If youre a craft brewer that is enjoying growth, Big Beer might keep you waiting a while longer

If you're a craft brewer that is enjoying growth, Big Beer might keep you waiting a while longer

Last month, the US trade organisation for craft brewers, the Brewers Association, released a most interesting list. just-drinks' resident beer commentator, Stephen Beaumont takes a closer look at the chart of the fastest-growing US craft brewers in 2017.

On the surface, the numbers in the Brewers Association's latest chart appear impressive: Median growth from the craft beer segment in the US between 2016 and 2017 was 216%, from 284 to 963 barrels (333 to 1,130 hectolitres). But, let's for a minute take a look at what these figures really mean.

The allure of putting up triple-digit numbers - fifty of them! - must have been great

The context for all of this - and perhaps the incentive for the BA to release these numbers for the first time - is, of course, a shrinking rate of growth for craft beer in the US. By the Association's own numbers, overall growth for the craft segment between 2016 and 2017 was 5%, a far cry from the double-digit increases we saw as little as a few years ago. Even though positive growth of pretty much any sort is still good news in a declining national market that shrunk by 1.2% to below 200m barrels during the same period, the allure of putting up triple-digit numbers - fifty of them! - must have been great.

So far as those numbers go, let us begin with the scale of the list of 50. The BA states that the median growth was to 963 barrels (1,130hl). For fun, let's assume that rather than half the breweries listed as growing to that level or more, all of them increased their production between 2016 and 2017 to that amount, plus a generous allowance of an extra 25% for rounding, or 1,203.75 barrels (1,412.5hl) per brewery. Multiplied 50 times, that amount would total 60,187.5 barrels (70,628.7hl) in total, a seemingly impressive amount.

But, wait. In 2017, the BA says that there were 6,266 craft breweries operational in the US, producing 25.35m barrels (29.75m hl), including amounts exported. Given that, the fifty growth breweries listed in the Brewers Association chart amounted to 0.0079% of the total number of breweries. Yet, even our generous and, really, quite fanciful production numbers for the top 50 growth breweries in 2017 amounted to a total of only 0.00237% of overall US craft beer production.

Of course, such comparisons aren't necessarily fair, since the top five craft brewers by volume in the country (as defined by the BA) accounted for almost a full one-third of the segment's production in 2016. (Individual brewery numbers for 2017 won't be made available by the BA until later this year.) Let us, therefore, take a look at only the top ten on the list and examine their production numbers in the base year of 2016.

All of the ten fastest-growth breweries were listed in the BA's chart of 2016 production numbers. Only half of them, however, reached beer production of over 30 barrels (35hl) over the course of that year, a sure indicator of a start-up operation, since such a small amount of production over a calendar year is hardly sustainable for a business based upon brewing. Further, of the remaining five, only two topped 200 barrels (235hl) of production and but one stretched above 400 barrels (470hl).

This means that the top ten growth breweries on the BA list could in total boast of barely over 1,600 barrels (1,877hl) of production in the year prior to their triple-digit growth and, of that amount, a single brewer was responsible for close to half.

To put this in perspective, in 2016 more than 1,000 US craft brewers produced as much or more beer as the top ten growth brewers combined.

So, what to make of the BA's list if the base-line production numbers for all but two of the top growth breweries are so small as to be negligible?

Let's begin with what the list isn't. 

The Brewers Association's list is most certainly not a shopping list for Anheuser-Busch InBev

With median production of fewer than 1,000 barrels even after the breweries' triple-digit growth rates, the BA list is most certainly not a shopping list for Anheuser-Busch InBev or any other large company seeking acquisitions. That number puts even the fastest-growing of the top 50 years away from boasting the sort of sales figures that would interest a modern multi-national.

Neither is the list a slap across the face of 'Big Beer', given that it's more a celebration of smaller brewery success than it is a glorification of what the industry is doing on the whole. 

Where the list is effective, on the other hand, is as a declaration of the changing nature of craft beer in the US. While market leaders like Sierra Nevada, New Belgium and Boston Beer may be struggling off and on with stalled - or even negative - growth, very small operations like those listed in the BA chart are still racking up big year-to-year increases.

As demonstrated by the brewers on the list, that growth looks unlikely to stop very soon.

Click here for more commentary from beer industry expert Stephen Beaumont

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About Craft Beer Craft beer is a type of beer brewed in a traditional manner and usually produced in smaller quantities than that of the conventional beer....read more