to be something more than that. Dunno, though.

Anonymous said...

Lew

I think you're right about gayfolk, (is that a word?) in general, but you should see the recycling container of the two guys across the street from me! Filled to the top every other week with great, but empty, bottles.

jakester

Thomas Cizauskas said...

Let's note as well that total sales of US-produced beer increased by only 0.4% while imports jumped by 14.6%.

By the way, am I mistaken, or has the Brewers Association's definition of a what a craft brewery is (might depend upon what your definition of is is) been changed subtly within the last year to un-proscribe the use of adjuncts other than wheat or invert sugar?

Lew Bryson said...

Jake,

Yeah, I know a few beer-hip gay guys (and probably a few I have no idea are gay, sure), and some lesbians who dig it. But even they complain about how most other gayfolk drink light beer.

Oh, God, listen to me. I'm asking why it is that most gays who are beer-drinkers drink light beer. I forgot: so do straights. My bad. That's embarrassing.

Lew Bryson said...

Tom C.,
I think you're right about that definition, although it's still a real waffle: if the adjunct increases the flavor of the beer, it's okay.
I'm not sure I like the whole "independent" thing, either. If a brewery is owned by enough partners, aren't they influencing the direction of the brewery, and the beer?

roan22 said...

Damn right they are influencing the direction. When I was 15-22 I worked in the food/restaurant industry (in kitchens or as a catering server), and I observed that the owner/head honcho is always fighting with the head chef about the direction of the food. It becomes a control issue, right? Isn't it the same within brewpubs (brewer/owner squabbles)?

Or even look at the former Chairman of Pennsylvania LCB (sorry I forget his name), he quit his job in protest because the new guy Rendell brought in would have more authority than him (and would make more money), and the new guy had already criticized the 'Chairman Selection' picks in the media. That departing guy is PA's wine hero, so WTF was Rendell thinking? Politics and greed always win out.

roan22 said...

...and art does not. To me, craft beers are works of art, and brewers are artists, with a smidge of science thrown in. Chefs are also artists.

roan22 said...

...Lol my point is that's why craft or micro beer hasn't moved forward in the minds of macro crappist drinkers, because they aren't able to recognize or care about the art form. They are anti-art, and pro-clones.

Anonymous said...

Its roan22 again...last point I promise. Steven said this, "There doesn't seem to be enough knowledge or enthusiasm for craft brew out here in the 'burbs to push demand."

When I said go with the youth, I meant as the target audience to train to like craft beer. It is a training process, to work against all of those years of seeing Budweiser ads on TV. Unless you went to Virginia Tech where craft beer thrived in the 90's, and then moved to Philadelphia where you can't escape craft beer (like me). Focusing only on the age of people who are actually drinking the craft beer seems stupid. We need to restart people's mindsets so why not start young?

Lew Bryson said...

Rebecca,
Gotcha. Now that I understand what you're saying, I'm with you. Young legal adults don't drink a lot of craft beer -- yet -- and that's definitely something we should work on.