Craft Brewing Ideas and Options

If you like craft beer, there are probably plenty of reasons why you’d rationalize spending a little more on a quality brewed drink. Obviously, there are many ways to define that special quality in a beer. For some, the nomenclature “craft” is enough. Here are some facts to put ‘craft’ in context.

The general definition of a ‘craft beer’, as stated by the Brewers Association is: “An American craft brewer is from a small, independent brewer.” Small is defined as having an annual production of 6 million barrels of beer or less (approximately 3 percent of annual US sales). Independent is a brewing operation that is less than 25 percent owned or controlled (or an equivalent economic interest) by a member of the spirits industry that is not a craft brewer.

The TTB (Office of Taxation and Trade, TTB.gov) is responsible for regulating the craft beer industry. Anyone can go to the ttb.gov website and get more information than even the informed consumer would want.

A generic definition of a craft brewing operation can be summarized as:

• Innovative approaches to historic styles with new ingredients and evolving techniques.
• Distinctive flavours, aromas and character of new ingredients such as yeast, hops and cereals.
• Small independent brewers who are immersed in and with a region or community.
• Brewers with individual approaches to customers and defined markets/regions.
• Craft brewers have a market identity by being independently owned, developing distinctive product styles, and having creativity in brand identity.
• Most Americans live within 10 miles of a craft brewery, so by definition they are locals.

The craft beer industry can be segmented as: Microbreweries, Breweries, Taproom Brewery, Regional Breweries, Contract Brewing, and Alternate Ownership.

microbrewery: 1,952 Total in 2019

It produces less than 15,000 barrels of beer per year and sells 75% or more of its beer outside of its facilities. Off-site is defined as retail stores, bars/restaurants to go, or on-site. Individual states regulate the distribution of craft beer through state laws. For example, some states allow brewers to self-distribute, while others require a system known as three-tier distribution only. (Average consumers call this a monopoly.)

brewery: 2,929 Total in 2019

A restaurant and brewery, contained in a single location, that sells 25 percent or more of its beer on-site and operates major food services. The beer produced is for sale in the restaurant and bar. Here again, local and state laws regulate Brewpubs and their ability to sell takeout and distribute to off-site accounts.

brewery tavern: 3,073 Total in 2019

A professional brewery that sells 25 percent or more of its beer on-site and does not operate significant food services.

Regional Brewery: 238 Total in 2019

Brewery with an annual beer production of between 15,000 and 6,000,000 barrels.

contract brewing company:

A business that contracts with another brewery to produce its beer. It can also be a brewery contracting with another brewery to produce additional private label beer. The contract brewer handles the marketing, sales, and distribution of its beer, while generally leaving the brewing and packaging to its producing brewery (sometimes also called a contract brewery).

alternate owner:

Recognized by TTB with specific regulations. “A licensed tenant brewery that physically takes possession of a shared brewery while brewing. Unlike contract brewers, alternate owners are the brewery of record for all obligations of a licensed brewery, including record keeping, payment of taxes and the approval of labels or formulas, “Association of Brewers/TTB.

All categories defined by the Brewers Association in the US total 8,500 breweries in 2019. Distribution by state generally follows population patterns. The annual increase, 2019 versus 2018, represented a variation of +8.9%.

2020 could be an extremely difficult year to assess the craft brewing sector. In the 1-year space of 2018 vs. 2019, openings in the Microbrewery category alone went from 700 openings to 100. Closings versus openings went from 15% in 2017 to 80% in 2019. Basically, in 2019 closings almost equaled the openings. In 2020, there will probably be a negative growth rate, especially in the Brewpub category (brewery and food).

There is no shortage of opinions on what the craft brewing market will look like after Covid19, so I am not afraid to join the crowd of self-proclaimed experts. If a person is committed to the brewing industry and involved with the science and art of brewing, 2020 and 2021 could offer opportunities through turnkey operations. However, keep in mind that watches are fair and honest in all dealings. I know this because I lost a business during a recession.

What is the best way to plan/position to increase craft beer sales? In a July 2 blog, I recently read (How Wine Can Stop Its Return to An Era of Snoot) where Dorothy Gaiter advised the wine industry to rebuke the image of wine as a presumptuous drink. One of the premises was that dismissing wine as something for the educated and privileged meant they were selling to a shrinking demographic. She precisely commented: “A diverse demographic included in the wine industry can only bring great benefit. It is my opinion that every industry that has embraced these ideals has grown exponentially and opened up markets that were previously untouchable.”

Spat feedback can be extrapolated to fit the craft beer industry as well; from bean to bottle beer is as complicated as making wine. The problem with craft beer, as an industry, is presenting the message that craft beer is worth the price and respect due to quality, choice of styles, attractive packaging, new and innovative complex flavors and aromas, and feel. in the mouth. Brewers must participate, invite and be interested in the consumer. An average bottle of wine costs around $12-14 per 22oz bottle; that’s not a bargain compared to craft beer. Remember, artisans, not everyone likes hops. Some people like a nice malt finish with a toasty aroma.

Beer is not always a cheap product. Boston Beer Company CEO Jim Koch marketed a beer that was in the category of a celebration drink that Jim said rivals champagne. The most expensive premium beer produced in the United States was from the Boston Beer Company and is 27% ABV in a 700ml bottle and retails for $275.

As a beverage, beer has a universal market appeal that is evolving rather than changing. For example, there are more style and flavor options, current offerings are innovative, more women drink beer, it’s a convenient/portable product, branding opportunities are diverse, and beer is affordable.

Let’s talk about beer. Enjoy to your heart’s content,

Health!