We have all heard about the craft beer boom and the possibility of a craft beer bubble, but I think it’s important to understand the context around our bubbling industry.
First, let’s understand that craft breweries only made up 5.7% of the U.S. beer market by volume in 2011, yet make up 97% of all breweries. Craft breweries are slowing stealing market share away from the big guys, but there is a long way to go. Also, although brewers such as Anheuser Busch brands have seen some of their brands decrease sales by over 25% in 5 years, the reality is that AB is still a giant and is only down 4% in barrels of beer shipped since 2002. Let’s remember where AB stands compared to the other giant macro breweries:
Continuing with looking at our top beers in the U.S., there are a few beers that have been slipping into oblivion. The beer brands that have lost the most market share are Michelob (down 72%), Michelob Light (down 66%), down Budweiser Select (down 60%, and Milwaukee’s Best (down 57%). Here were the top major brands in 2011 (notice Bud Light’s dominance):
Shifting the conversation to the growth in craft breweries, there are now 2,076 craft breweries in U.S., up 48% since 2007. The initial rise of craft beer started in the early 1980s after President Carter signed H.R. 1337 in 1978 which allowed homebrewers to be exempt from taxation for beer brewed at home for personal or family use. Before this was law was signed, there were only 42 brewery companies in the U.S. Below is the recent craft brewery growth in the U.S.
Take a step back and you can recognize the significance of this rise in U.S.
Lastly, I think it’s important to understand the scale that breweries like Anheuser Busch are producing beer. Lagunitas and Pyramid’s brewing facilities seem like some of the largest brewing operations I have ever seen in person. I see Lagunitas everywhere as well as Sierra Nevada and Deschutes. Below are the largest craft breweries in the U.S.
From above, you can tell how far ahead Boston Beer company is ahead of the rest of the craft brewers. In fact, Boston Beer company’s founder, Jim Koch, helped change the production ceiling for a craft brewery from 2 million barrels to 6 million barrels annually back in 2009. Looking at these major craft brewers, you may recognize the majority of these brands. The Craft Brew Alliance consists of Redhook, Kona, and Widmer breweries. I see Lagunitas everywhere, along with New Belgium, Pyramid, Deschutes, and others. However, even with great distribution, these brands come nowhere near the macro breweries. Take Lagunitas vs. Bud Light for example:
That’s 162,000 barrels of beer to 39.8 million barrels. Seems like we all have a lot of work to do for Lagunitas to get there beers in the hands of most Americans. However, if there is one brewery that has been doing all they can to expand their distribution of beers, it’s Lagunitas. They most recently finished expanding their brewing facilities at their brewery in Petaluma and finished the new bottling line last month. They are the fastest growing brewery in the U.S. over the fast few years with over a 200% growth:
So, after all of this where do we stand? We have the most number of breweries in the U.S. since prohibition and there are no signs of it slowing down. Perhaps local craft breweries will begin to compete next to each other for space in the stores and space on the taps, but at the same time there will be more space for these beers. With more people wanting to drink better beer, there will be more craft beer stores and craft beer bars.
So go out and drink local over the holidays, you have a lot to choose from!