Tuesday, March 24, 2015

Who, and what, is the (U.S.) Brewers Association?

In my report on the Brewers Association's 2014 'craft' beer business numbers, the footnotes were as lengthy as the body of the post. In hindsight, I believe that those observations and definitions rise above the level of mere clarification. So, I've brought them out into the open, above the jump.

Brewers Association

The (U.S.) Brewers Association —parenthesis, mine— was founded in January 2005 as a merger between the Association of Brewers (founded in 1983) and the Brewers Association of America (founded in 1941) ...

"to promote and protect American craft brewers, their beers and the community of brewing enthusiasts."
The Brewers Association is an organization of brewers, for brewers and by brewers. More than 2,300 U.S. brewery members and 43,000 members of the American Homebrewers Association are joined by members of the allied trade, beer wholesalers, retailers, individuals, other associate members and the Brewers Association staff to make up the Brewers Association.

The Brewers Association's (BA) President and co-founder is Charlie Papazian; the CEO is Bob Pease; the Director is Paul Gatza.

The BA defines an American 'craft' brewer (and thus any and all of its brewery-members) as "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.
  • Independent
    Less 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.

And, here's how the BA differentiates between six categories of breweries:
  • Microbrewery
    A brewery that produces less than 15,000 barrels (17,600 hectoliters) of beer per year with 75 percent or more of its beer sold off-site.
  • Brewpub
    A restaurant-brewery that sells 25 percent or more of its beer on site. The beer is brewed primarily for sale in the restaurant and bar. The beer is often dispensed directly from the brewery’s storage tanks. Where allowed by law, brewpubs often sell beer “to go” and /or distribute to off site accounts. Note: BA re-categorizes a company as a microbrewery if its off-site (distributed) beer sales exceed 75 percent.
  • Contract Brewing Company
    A business that hires another brewery to produce its beer. It can also be a brewery that hires another brewery to produce additional beer.
  • Regional Brewery
    A brewery with an annual beer production of between 15,000 and 6,000,000 barrels.
  • Regional Craft Brewery An independent regional brewery (between 15,000 and 6,000,000 barrels) with a majority of volume in “traditional” or “innovative” beer(s).
  • Large Brewery
    A brewery with an annual beer production over 6,000,000 barrels.

Did last year's 'craft' definition change affect the numbers?

In 2014, the BA changed its definition of 'small' brewery, increasing the upper annual production limit by 200%, from two to six million barrels of beer, and it changed the definition of 'traditional' from this (to what is stated above):
A brewer who has either an all malt flagship (the beer which represents the greatest volume among that brewers brands) or has at least 50% of its volume in either all malt beers or in beers which use adjuncts to enhance rather than lighten flavor.

When the BA announced an 18% growth in the volume of 'craft' beer sold in 2014 over 2013, that definition change could have accounted for a non-trivial portion of that increase. In a footnote to that press release, the BA stated: "[Volume of craft beer sold] figure derived from comparable data set based on 2014 update of craft brewer definition." Thus, it appears appears that there may have been some sort of weighting of the numbers. Learning if so, and what exactly that might have been, will have to wait until the Craft Brewers Conference, in Portland, Oregon, in April, where the BA will release its final report.

In terms of the number of breweries, however, any increase caused by that would have been negligible. The small number of formerly 'large' or 'non-traditional' breweries that have now been re-branded as 'craft' —e.g., Yuengling, August Schell and Straub— would have been overwhelmed by the large numbers ofmicrobreweries, brewpubs, and regional craft breweries. And without the size-increase in the definition, Boston Beer/Sam Adams, which had been 'craft,' would have been excised from the 'craft' beer ranks.

There is a discrepancy between the total amount of U.S. beer produced as implied by the BA and as explicitly reported by the National Beer Wholesalers Association.

Calculating the total beer volume in 2014 —using the BA's number of 'craft' beer volumes of 22.2 million barrels as 11% of the total volume— yields 201.82 million barrels of beer.

The NBWA based its numbers on the TTB's report of beer produced: 2,843,141,000 case equivalents (CEs). Since one barrel of a beer (31 gallons) is approximately 13.78 CEs, total U.S. beer production in 2014 can be calculated to 206.3 million barrels. A big discrepancy, even if accounting for rounding errors.


