The TTB (Tax and Trade Bureau) beer data for the first half of 2020 is neither bad nor good for craft beer, it is what it is. The largest brewers have noted varying degrees of reduced demand in the first half of 2020, but the craft beer sector is somewhat stable. Nothing is perfect and much of the feeling about the environment today is subject to opinion. Obviously curbside delivery is not considered a solution for Covid19.
The TTB only reports data on tax revenues derived from the production of spirits, wine, and beer; but at the moment we are only interested in beer. Consumer tastes change from time to time in relation to their preferred beverage. This only increases the complexity of understanding the data. For example, strong ciders and soft drinks have captured the attention of younger adults, and this does impact craft beer.
Currently, Covid19 has taken center stage forcing the craft beer industry to cut costs, delay some new product plans, think about market expansion, packaging options, and on and off-premise marketing strategies. The impact of Covid19 started to be felt in the craft beer industry in February 2020. The fact is that the craft industry always faces changes in the market, but the impact of the virus is a disaster that happens once every 100 years. worldwide.
The TTB does not define or report beer production at the market segment level, i.e. craft beer, brewery, etc. Their charter is to collect the proper taxes on the beer that leaves a brewery based on ABV. We will examine the production reported by the TTB based on the size categories of barrel production. Although some changes were noticed in the market in early 2019, Covid19 has had a major impact on the economic health of the craft beer industry.
Statista reports that The Boston Beer Company produced 5.31 million barrels of beer in 2019. That compares to Miller/Molson/Coors’ 2019 production of 50 million barrels domestically. “Keep in mind that Anheuser-Busch today accounts for 49% of the US market. To put it in perspective, of the 6,400 breweries in the US, 95% produce less than 15,000 barrels of beer per year,” says the Dr. Bart Watson, PhD -Chief Economist for the Brewers Association.
For the craft beer consumer, macro data is only important as a starting point for evaluating what’s going on with our favorite beer. “Currently, the majority of US craft beer consumers live within a 10-mile radius of a local brewery,” says Dr. Watson. This is important because it shows how important the health of the craft beer industry is to communities and consumers.
So what does the TTB production data for 2019 indicate compared to 2018 and the first half of 2020 and 2019?
Total beer production in the first half of 2020 vs. 2019 was 88.3 million barrels and 91.6 million barrels, respectively. That represents a beer production loss of -3.6% in the first half of 2020 vs. 2019. However, data for the first half of 2019 vs. 2019. 2018 shows a -4.4% decline in production . This indicates a decline in barrel production that began in early 2019.
Some analysts point out that barrel sales are declining, indicating the impact of Covid19; this is true as most kegs go to on-premise beer drinking venues. Barrel sales in the first half of 2020 fell 52%. Bottle/can sales increased by +3.1%. (Data is based on comparable barrel volumes: 31 gallons in a barrel.) Source: TTB Tax and Trade Office. Barrel sales in the first half of 2018 vs. 2019 were 7.5 million barrels and 8.1 million barrels respectively: a slight increase.
Now let’s analyze the market segmented by barrel production. In 2019, US brewers produced a total of 180 million barrels of beer. In 2018 total production was 183 million barrels with 7% fewer breweries. A slight decline.
All US brewers producing more than 6 million barrels per year had a -4% drop in production and accounted for approximately 70% of total US production. The 6M+ segment comprises 15 of the largest producers.
The Brewers Association reports that 95% of breweries in the US produce less than 15,000 barrels a year. Numerically they are 5,947 of the 6,400 breweries in total. This segment produced a total of 6.2 million barrels in 2019. For perspective, compare that to the 5.31 million barrels attributed to The Boston Beer Company alone. Interestingly, this segment achieved a +4% production increase in 2019 vs. 2018. Most of that increase can be attributed to the number of producers in the 1-15,000 barrel category, which saw a 7% increase in breweries.
Without a doubt, the Covid19 virus has had an impact on the craft beer industry, however, not to the extent that some macrobrewers have realized. Some have had about a 4% reduction overall, but they are not in the ‘craft’ category. Full year data will tell a better story. Logic would tell us that the Brew Pub segment of the industry has been the hardest hit. For example, 25% of your product is purchased and consumed on-premises.
The jury is still out on how badly the economic and lifestyle environment has impacted the craft beer industry, but people still want the quality that is most easily exhibited in craft beer. Brandon Gaille reported on research in late 2019 showing that 94% of beer drinkers bought craft beer because of flavor and 83% were also interested in craft. Consumers. This indicates some level of research and understanding of the product to understand craft beer.
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