Cheers to Craft Beers

May 1, 2005
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Cheers to Craft Beers
By Elizabeth Fuhrman
In 2004, 1,430 brewing facilities manufactured beer, and of these, nearly 1,400 were craft brewers. Although craft brewers may be the 1,400 smallest companies in the beer industry, their total dollar volume is nearly $3.6 billion, and with 7 percent sales growth last year, they bucked the trend set by the biggest companies.
For the first time since 1996, all four segments of the craft brewing industry, which include regional specialty breweries, contract-brewing companies, microbreweries and brewpubs, showed growth in 2004, reported the Brewers Association, Boulder, Colo., at its Craft Brewers Conference last month in Philadelphia.
U.S. domestic specialty brewing reached nearly 6.7 million barrels in 2004. Regional specialty breweries, of which there are 57, sold more than 4.4 million barrels last year, up more than 8.5 percent from 2003. In turn, contract-brewing companies sold 965,000 barrels last year, up more than 2.3 percent from 2003.
“Consumers are trading up to products with more character, taste and variety and just more history, heritage and tradition vs. mass marketed products,” says Jim Koch, founder of the Boston Beer Co., the largest of the craft brewers and brewer of Samuel Adams Beers. “Consumers are just getting more knowledgeable about different tastes and styles of any alcoholic beverage, whether it’s wine, liquor or beer, and craft brewers are the beneficiaries of consumer interest.”
The regional specialty brewers segment makes up more than 65 percent of the craft brewers market. Regional specialty brewers with national distribution didn’t grow as quickly in 2004 as regional players adding new distribution states. Additionally, companies producing between 15,000 to 60,000 barrels saw about 12 percent sales growth while companies producing more than 120,000 barrels saw only 5 percent growth.
The more than 350 microbrewers in the industry were relatively stable, with few new openings and closings (26 and 12, respectively). These companies, which make up about 11 percent of the craft brewers market, produced 734,000 barrels in 2004, up more than 7 percent from last year. On average, microbreweries manufactured 2,091 barrels in 2004, recovering from a rough year in 2003 and taking the companies a little bit ahead of their 2002 average.
Brewpubs, which number a little less than 1,000, saw their first beer production growth since 2000, with brewpubs producing 636,000 barrels in 2004 up 5.1 percent from the previous year. On average, brewpubs produced 645 barrels, with 203 brewpubs manufacturing more than 1,000 barrels and 28 brewpubs making more than 2,000 barrels.
Brewpubs, which make up 9.5 percent of the craft brewing market, also have expanded from single-site brewpubs to companies with multiple sites. Some of brewpubs’ growth can be attributed to packaged beer for off-premise sales.
Since 1994, the craft brewing industry has seen contract brewing companies decline from 43 percent of the total market to about 14.4 percent in 2004. The Brewers Association feels this trend will continue, with regional specialty brewers’ sales increasing and this segment making up more of the market share.

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