On Tuesday, the Brewers Association released its annual report on craft brewery growth. In 2018, we spent approximately $27.6 billion on craft beer, a 7 percent increase over 2017.
Craft brewers produced 25.9 million barrels of beer in 2018, gaining 0.6 percent more volume share than in 2017 (13.2 percent versus 12.6 percent). Craft brewer production volume grew 4 percent, compared to a 1 percent decline in volume for the beer market overall.
Additionally, we now have a record-breaking 7,346 craft breweries in the U.S., with an estimated 1,049 openings and 219 closings last year. Small and independent breweries provided 150,148 jobs in 2018, an 11 percent increase over 2017.
“We’re still seeing openings outpace closings by about five to one,” Bart Watson, chief economist of the Brewers Association, said on a media conference call on Tuesday. However, he noted, the BA expects both numbers to climb.
Watson noted “a lot of growth in New York, Texas, and Florida,” driven by brewery openings and taproom sales in those areas. Overall, he estimates 3.1 million barrels of beer were sold directly to consumers in taprooms in 2018. “The smallest brewers see the most success,” as they build out this “experiential piece,” Watson said. Regional craft brewers were largely static in 2018.
Asked about non-beer offerings from craft brewers, Watson said, “I do think it’s a more common component,” noting that the BA is “seeing more brewers experiment with things like hard seltzers, ciders, wine, and spirits. I think we’re going to see a lot more of it going into 2019.” However, the data in this report measures beer only, not flavored malt beverages or other beverage alcohols.
All of this is pretty good news. Although the craft beer industry isn’t seeing the meteoric growth it once did, we’re still getting more brewery openings, more taprooms, more jobs, and more innovation. As more consumers embrace beer from local and independent producers, and craft brewers embrace new consumer markets where they’re building said taprooms, I see the industry continuing to strengthen. I’ll take steady and sustainable over staggering any day.
Avery Now Majority-Owned by Mahou San Miguel, Spain’s Leading Brewery
Mahou San Miguel, Spain’s biggest beer company, is now the 70 percent majority owner of Avery Brewing. Mahou San Miguel initially invested a 30 percent stake in the company in November 2017, and, along with Mahou partner Founders Brewing, recently invested an additional 40 percent in Avery, the brewery announced on Tuesday. Mahou San Miguel invested a 30 percent stake in Founders in December 2014.
According to Porch Drinking, the original focus of the deal between Mahou and Avery was to expand Avery’s offerings abroad. The new deal aims to grow the Boulder-based brewery’s presence in Colorado and in the U.S., Joe Osborne, Avery’s marketing director, said in a press release.
He also added the brief but familiar spiel: “Mahou will have no impact on the beers we decide to brew.”
I call B.S. Avery Brewing founder Adam Avery told Brewbound that the deal will grant Mahou a bigger role in “day-to-day” decision-making, and that Avery’s “debt load was very high” before Mahou bailed it out.
I can’t fault a brewery for staying afloat. Avery was facing debt, production declines, and its $30 million, 96,000-square-foot facility wasn’t being properly utilized. By selling what is now a majority stake to Mahou San Miguel, Avery has “paid down almost all of our debt, which is a pretty nice feeling,” Avery told Brewbound. It also plans to maximize production by brewing and co-packing Founders All Day IPA.
But I’m not sure this partnership with Mahou and Founders will strengthen Avery in the long term. Founders is the 14th-largest brewing company in the country, whereas Avery didn’t even place. At the very least, we’ll be seeing a lot more White Rascal, Avery’s very good wheat beer. I only hope Avery doesn’t adopt Founders’ racism policy.
Heineken Settles Shady Business Violations With Record-Breaking TTB Payment
On Tuesday, the Alcohol and Tobacco Tax and Trade Bureau (TTB) announced that Heineken USA will pay a record $2.5 million for trade practice violations. Heineken USA supplied retailers with proprietary draft systems free of charge for nearly four years, and reimbursed retailers for purchases through “disguised” credit card transactions, according to the TTB.
The draft system, called “BrewLock,” is designed to dispense only Heineken products, the TTB said. Heineken, despite offering the largest sum the TTB has ever accepted, did not admit to any violation. “Heineken USA has been and remains committed to legal compliance in everything we do,” a spokesperson told Brewbound.
Heineken may be breaking the law, and it’s definitely breaking records with the amount of money it’s throwing at the TTB, but these shady practices are hardly shocking. Conglomerates like Heineken and Anheuser-Busch InBev are known for pay-to-play schemes in which they find sneaky ways to monopolize the three-tier system that’s designed to keep them in check.
All this hefty fine tells us is that breweries can continue breaking the law and putting consumer choice at risk, as long as they’re willing to pay for it.