Each summer, the Brewers Association (BA) conducts a Midyear Production Survey of its members (craft breweries across the USA) to complement the comprehensive Beer Industry Production Survey (BIPS) conducted in the first months of the year. This Midyear Survey provides an early glance at what the industry might expect the overall trends to look like across the full calendar year. Here are some key findings from the 2024 Midyear Production Survey. Also, my takeaways on each.
Survey says… More new breweries. The number of active craft breweries is up. In June 2023 there were 9,339. In June 2024 there were 9,358. Also, the total number of breweries (including non-craft) is up from 9,456 to 9,528.
My takeaway: We’ve seen it here in the PNW; the number of brewery openings is still matching the number of closings. Please, let your enthusiasm for a new brewery opening match your disappointment for an old brewery closing.
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Survey says… Down 2%. No bueno! That said, the report showed that 54% of the surveyed breweries reported growth in the first half of 2024 compared to a year ago. However, dollar sales and growth are not necessarily the same thing. With dollar sales likely more static, there was a continued decline by volume in the market, estimated at a 2% drop compared to 2023. No single segment is driving this decline: distributed draft, packaged, and onsite sales all show similar trends.
My takeaway: No getting around it. For whatever reason, all sorts of surveys and studies show that people are drinking less beer and less alcohol overall. It’s a fact. While some folks want to point to one factor or another, there are many factors and this is a topic unto itself.
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Survey says… Breaking down distribution channels, Nielsen IQ scan data shows that packaged craft beer sales were down 2% year-over-year. Distribution continues to be tough for a lot of breweries as many distributors and retailers are looking to simplify their offerings.
My takeaway: The concept of retailers and distributors simplifying their offerings bodes well for the relatively small number of craft breweries that have very strong relationships with their distributors, but it is pretty rough news for the ones that do not. Most craft brewers I talk to these days are disappointed with their distributor relationships. With distributed craft beer, the profit margin is incredibly thin and without volume, what’s the point?
Survey says… At-the-brewery sales showed better numbers than distributed craft beer sales. However, the report showed that at-the-brewery sales are no longer a growth engine as they’ve been in recent years. The report cited different types of data that showed static volume. “There remains high variation by brewery and region, pointing to the importance of local markets and individual business factors,” the report pointed out.
My takeaway: Where I live, in the Seattle area, going out for beers at a brewery taproom is still a pretty hip thing to do. Regardless of where you live, you should never leave a brewery taproom empty-handed. Always grab a six-pack or a crowler, or more. You’re going to buy beer for your fridge at some point, so why not support your local brewery by purchasing beer where the profit margin is highest? Don’t just drink beer at the brewery, buy beer at the brewery.
Survey says… In addition to the challenges presented by a marketplace crowded with more beer options and other beverage alcohol options, craft breweries continue to navigate challenging economic realities. Inflation and costs factored heavily into survey comments for both brewery customers and operations. The report also showed that “with so many brewers locally focused, specific local factors including weather, tourism, economic changes, and more, were cited in performance.”
My takeaway: I’ve heard some consumer rumblings about the rising cost of beer. I’ve even heard some folks use terms like “price gouging.” That is ridiculous! The cost of almost everything that goes into your beer has gone up. Some of the costs have skyrocketed. The cost of grain, yeast, CO2, energy, rent, and a lot more has gone up. When a brewery’s cost goes up 10% they typically only raise prices 5% or less because they know you will freak out. There are many, many factors involved but to angrily call it price gouging is ignorant and does not help the situation.
Bart says… “While the category continues to struggle to find collective growth, there are still plenty of success stories in the midyear data,” reflected Bart Watson, vice president of strategy and chief economist at the Brewers Association. “The success of those brands illustrates that while beer lovers and drinkers have many options, they’re still willing to spend their money on beers and brands that resonate. With so much choice in beer and beverage, brewers need to consistently think about how their brands can meet what beer lovers and drinkers are looking for, both in terms of product offerings and business model.”
My takeaway: Yeah, what he said.
