The 2015 craft brewing growth numbers were released today. Since I know that a lot of Brewers Association brewery (and brewery-in-planning) members rely on these numbers to benchmark performance, apply for loans and a variety of other statistical purposes, I wanted to write a short post breaking down how we compile these numbers and why I think they are the best data source available on the craft brewing industry. This is an update of last year’s post.
The Data Set
The first note should be on the data set itself. The data set represents the taxable production of small and independent craft brewers. A primary reason for the craft brewer definition is to clearly delineate what should be included in the data. Acquisitions by non-craft brewers have meant that the breweries that make up the data set have shifted a bit over the past few years. While 99 percent of U.S. breweries are still covered, the few that aren’t shift the numbers a fair amount. A couple of notes relevant to these changes:
- Inclusion in the data set is based on when a deal closes. If a deal closed prior to Jan. 1, 2015, no barrels from the acquired company were included in the 2015 data.
- If the deal closed at some point during 2015, the breweries barrels were pro-rated based on that date. If the deal closed on the 43rd day of the year, I used 42/365 of that company’s barrels.
- If a deal closed in 2016, I included all of that companies barrels. This means that breweries who will not be included in the data set going forward will still feature prominently in 2015 data, since they were craft brewers for all or part of 2015.
- All growth statistics are presented on a comparable basis. So if we included 42/365 of a company’s barrels in 2015, the same percentage was used from 2014 to calculate the base for growth rates. That said, all of those 2014 barrels will still appear in historical numbers, so you can’t just line up the 2014 number to the 2015 number to get growth – you need to use the comparable base. For members, this will once again appear in the spreadsheet you can download with the full data.
The Data Gathering Process
The vast majority of our data is self-reported. This year, 84 percent of of the volume we reported came directly from breweries, including both members and non-members–we send a green Beer Industry Production Survey (BIPS) form to everyone. That’s up from 79 percent in 2014. Now, normally, you’d be worried about various forms of “self-report bias” (i.e., people tend to lie on surveys, in predictable ways). That fear is mitigated here, however, since brewers tend to know their taxable production very well (thanks tax authorities!) and the data can be easily checked against state sources in a variety of states (I double check and they typically line up very well).
That leaves the other 16 percent of volume coming from Brewers Association estimations. I’m frequently asked how we come up with those estimations. The answer: it depends.
If you’re in one of the states that publishes brewery production data, or will give it out in response to a Freedom of Information Act request, we use that state number. Note that many states still haven’t published their final annual numbers. This means that we often miss some small breweries that open and only file annually. That’s one reason the press release always states that numbers are preliminary. People who compare this release to last year will find that our 2014 brewery number has jumped, mostly due to annual filings now being available. I expect the same thing to happen next year as we revise our 2015 production and openings number. These changes do not do much to shift industry volume.
If you’re not in a state that provides brewery production data, we use a variety of factors including:
1. Previously reported production
2. Estimates of capacity and average usage
Note: If I’ve ever visited your brewery, I’ve asked about your fermenters, because total fermenter capacity * 52/average turns (in weeks; which we measure in the Brewery Operations and Benchmarking Survey. I also review your website looking for ale vs. lager mix) * average production/capacity (asked about in BIPS) is a pretty darn good estimate of production. I tend to adjust up or down based on a few other factors (presence of a taproom, etc.).
Note 2: Luckily for me, brewers really love posting pictures of their new fermenters on Facebook.
3. Media reports and a healthy dose of skepticism (at the beginning of the year, people tend to be overly optimistic, later in the year, more accurate). Media reports are also used to shift that usage rate. If I read over and over that a brewery is capacity strapped, I’ll bump up the production/capacity ratio I use.
I believe that these estimates are fairly accurate, particularly in the aggregate. When in doubt, I often check them with your local guild director–I haven’t been told I’m way off yet.
To test my estimates, this year I lined up every brewery that gave us their 2014 data against my 2014 estimate. The result? My estimates equaled 97.4 percent of the 2014 volume they reported this year. I like to believe that’s an acceptable margin of error, and in the direction I’d prefer. I’d rather revise numbers up after the fact than down. That isn’t to say each brewery estimate was correct–many were well off–but in aggregate, the process we are using doesn’t introduce any major systematic bias.
So to summarize:
- Most of the production data (more than 4 out of 5 bbls) comes from breweries reporting their production
- Those reports appear to be very accurate
- Everything else is filled in with state reports or estimated (by individual brewery)
- I have a high degree of confidence in the aggregation of those estimates
Thanks to the more 2,000 breweries that took a few minutes out of your day to answer the survey and make it the best in the business.