With the annual release of our 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). How the data are crunched hasn’t changed much–other than the number of breweries has increased and the process is taking a lot longer.
Who’s in and Who’s not?
The first thing to point out is that our numbers are based on our craft data set, which uses the Brewers Association (BA) craft brewer definition of small, independent, and traditional. We will publish the volume numbers for non-craft brewing companies owned by the large brewers in our May/June 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 of the BA’s craft brewer definition, which is set by our board of directors.
Measuring Apples to Apples
Because that data set changes every year, that requires us to compile two numbers for 2015. The first is simply our revised 2015 barrel production number. That number was revised down slightly, but is still 99.3% of last years reported total, and will typically look fairly similar, since its goal is to measure brewers who were in the data set last year. The revisions to that number come from members who update their 2015 numbers when filling out the 2016 survey (typically small adjustments to align with their final taxable number), state reports that weren’t available until after the 2015 number was created, or updated estimates based on new data availability.
The second is our comparable base. That number takes just the brewers who were included in the 2016 data set and looks at their 2015 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 ~1.2 million barrels to create the comparable base, making a baseline number for 2016 growth of just above 23.1 million barrels. That means that although the craft production number did not move a great deal (24.3 million [revised] up to 24.6 million barrels), we are reporting 6% growth for small and independent brewers – that growth is the growth rate of those brewers that remained in the data set on a comparable base.
Our market share numbers will also differ slightly from other sources since 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). In my estimate of the beer market, I’ve actually made two adjustments this year. The first is the aforementioned pulling of FMBs from the total taxable beer number (TTB + imports). I do this based on both off-premise scan and on-premise point of sale data we purchase. The second is a slight upward revision in the TTB number since they have consistently been finding volume after their initially publish as more returns get counted and added to their figures.
What Else Changed?
Finally, I thought it might be worth laying out how the changing composition of the craft data set is shifting some of the other numbers – such as dollar sales and jobs. Because the vast majority of the 1.2 million barrels that exited the data set were from regionals, and the vast majority of the growth came from micros and brewpubs, the craft set got “smaller” this year – i.e. the average/median brewery in the data set was a smaller one that the previous year. That means that the job gains and the dollar sale gains ended up being higher than you might expect based on the volume number alone, since the volume shifted into smaller production size, typically higher retail value/bbl breweries (both due to average price point and on/off mix, which have very different retail markups).
More to Come
The full data set, including control group numbers for individual brewing companies (excluding those who requested not to be published), state totals, regional companies owned by large brewers, and a few new additions will be published for members on both on BrewersAssociation.org and in the May/June The New Brewer. We’ll also be delving into the new numbers at this year’s Craft Brewers Conference, both from the main stage and in side seminars. Hope to see you there!