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.
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.
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.
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 2006 2007 2008 2009 2010
Brewpub Openings and Closings 120 100 Openings Closings 55 Openings 33 Closings 80 60 40 20 0 2003 2004 2005 2006 2007 2008 2009 2010
Percent Brewpub Growth (barrels) 8 6 Brewpubs 4 +6.9 2 0-2 -4 2006 2007 2008 2009 2010
Average Barrels Per Brewpub 750 bbl 700 728 650 600 2006 2007 2008 2009 2010
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.
Microbrewery Openings and Closings 100 90 80 70 60 50 40 30 20 10 0 Openings Closings 97 Openings 8 Closings 2004 2006 2008 2010
Percent Micro Growth (barrels) 30 25 20 15 w/o the 9 with the 9 +27.9% +11.9% 10 5 0-5 -10 2006 2007 2008 2009 2010
Average Barrels Per Micro 2500 2000 1758 1500 1000 500 0 2006 2007 2008 2009 2009
Microbrewery Trends 12 times as many openings than closings in 2010. 232 more microbreweries in 2010 than 2006 (62% more!) 9 microbreweries became regional craft breweries in 2010. 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.)
80 70 60 50 40 30 20 10 0 Craft Breweries Over 15K Barrels 2006 2007 2008 2009 2010 80
Craft Regional and Contract % Growth (The Big Shift) 40 20 +13.0% 0-20 -40-60 -80 Regional Craft Contract Craft 2006 2007 2008 2009 2010-20.4%
Craft Regional & Contract Combined Growth Percent 14 12 10 8 6 4 2 0 % Growth 2006 2007 2008 2009 2010 +11.8%
Regional Craft Brewery Trends 75 of 80 (94%) of regional craft brewing companies increased beer sales in 2010. 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.
Total Craft Brewery Closings 130 122 110 109 41 Closings 90 86 84 78 70 57 61 55 50 41 30 10-10 2003 2004 2005 2006 2007 2008 2009 2009 2010
Total Craft Brewery Openings 160 140 120 152 Openings 124 128 118 152 100 91 95 99 80 75 60 55 40 20 0 2002 2003 2004 2005 2006 2007 2008 2009 2010
Total Craft Breweries Operating 2000 1800 1600 1400 1200 1000 800 600 400 200 0 1716 Total 1033 Brewpubs 603 Micros 80 Regional 2006 2007 2008 2009 2010 Total Brewpubs Micros Reg'l Craft
Share of Craft Segment 2000 2009 2010 12.9% 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
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 +1.8-1.2 +2.0-0.7-0.8 +0.7-0.5-0.3-0.3 +0.2 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 +1.2 Chg vs YA $ Share of Beer Category 15.9 +1.6 Chg vs YA +9.3% +17.6% $ Share of Beer Category 7.3 +1.0 Chg vs YA $ Share of Beer Category 8.0 +1.2 Chg vs YA +21.1% +17.2% $ Share of Beer Category 13.8 +0.9 Chg vs YA +13.6% $ Share of Beer Category 7.6 +1.0 Chg vs YA +14.5% $ Share of Beer Category 6.1 +0.7 Chg vs YA +24.1.% $ Share of Beer Category 5.2 +1.1 Chg vs YA SIG Data 52 Weeks Ending Jan 2, 2011
U.S. Craft Brewer Exports 60000 50000 59,093 bbl 40000 30000 20000 10000 0 2007 2008 2009 2010
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 5,000,000 0 2006 2007 2008 2009 2010
Beer Sector Percentage Growth Craft Brewing Imports Domestic Non-Craft 16 14 12 10 8 6 4 2 0-2 -4-6 -8-10 2002 2003 2004 2005 2006 2007 2008 2009 2010
Beer Segments - Dollar Share &Trends Total U.S. - Supermarkets Craft gained 1.1 share of total Beer Category Dollar Sales in 2010. 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
Total Craft Industry Percentage Annual Growth 120 100 80 60 40 20 0-20 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Total Craft Industry Percentage Annual Growth 13 12 11% Growth 11 10 9 8 7 6 5 4 3 2 1 0 2005 2006 2007 2008 2009 2010
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.
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.
CRAFT BREWER GROWTH FOR 2010 11.8% $ Value Growth $805,968,120.45 Craft Industry $ Volume Growth
U.S. Total Craft Industry Retail Dollar Sales $7,649,770,663.08
Craft Share Volume 2008 3.87 2009 4.32 2010 4.86 Dollars 2008 6.03 2009 6.78 2010 7.57
Economic Impact of Brewing Industry in United States $45 billion 1,836,342 $71 billion $224 billion Taxes Paid Jobs Wages Economic Impact
Craft brewer sales are at an ALL TIME HIGH!