First Draft: Circle the Clydesdales, craft beer continues to grow
Last month in this space, First Draft cast a quizzical eye at Budweiser’s recent Twitter campaign in which the mighty mega-brewer declared it is #NotBackingDown.
We were confused. So we sent Bud and its global masters, InBev — the world’s largest beverage company — a list of questions, wondering who, exactly, has the power to make the so-called King of Beers so skittish?
Despite their courageous Twitter stand, Budweiser officials never replied.
But that’s OK, because the answer might have surfaced earlier this week, in the form of annual growth figures released by the Brewers Association, the trade group representing American craft brewers.
And it turns out that Budweiser has legitimate cause to be afraid — or at least irritated — because craft beer continues to grow at exponential rates.
A few findings:
• Craft beer’s market share rose to 12.2 percent in 2015, more than double its market share of 5.7 percent just five years ago.
• While the total U.S. beer market volume declined in 2015 by 0.2 percent, craft brewer’s volume rose 13 percent.
• More than 600 new breweries opened in 2015, while 68 closed. Overall, there were 4,269 breweries in the country by year’s end — the highest total ever— of which 99 percent were small and independent craft breweries.
“For the past decade, craft brewers have charged into the market, seeing double-digit growth for eight of those years,” says Bart Watson, the Brewers Association’s chief economist. “There are still a lot of opportunities and areas for additional growth. An important focus will remain on quality as small and independent brewers continue to lead the local, full-flavored beer movement.”
And, of course, Budweiser/InBev are paying close attention.
But should they really be worried? After all, they and other macro-breweries still dominate the U.S. beer market.
The answer is yes, because a trend is a trend, and this is not trending well for the mighty Clydesdales.
“That growth is impressive as heck,” notes James Craft, a professor at the University of Pittsburgh’s Katz Graduate School of Business. “It suggests to me that there may be a shift from traditional brands to craft beers that articulate some kind of specific process they’ve used or a unique taste.
“And that would suggest some potential problems for the traditional brewers.”
(Disclaimer: Despite his name, Craft is not an advocate for craft beer. Indeed, he’s not even much of a craft imbiber. He prefers red wine.)
Perhaps the industry’s most impressive statistic from last year was its overall production: 24.5 million barrels of beer, up from 10.1 million barrels in 2010 — an increase of nearly 150 percent.
Producing all of that beer takes people, which means jobs. Craft brewers employed 121,843 people in 2015, a 5.5 percent increase from 115,469 jobs in 2014.
Craft calls the job increases “meaningful, but not overwhelming.”
“It’s not trivial (but) it’s not like it’s large-scale manufacturing,” Craft notes. “It’s interesting growth, one that seems to reflect a dynamic, evolving process in terms of taste.”
The Brewer’s Association’s Watson sees more room for growth.
“Small and independent brewers are a beacon for beer and our economy,” Watson says. “As breweries continue to open and volume increases, there is a strong need for workers to fill a whole host of positions at these small and growing businesses.”
A couple additional findings:
• Craft beer’s retail dollar value was an estimated $22.3 billion in 2015, or 21 percent of the market.
• The South is one of the fastest-growing regions for craft beer, with four states seeing at least 20 new breweries last year: Florida, North Carolina, Texas and Virginia.
The Brewer’s Association will release a more extensive analysis next month at the Craft Brewers Conference & BrewExpo America in Philadelphia, May 3 to 6.
Those numbers will most certainly bolster what industry insiders have been saying for years:
Craft beer is not a fad. There is no bubble. This is not going away.
So … perhaps now we understand what has Budweiser all defensive and #NotBackingDown?