  • * Under the BA's 'Independent' definition, pioneering 'craft' brewers such as Widmer and Redhook are not considered 'craft;' nor are Blue Point, Goose Island, Elysian, all of which were recently majority-purchased by Anheuser-Busch; nor is Founders, which recently sold a 30% stake to a Spanish brewery. Terrapin Brewing, in Athens, Georgia, however, is NOT majority-owned by SAB/Miller, as is sometimes claimed. The conglomerates' investment division does own a less-than 25% stake, but lies well within the 'craft' parameters.
  • Read the BA's report on the state of U.S. 'craft' beer in 2014: here. If the BA announces any significant modifications to its numbers and/or reveals more about its methodology, I'll update this post to reflect that.
  • Read the NBWA's report on the state of all of U.S. beer in 2014: here.

  • For more from YFGF:

Monday, March 23, 2015

Clamps & Gaskets: News Roundup for Weeks 8/9, 2015.

Clamps and Gaskets: weekly roundup
A bi-weekly, non-comprehensive roundup
of news of beer and other things.

Weeks 8/9
15 February - 28 February 2015

  • 2015.02.28
    Meritage 2009 from Muse Vineyards of Woodstock, Virginia, wins Virginia's best wine in the 2015 Governor's Cup.
    —Via Virginia Wine.

  • 2015.02.27
    Leonard Nimoy, an American actor well-known for his portrayal of Mr. Spock on the television sci-fi series, Star Trek, has died at age 83.
    —Via New York Times.

  • 2015.02.26
    Comparing beer business tax breaks: Small BREW Act vs. Fair BEER Act.
    —Via All About Beer.

  • 2015.02.26
    The Federal Communications Commission approves 'net neutrality' rules, reclassifying high-speed Internet service as a telecommunications service, instead of an information service, under Title II of the Telecommunications Act of 1934.
    —Via New York Times.

  • 2015.02.25
    M&T Bank pulls a television advertisment featuring Baltimore, Maryland's Union Craft Brewing because of the use of the term "joy nuggets."
    —Via Baltimore Business Journal.

  • 2015.02.24
    Employees at Full Sail Brewing (Hood River, Oregon) vote to scrap their Employee Stock Ownership Plan (ESOP), and merge with an investment firm.
    —Via Beervana.

  • 2015.02.23
    Ocean City, Maryland 'craft' brewery, Back Shore Brewing, wins trademark case to use its original name, "Shorebilly."
    —Via USA Today.

  • 2015.02.23
    Eight southwestern Virginia breweries promote a Blue Ridge Beerway.
    —Via Blue Ridge Beerway.

  • 2015.02.19
    In January, on-premise 'craft' beer volume growth slowed, up 0.9% vs. up 1.9% in 2014. Still at 30% of all draft beer sold.
    —Via Craft Brewing Business.

    Goodbye, Heavy Seas original brewhouse!
  • 2015.02.19
    The decommissioned brewhouse at Heavy Seas Beer, in use at the Baltimore, Maryland, brewery since it opened in 1995, being dismantled and shipped south to Waco, Texas, where it will brew the wash for new 'craft' distiller, Tate Distillery. Owner, Chip Tate, was the founder of Balcones, a pioneering Texas 'craft' distillery, which he opened in 2008, also in Waco. He recently departed Balcones after a disagreement with the board.
    —Via YFGF.

  • 2015.02.18
    "End goal [of Budweiser, etc.] is to dominate every segment of beer world," according to Sam Calagione of Dogfish Head Brewery, on the international conglomerate's current acquisitions of 'craft' breweries.
    —Via Men's Journal.

  • 2015.02.17
    Danish 'gypsy' brewer Mikkeller to move into a permanent home, in ... San Diego California, in the former Alesmith Brewery facilities.
    —Via All About Beer.

  • 2015.02.16
    A changing of guard for Virginia 'craft' beer. Mark Thompson, founder of Starr Hill Brewery, in Crozet, Virginia, departs the brewery after 16 years at the helm.
    —Via Starr Hill.

