Craft Brewer Definition

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Jocelin Gardner
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2 Craft Brewer Definition Craft Brewer: An American craft brewer is small, independent and traditional. Small = Annual production of beer less than 6 million barrels. Beer production is attributed to a brewer according to the rules of alternating proprietorships. FMBs are not considered beer for purposes of this definition. Independent = Less than 25% of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member who is not themselves a craft brewer. Traditional = A brewer who has either an all malt flagship (the beer which represents the greatest volume among that brewers brands) or has at least 50% of it s volume in either all malt beers or in beers which use adjuncts to enhance rather than lighten flavor.

3 2010 Beer Headlines Craft brewers continue momentum. Large brewer sales down, record profits. Imports regain some volume on lower pricing. Caffeine-added malt beverages banned. Small brewer deals abound. Cracks in the foundation of what was a unified industry.

4 2010 Craft Brewer Headlines Craft brewers Grow 11 % by Volume. Craft brewers just under 10 million bbls. Craft pricing up $0.42/case in scans. Deals CraftWorks. IBU to NAB. Anchor to Griffin Group. Rest of Kona to CBA. Anderson Valley to Griffin Group. Carolina Beer and Beverage.

5 U.S. Craft Brewing Index (barrels) 10M 9M 9,115,635 8M 7M 6M 5M 4M 3M 2M TOTAL Regional Craft Breweries Contract Brewing Companies Microbreweries Brewpubs 1M

6 Brewpub Openings and Closings Openings Closings 55 Openings 33 Closings

7 Percent Brewpub Growth (barrels) 8 6 Brewpubs

8 Average Barrels Per Brewpub 750 bbl

9 Brewpubs Trends Brewers continuing to innovate with beer styles and ingredients. Brewpubs that are multi-taps carrying other brewers beers becoming more common Centralized brewing location to serve several nonbrewing pubs in company group. More openings and fewer closings. Average barrels climbing due to more beer sold offpremise as canning and packaging options making more sense.

10 Microbrewery Openings and Closings Openings Closings 97 Openings 8 Closings

11 Percent Micro Growth (barrels) w/o the 9 with the % +11.9%

12 Average Barrels Per Micro

13 Microbrewery Trends 12 times as many openings than closings in more microbreweries in 2010 than 2006 (62% more!) 9 microbreweries became regional craft breweries in Cans estimated at 3% of craft sales. 100M cans. Home territories outperforming further markets. Local has moved from a fad to a trend to mainstream. Brewers specializing in multiple variations of a style. Micros relying on tasting rooms to build sales. (56 sell more than 25% of their beer onsite.)

14 Craft Breweries Over 15K Barrels

15 Craft Regional and Contract % Growth (The Big Shift) % Regional Craft Contract Craft %

16 Craft Regional & Contract Combined Growth Percent % Growth %

17 Regional Craft Brewery Trends 75 of 80 (94%) of regional craft brewing companies increased beer sales in Home territories performing well. Smaller regionals coming into their own. Deals are being made. Ownership changes happening. Private equity $ now in game and wanting more.

18 Total Craft Brewery Closings Closings

19 Total Craft Brewery Openings Openings

20 Total Craft Breweries Operating Total 1033 Brewpubs 603 Micros 80 Regional Total Brewpubs Micros Reg'l Craft

21 Share of Craft Segment % 25.7% 3.2% 2.2% 10.6% 7.9% 10.7% 7.6% 14.8% 46.6% 78.4% 79.5% Brewpubs Regional Craft Microbreweries Contract Brewing Companies

22 Symphony IRI Top 10 Craft Beer Styles The Top 10 Craft Styles Account for 86% of Total Craft Dollar Sales Top 10 Craft Styles Dollar Share of Total Craft & Chg vs YA SIG Data 52 Weeks Ending Jan 2, 2011

SIG Regional Dollar Sales % Change and Share % Change Total U.S. - Supermarkets Craft Dollar Sales % Chg vs YA = 14.1% Craft $ Share of Beer Category = 9.4% +9.7% $ Share of Beer Category 11.2 +1.

23 SIG Regional Dollar Sales % Change and Share % Change Total U.S. - Supermarkets Craft Dollar Sales % Chg vs YA = 14.1% Craft $ Share of Beer Category = 9.4% +9.7% $ Share of Beer Category Chg vs YA $ Share of Beer Category Chg vs YA +9.3% +17.6% $ Share of Beer Category Chg vs YA $ Share of Beer Category Chg vs YA +21.1% +17.2% $ Share of Beer Category Chg vs YA +13.6% $ Share of Beer Category Chg vs YA +14.5% $ Share of Beer Category Chg vs YA % $ Share of Beer Category Chg vs YA SIG Data 52 Weeks Ending Jan 2, 2011

24 U.S. Craft Brewer Exports ,093 bbl

25 Import vs. Craft Total Sales 35,000,000 30,000,000 Imports U.S. Craft Brewer Sales 25,000,000 27,142,402 20,000,000 15,000,000 10,000,000 9,951,956 5,000,

26 Beer Sector Percentage Growth Craft Brewing Imports Domestic Non-Craft

This came at the expense of the Domestic and Import segments.

27 Beer Segments - Dollar Share &Trends Total U.S. - Supermarkets Craft gained 1.1 share of total Beer Category Dollar Sales in This came at the expense of the Domestic and Import segments. PAB s and Cider also managed slight Dollar Share gains in Supers. Dollar Share of Total Beer Category Dollar Share Chg YA SIG Data 52 Weeks Ending Jan 2, 2011

28 Total Craft Industry Percentage Annual Growth

29 Total Craft Industry Percentage Annual Growth % Growth

30 Concerns for Craft Brewers So many new microbreweries. Can existing wholesalers get all the brands to market effectively? SKU growth reaction. State legislation on product composition, franchise, selfdistribution, excise tax. Regulatory actions from FDA, TTB, FTC. Hop growing decisions. Access to market as large companies explore high end. Financing Capacity Expansions.

31 Reasons for Optimism for Craft Brewers Craft brewers well connected to customers and communities. Local purchasing movement has moved to mainstream. Share growth. Millennials identify with craft. Quality. Innovation. Fun. Nearly everyone believes craft on its way to doubling or tripling share.

32 CRAFT BREWER GROWTH FOR % $ Value Growth $805,968, Craft Industry $ Volume Growth

33 U.S. Total Craft Industry Retail Dollar Sales $7,649,770,663.08

34 Craft Share Volume Dollars

35 Economic Impact of Brewing Industry in United States $45 billion 1,836,342 $71 billion $224 billion Taxes Paid Jobs Wages Economic Impact

36 Craft brewer sales are at an ALL TIME HIGH!

BREWERS ASSOCIATION CRAFT BREWER DEFINITION UPDATE FREQUENTLY ASKED QUESTIONS. December 18, 2018

BREWERS ASSOCIATION CRAFT BREWER DEFINITION UPDATE FREQUENTLY ASKED QUESTIONS December 18, 2018 What is the new definition? An American craft brewer is a small and independent brewer. Small: Annual production