Once again, a record number of craft breweries were in operation in 2018, according the Brewers Association (BA), a trade organization that represents small and independent breweries.
The BA, which released its 2018 craft industry growth statistics today, reported that 7,346 craft breweries operated in the U.S. in 2018. That’s up from 6,490 in 2017.
Those 7,346 craft breweries produced a combined 25.9 million barrels of beer in 2018, up about 800,000 barrels from 2017, the BA said.
Of those 7,346 craft breweries, 2,594 were brewpubs, 4,521 were microbreweries (breweries making up to 15,000 barrels of beer), and 231 were regional breweries (breweries making more than 15,000 barrels).
According to the BA, 1,049 new breweries opened in 2018, while 219 went out of business. Of those closings, Watson noted that the majority — 123 — were microbreweries, followed by 90 brewpubs, five regional breweries and one large brewery.
“We’re still seeing openings outpace closings by almost five-to-one,” Brewers Association chief economist Bart Watson told members of the media during a teleconference. Watson added that he expects both numbers to be revised upward next year as additional data is collected.
Nevertheless, BA-defined craft breweries grew beer production 4 percent in 2018, slightly slower than mid-year projections of 5 percent. The volume growth figure is also significantly slower than the segment’s six consecutive years of double-digit growth between 2010 and 2015.
Although the growth pie is being sliced up among more producers, BA-defined craft breweries’ volume growth still outpaced the overall beer market, which the organization estimated was down 1 percent.
In 2018, craft’s share of total beer dollars grew to 24.1 percent — to an estimated $27.6 billion — which Watson attributed to price inflation and the so-called “long tail” of small brewers commanding higher retail margins. Craft’s volume share of the overall U.S. beer also increased, to 13.2 percent last year, up from 12.6 percent in 2017.
“It’s pretty safe to say the growth was driven heavily by the tail, driven heavily by new openings and breweries in their second and third years cycling and growing,” Watson told reporters. “As such, we see growth happening geographically where those brewery openings are occurring.”
According to Watson, parts of the country — such as the south and southeast — remain pockets of opportunity to grow compared to traditional craft heavy markets.
“States like Florida and Texas, there still is a lot of growth going on,” Watson said.
Watson also made a case for the smallest breweries finding the most success as they build their businesses through direct-to-consumer taproom sales. The BA estimates that the number of barrels sold directly to consumers via brewery taprooms grew by about 400,000 barrels, to 3.1 million barrels, in 2018 (up from 2.71 million barrels in 2017).
“So it was about 40 percent of total craft growth,” he said.
Meanwhile, the growth of regional craft breweries was “static” last year, Watson said.
“We’ll have to wait and see if this is a plateau or was a year where they were challenged and retrenching in terms of distribution and refocusing on particular areas,” he said. “But certainly that’s where the slowest growth occurs in the marketplace.”
In a blog post, Watson also noted that the BA revised its 2017 growth figure down about 200,000 barrels. He explained that “a big chunk” of the decrease was due to double counting — such as multiple locations reporting production or brewers reporting contract volumes as their own volume.
A more detailed analysis of the 2018 growth statistics will be shared during Watson and BA senior vice president of the professional brewing division Paul Gatza’s “State of the Industry” presentation on April 10 at the annual Craft Brewers Conference in Denver.