    Hopyards @Stillpoint Farms (02)
  • 2015.02.15
    Contract hop prices have doubled and even tripled since the last USDA National Hop Report, in 2012.
    —Via CNBC.

  • 2015.02.15
    'Craft' brewers facing price spikes and shortages of wooden barrels: bourbon and otherwise.
    —Via Austin Chronicle.

Sunday, March 22, 2015

How beer as a whole fared in the U.S. in 2014.

Two reports on the state of beer in the United States in 2014 were delivered this month.

One came from the Brewers Association —founded in 2005 to advocate for 'craft' brewers— that showed a continuing double-digit rate of growth for 'craft' beer. Read that: here.

The other was from the National Beer Wholesalers Association (NBWA) —founded in 1938 as a trade association representing beer distributors in the U.S. (currently numbering just under 3,000).

The purpose of the National Beer Wholesalers Association is to provide leadership which enhances the independent beer distribution industry; to advocate before government and the public; to encourage the responsible consumption of alcohol; and to provide programs and services that will benefit its members.

The NBWA's report showed that:
  • U.S. taxable beer volume as a whole —factoring in mainstream beers, 'craft' beers, imports, and flavored malt beverages (FMBs)— increased by 0.4% in 2014, to a total of 2,843,141,000 'case equivalents' (CEs *).
  • One barrel of beer is the equivalent of 13.78 cases. So, doing the math, the total volume of beer produced in the U.S. in 2014 was 206,323,730 barrels (two-hundred six million, three hundred twenty-three thousand, seven hundred thirty barrels).
  • Mainstream beer sales, by volume, were down slightly (-0.6%).
  • Imports were up (+6.9%).
  • 'Craft' beer sales were up dramatically (+18% over 2013). But, at 11% of the total beer sales, 'craft' beer gains were still not enough to offset mainstream beer's losses. The NBWA didn't break down 'craft' beers' numbers. For that, read: here.
  • Can beer sales continued to exceed bottle beer sales.
  • Draft beer sales were down slightly (-0.4%).
Final December numbers from the Alcohol and Tobacco Tax and Trade Bureau (TTB) on national domestic beer shipments were released Monday. This release from the TTB closes out the last 2014 report for total industry accounting. The combination of domestic tax paid and imported volumes represent the total amount of beer available for sale in the United States. This is the only measure we have of total industry volumes that cover all domestic brewers, brewpubs and importers of malt beverages.

As previously reported, domestic volumes were down slightly (-0.6% CY), but import volumes rose significantly (+6.9% CY) to bring total industry volumes (+0.4%) into positive territory. While looking relatively flat, the industry saw some significant shifts in package mix between cans, bottles and draft. The table below shows combined domestic and import volumes for 2013 and 2014 with volume changes and shares.

The data above show that the can segment was the big winner in 2014, growing more than 30 million cases and gaining almost 1 share point of total volumes from 2013. Bottle packages lost almost 18 million cases and subsequently lost almost all of their share to can packages. Draft, on the other hand, continues to hold a 10 share of the market, losing only about 1.2 million case equivalents (CEs).  The shift between can and bottle packages in the marketplace was seen in both import (+18%) and domestic (+1.1%) volumes. Clearly, the can package has managed to break into the high-end beer business where glass has traditionally had a hold for both craft and imported beers. Craft beer’s expansion into more channels from convenience to airlines over the past few years also has helped increase can packages share of total business.

The conundrum for the beer industry is draft beer. Despite significant growth in brewpubs, taprooms and festivals driven by smaller brewers with a heavy draft mix, the total share of draft beer continues to be stuck at around 10 percent share of market and actually declined in 2014.

The graph above shows draft beer share grew from 9 percent in early 2005 to more than 10 percent in 2011; however, share growth slowed from 2011 to 2014 despite significant growth in the number of small brewers and brewpubs. 

In fact, the volume of draft beer shipped in 2014 at 287 million case equivalents is about the same volume that was sold back in 1954 at 255 million cases.


'Craft' beer by the (2014) numbers

Two reports on the state of the 2014 U.S. beer industry were released this month.

