The Top 50 Breweries. What their struggles do/don't mean for the rest of us.
Read time 4 min.
When Bart Watson speaks, people listen. The chief economist for the Brewers Association spends his time analyzing industry data so we don't have to. Thank god! This week we talk about the latest data and why it does or does not affect you. So here we go.
What we learned from 2022
This week the Brewers Association (BA) published its Top 50 Breweries list for 2022 (based on production volume). More importantly, along with the list the BA provided some insights about the state of the craft brewing industry, based on production data, sales data, and so on. Between the report itself, and the additional info provided at the press conference, there is a lot of valuable stuff to unpack. Here are a few things to consider from this year’s report (see it here).
An all-time high. At year’s end, the U.S. was home to 9,552 breweries, the most breweries in history. In 2022, 549 breweries opened and 319 closed. Brewery openings continue to outpace closings; however, the gap is getting smaller.
The word "plateau" comes to mind.
“I do want to stress that even in a tough environment, we saw openings continue to outpace closings in 2022. Those lines are coming together… But this is not a bubble bursting, this is a maturing market.”
More jobs and fewer job applicants. Craft brewers accounted for 189,413 direct jobs last year. Employment at craft breweries increased by 9 percent, which the BA attributed to both the increased number of breweries and the continued shift to hospitality-focused business models. In other words, as an increasing number of breweries rely more on taproom sales, they need more employees.
Watson points out that the labor market will remain tight, “We have a much smaller generation compared to millennials in Gen Z entering the labor market right now, and so, particularly in some of those entry-level positions, it’s probably just going to be a tight labor market for the coming years.”
Breweries and taproom managers, you should treat your employees well. Show 'em some appreciation. They are treasures.
Same beer, more money, slimmer margin. Last year craft brewers collectively produced 24.3 million barrels of beer, which is on par with the previous year. Dollar sales were up. Given the rising price of beer, that isn’t surprising. Watson also pointed to some other reasons dollar sales were up, like an increase in at-the-taproom sales and a returning market for draft beer. Still, with rising production costs outpacing consumer prices, breweries operate on an ever-shrinking margin.
“2022 presented small brewers with a number of challenges, including rising operating and material costs and increasing competition, particularly in distribution.”
The interesting thing to note here is that while overall production remained basically flat, the increase in dollar sales was in part attributed to an increase in taproom sales. The top 50 producers in the nation rely less on taproom sales than the 9,002 breweries that are not on the top 50 list. The larger the brewery, the more it relies on the distributed beer market, which is where we’re seeing a slowdown.
According to Bart, “A lot of the slowdown in the total numbers is a result of that distributed market becoming much more competitive. That doesn’t mean that overall demand for craft brewing is slowing, as much as we’re seeing some challenges in distribution and there’s still opportunities in that hospitality focus.” And by hospitality focus, we’re talking about a brewery’s own taproom sales.
This raises a question. How much do these national production and sales figures mean to the average brewery? The lesson here is to pay attention to these kinds of numbers but don’t let them freak you out too bad. These are national numbers, and they may not reflect what’s happening in your neighborhood and across your bar.
Lately, we’ve seen a constant stream of bad news about things like IRI data and SKUs, but if your business isn’t based on those kinds of sales… Keep your chin up. You keep being you. Be the best brewery, the best bar, and the best business you can be.
Frühlingsfest - In Munich each spring, locals celebrate the annual Frühlingsfest (Spring Festival) on the same festival grounds as Oktoberfest. The event happens over two weeks at the end of April and the beginning of May. It is the same type of beer/community festival but is not nearly as crowded or rowdy as Oktoberfest. In our news feed recently we noticed a number of breweries celebrating Frühlingsfest here in the U.S., releasing special beers and hosting events focused on German-style beers, so we thought it worth introducing you to the term Frühlingsfest.
We received some reader feedback last week, when we focused largely on the emergence of, and possible future of, the non-alcoholic beer trend.
[email protected] said: "I love the stories about the NA market, and as a lay person you're bringing interesting insights to light I hadn't considered, like how soft drink companies may jump in to compete with craft brewers."
[email protected] said: “NA brews will definitely go the way hard seltzer went.”
Thanks for the feedback, wrigster, we also thought it was interesting. And thank you, janaumann, we agree.
So how did we do this week?
Select whichever answer best applies. You'll have a chance to leave additional feedback once your vote is recorded.
This week's Taster Tray was composed by Kendall Jones.