Strong Craft Beer Numbers Are Good For BusinessAugust 22, 2011 By: Alissa Ponchione
The Brewers Association released strong mid-year craft brewer numbers for the first half of 2011, which is welcome news in light of the stagnant economic numbers and slow growth in the hospitality industry.
In the first half of 2011, dollar sales were up 15%, a record growth for the craft beer industry while volume grew 14%, which compares favorably with the 9% growth in the first half of 2010.
“The mid-year 2011 growth numbers we just released reflect the groundswell of interest behind craft beer and small and independent U.S. craft brewers," says the Brewers Association Craft Beer Program Director Julia Herz. "Fourteen percent by volume and 15% by dollar growth is very unique for an industry right now, especially considering the challenged economy.”
At Irvine, Calif.-based Yard House, Beverage Director Kip Snider says “65% of what we carry is craft,” and in the last two years, he’s seen craft increase exponentially. “A lot more people and chains are getting involved [with craft beer]."
With total sales of craft beer totaling $3.88 billion for the first half of 2011, up from $3.37 billion in the first six months of 2010, and craft brewers selling an estimated 5.1 million barrels during the first half of 2011, up from 4.6 million barrels during the same period in 2010, management at concepts such as Yard House are capitalizing on these high numbers by offering more seasonal selections, more extreme and robust beers and highlighting sampling.
Snider also credits more adventurous palates for stimulating craft beer growth. People are more willing “to try new things. What we see is a little more aggressiveness with how they’re ordering. They’re trying bigger, bolder and more robust beers” such as heavy hop IPAs and West Coast IPAs.
In the United States, 97.2% of breweries are craft breweries. This number increased by 10.2% or an increase of 165 additional breweries since June 2010, bringing the total breweries to 1,790 at the end of June. What’s more, 725 breweries are in planning today compared to 389 a year ago.
But Snider doesn’t worry about saturation in the craft industry. In fact, he says “more offerings [of craft beer] are better."
Snider predicts that “the craft segment will continue to rise,” and even in a tough economy he finds it interesting that “beer can stabilize and continue to drive the segment more and more.”
However, Snider does note that the with more breweries popping up, the added competition isn’t necessarily good for profit margins.
“With the profit point with craft being as hot as it is, you have a lot of brewers charging a lot more because demand is there. It hurts people like us who have been there since day one. It’s not helping us with profit margins but does increase check averages,” he adds
Herz sees this as an exciting time for the beer category. “Diversity and selection is good, desired and in demand for locally produced craft beers,” she says, which means if your not taking heed of a growing segment such as craft beer, you're missing out on a very important beer-drinking audience.