Today, the National Beer Wholesaler’s Association (NBWA) released the list of finalists for the 2014 Craft Beer Distributor of the year award. Every year, this award highlights the close ties between wholesalers and craft brewers. [Brewers – check the BA Forum for information about how you can provide feedback to help pick this year’s winners.]
The presence of an independent three-tier system has been one of the reasons for the rise of craft brewers. In recent years, however, craft brewers have been equally good for wholesalers. Much has been made of the volume challenges facing the beer industry. Equally well-document has been the ability of craft brewers to provide volume gains in a tough overall environment. But are these two sides of the same coin? Some commentators have suggested that craft eats into overall beer volume as beer lovers trade up to fewer, fuller-flavored offerings. Is there any evidence for this?
Not really – in fact, the evidence suggests the opposite. In recent years, looking at a state-by-state level, the presence of a strong craft industry has been great for the beer industry, and in turn, for beer wholesalers.
The graph below shows the relationship between the craft industry in a state (measured by craft brewer production/total beer shipments) versus the change in beer shipments in each state from 2009-2013. What it finds is striking. States with the strongest craft beer industries have on average gained volume, versus the vast majority of states, which have lost volume.
More specifically, from 2009 to 2013, a state with no craft industry would be expected to have lost -2.3% of its beer shipment volume, whereas a state with one of the strongest craft industries (a state approaching 40% craft production/shipments like in CO or VT) would have been expected to GROW shipments by 3.8%.
Note: these already strong findings only increase if you exclude outlier North Dakota, where the Bakken formation oil boom brought an influx of largely young, male workers (aka core beer drinkers) into a state with a previously aging, shrinking population.
These state-by-state results strongly suggest that craft is good for overall industry volume, re-energizing beer lovers and bringing new people into the beer category. Other sources agree. Looking at IRI Group data, the beer industry lost and gained roughly the same number of buyers from 2012 to 2013 (a bit less than a quarter of the population of beer buyers). With 23-24% turnover every year, you can bet that a large percentage of new entrants to the beer category were brought in by craft and IRI found that retained beer drinkers shifted more toward craft.
So to sum, as we take a moment to honor those distributors that have invested their time and effort in building great craft brands, other members of the wholesaler community should be asking themselves, “why aren’t we doing the same?”.