One from the Brewers Association (BA), on 'craft' beer1 sales in the U.S. The other, from the National Beer Wholesalers Association, on how beer as a whole fared.

As to the first: the state of 'craft' beer is hearty and hale.

  • By dollars, 'craft' beer sales totaled $19.6 billion dollars, representing 19.3% of all beer sold in the U.S. (which is $101.5 billion dollars!).
  • By volume share, 'craft' breweries sold 22.2 million barrels, 18% growth over 2013, accounting for 11% of the total of all beer sold in 2014 (which came to more than two hundred million barrels)2.
  • Not in the report, but the BA's mission statement calls for achieving a 20% market share by volume by the year 2020.
  • In 2014, there were 3,814 'craft' breweries operating in the U.S., accounting for 98.6% of all U.S. breweries.

Craft beer growth in 2014 (Brewers Association)

Craft Brewer Volume Share of U.S. Beer Market Reaches Double Digits in 2014

Brewers Association Reports Annual Growth Figures for Small and Independent Brewers

Boulder, CO • March 16, 2015—The Brewers Association (BA), the trade association representing small and independent American craft brewers, today released 2014 data on U.S. craft brewing growth. For the first-time ever, craft brewers reached double-digit (11 percent) volume share of the marketplace.

In 2014, craft brewers produced 22.2 million barrels, and saw an 18 percent rise in volume and a 22 percent increase in retail dollar value. Retail dollar value was estimated at $19.6 billion representing 19.3 percent market share. 3

“With the total beer market up only 0.5 percent in 2014, craft brewers are key in keeping the overall industry innovative and growing. This steady growth shows that craft brewing is part of a profound shift in American beer culture—a shift that will help craft brewers achieve their ambitious goal of 20 percent market share by 2020,” said Bart Watson, chief economist, Brewers Association. “Small and independent brewers are deepening their connection to local beer lovers while continuing to create excitement and attract even more appreciators.”

Additionally, the number of operating breweries in the U.S. in 2014 grew 19 percent, totaling 3,464 breweries, with 3,418 considered craft broken down as follows: 1,871 microbreweries, 1,412 brewpubs and 135 regional craft breweries. Throughout the year, there were 615 new brewery openings and only 46 closings.

Combined with already existing and established breweries and brew pubs, craft brewers provided 115,469 jobs, an increase of almost 5,000 from the previous year.

“These small businesses are one of the bright spots in both our economy and culture. Craft brewers are serving their local communities, brewing up jobs and boosting tourism,” added Watson. “Craft brewers are creating high quality, differentiated beers; new brewers that match this standard will be welcomed in the market with open arms.”

Note: Numbers are preliminary.

The Brewers Association will release the list of Top 50 craft brewing companies and overall brewing companies by volume sales on March 31 [2015]. Additionally, a more extensive analysis will be released during the Craft Brewers Conference & BrewExpo America® in Portland, Oregon from April 14-17 [2015]. The full 2014 industry analysis will be published in the May/June 2015 issue of The New Brewer, highlighting regional trends and production by individual breweries.


Saturday, March 21, 2015

Pic(k) of the Week: Lemons, limes, & Hopslams 2015

Lemons, limes, & Hopslams 2015

It seems appropriate for the bar to have placed bottles of Bells Hopslam 2015 (10% alcohol-by-volume, or abv; 70 International Bittering Units, or IBUs) next to a 'hotel' pan of lemons and limes. Only missing from the tableaux were grapefruits and pine cones.
Starting with six different hop varietals added to the brew kettle & culminating with a massive dry-hop addition of Simcoe hops, Bell’s Hopslam Ale possesses the most complex hopping schedule in the Bell’s repertoire. Selected specifically because of their aromatic qualities, these Pacific Northwest varieties contribute a pungent blend of grapefruit, stone fruit, and floral notes. A generous malt bill and a solid dollop of honey provide just enough body to keep the balance in check, resulting in a remarkably drinkable rendition of the Double India Pale Ale style.
Bell's Brewery

And, then, there were those Dogfish Head 120s!

Arlington, Virginia.
11 March 2015.