Behind the Data: 2018 Craft Brewing Growth Methodology

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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.

Where Did the Data Come From?

In 2018…

  • 71.7 percent of the volume was reported through the Beer Industry Production Survey
  • 8.8 percent of the volume was filled in using state excise tax data
  • Of the remaining 19.5 percent of volume:
    • Almost 40 percent comes from our estimate of Boston Beer’s beer volume (who, as a public company, can’t report to our survey). Given the number of analysts who track their volume, this estimate has a lot of data behind it.
    • The remainder–about 12 percent of the total craft data set–comes from staff estimates taken from scan data, media reports, and other sources

Reported growth by volume was 5.4 percent. Breweries whose numbers were taken from state reports or estimated by staff grew 0.6 percent, so those estimates build in the expectation that breweries who didn’t report may have grown more slowly than those who did.

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 and independent brewers. Since I get questions about this every year, BA membership is not required, and our data set tries to cover all small and independent brewers, including non-members (and a fair number of non-members still report their numbers).

We will publish the volume numbers for fuller-flavored non-craft brands/companies owned by the large brewers in the 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 by our board of directors.

Comparing Year to Year

Because the craft data set changes every year, it requires us to compile two numbers for 2017. The first is simply our revised 2017 number, which is about 200,000 barrels lower than the number we reported last year. As with last year, I think a big chunk of this drop is that we’re increasingly eliminating some of the double counting we’ve had in past years. This occurs either when multiple locations report, or when brewers report contract volume numbers for other brewers who list them as well. We’ve gotten better at spotting these duplicates and I think we have made the forms clearer as brewers fill them out. I also sometimes notice them when we line up 2017 numbers with state excise tax reports. This year we also had a couple of revisions from brewers who provided gallons, not barrels, in 2017. That was about 40,000 barrels of the “decrease.”

Other revisions come from members who update their 2017 numbers when filling out the 2018 survey; state reports that weren’t available until after the 2017 number was created (for example, we don’t have any California annual filer data yet); or updated estimates based on new data availability. These updates do lead to positive adjustments as well (we added around 200,000 barrels on various records), but the downward adjustments were much larger than the positive adjustments for the second straight year. I also took this into account in this year’s estimates, and tried to be a bit stingier than in years past.

The second number 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, and adds in the new brewers pulled into the data set by the change to the craft brewer definition. This year, the comparable base ended up about 160,000 barrels smaller than the 2017 updated number, making a baseline number for 2018 growth between 24.9-25.0 million barrels. That’s why we are reporting 4 percent growth for small and independent brewers instead of 3 percent—that is the growth rate of those brewers that remained in the data set. The non-comparable growth of craft production was 3 percent.

(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 the 2017 estimates based on the updated volumes described above, revising 2017 downward a little bit.

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 estimated total taxable beer number (Tax and Trade Bureau [TTB] + imports [from the Commerce Department]). TTB+imports is a market size of 204.2 million barrels. We’re using 194.3 million for just beer. We also revised the 2017 market share slightly based on updates the TTB has issued for their final 2017 taxable number.

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 numbers—such as dollar sales and jobs. Once again, the vast majority of volume that left the data set came from regionals, and the vast majority of the growth came from micros and brewpubs, so the craft set once again was “smaller” this year—i.e., the average/median brewery in the data set was a smaller one than 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 reason that dollar growth is larger 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.

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