With the annual release of craft brewing growth numbers, I thought it would be helpful to lay out as clearly as possible what the numbers represent and how our various topline statistics are calculated. If you’re interested in the larger Beer Industry Production Survey methodology, I’ll suggest you read one of the posts I’ve written about our methodology in past years (2014 data/2015 data). Not much has changed—other than the number of breweries has increased and the process is taking a lot longer.
In 2017, here’s where the data came from:
73% of the volume was reported through the Beer Industry Production Survey
7% of the remaining volume was filled in using state excise tax data
Of the remaining 20% of volume
- more the 40% of that 20% comes from our estimate of Boston Beer’s beer volume (who as a public company can’t report)
- the remainder of the estimated volume (about 10% of the total craft data set) comes from staff estimates (taken from scan data, media reports, and other sources)
Breweries whose numbers were taken from state reports or estimated by staff grew <1%. Reported growth by volume was nearly 7%.
Who is Included?
The first thing to point out is that our numbers are based on the Brewers Association (BA) craft data set, which uses the craft brewer definition of small, independent, and traditional. We will publish the volume numbers for fuller-flavored non-craft brands/companies owned by the large brewers in our May/June issue of The New Brewer, and make them available to BA members. That said, the goal of this release is not to measure the health of “craft beer,” which the BA doesn’t define. We are trying to measure the health of small and independent brewers, using the guidelines set out by our board of directors.
Comparing Year to Year
Because that data set changes every year, that requires us to compile two numbers for 2016. The first is simply our revised 2016 number. We revised our 2016 number down a bit this year due to a change in how we asked for data. In past years, I’ve been suspicious that we were double counting the volume of some breweries with multiple facilities since we often received multiple numbers. This year, we allowed breweries to indicate clearly whether they were providing facility or company-specific numbers, eliminating the vast majority of that double counting. This did lead to some downward revisions versus last year (reflected in a slightly lower 2016 craft production number). Other revisions to the 2016 number come from members who update their 2016 numbers when filling out the 2017 survey, state reports that weren’t available until after the 2016 number was created, or updated estimates based on new data availability. Those types of revisions didn’t tend to change the number much. I looked at our estimates of California breweries last year versus annual filing numbers that came available after our survey published. Collectively, the staff estimates were within 1% of the official state numbers, though individual estimates did have a fair amount of random error.
The second is our “comparable base.” That number takes just the brewers who were included in the 2017 data set and looks at their 2016 volume. It pulls out the brewers who won’t be included in the craft set going forward, unless their status changes. This year, we pulled out ~300,000 barrels to create the comparable base, making a baseline number for 2017 growth between 24.1-24.2 million barrels. That’s why we are reporting 5% growth for small and independent brewers—that is the growth rate of those brewers that remained in the data set. The non-comparable growth rate of craft production was 4%, whereas the growth of craft’s market share by volume was 5%.
(VISIT: U.S. Brewery Directory)
We create the same comparable figure for our retail dollar sales growth figure. Those figures also get updated based on newly available data. In this case, we updated both the 2016 and 2017 estimates based on new financial and production data from our Brewery and Operations and Benchmarking Survey, conducted in 2017.
Other changes this year affected the volume market share. Our market share numbers differ slightly from other sources because we make an effort to only count the beer market (excluding other products taxed as beer such as flavored malt beverages, and other non-beer products like cider that some analysts include). As always, we’ve pulled our estimate of flavored malt beverages (FMBs) from the total taxable beer number (Tax and Trade Bureau [TTB] + imports [from the Commerce Department]). Given consistent TTB revisions, I’ve used a higher estimate of U.S. taxable production than what the TTB has reported for 2017 so far. In addition, based on various data sources, I’ve revised our estimate of the FMB market downward for recent years, meaning that the overall beer market is a bit higher, and so craft share was a bit lower in past years.
Calculating Dollar Sales
Finally, I thought it might be worth reminding everyone that the changing composition of the craft data shifts some of the other number—such as dollar sales and jobs. Because the vast majority of the 300,000 barrels that exited the data set were from regionals, and the vast majority of the growth came from micros and brewpubs, the craft set once again was “smaller” this year—i.e., the average/median brewery in the data set was a smaller one that the previous year. That’s one reason that the dollar sale gains ended up higher than expected based on the volume number. The volume shifted into smaller production, which typically means higher retail value breweries. The other is simply price inflation.
The full data set, including control group numbers for breweries (excluding “do not publish”), state totals, regional companies owned by large brewers, and a few new additions will be published for members in about a month.
Tomorrow, I’ll have a post breaking down the growth numbers in a bit more detail.