It’s no secret that craft beer’s popularity is increasing rapidly, so much so that Aneheiser Bush purchased the most expensive commercial slot at this year’s Super Bowl, to introduce its new “premium beer” Black Crown, to the nation. They were not alone, as we also heard from Beck’s Beer with their new product offering Beck’s Saphir, another premium beer brewed with saphir hops. According to the Brewers Association overall U.S. beer sales were down an estimated 1.3% by volume in 2011 while craft beer sales were up 13% by volume and 15% by sales during the same period. The trends clearly point to a rise in craft beer in terms of both sales and volume, a fact which the big brewers can clearly no longer ignore.
More importantly, much of this growth has been fueled by the rise of the small independent microbreweries, regional craft brewers, and brewpubs. According to the Brewers Association as of July 1st, 2012 there were 922 microbreweries and 81 regional craft beer breweries operating in the United States. When the 1,072 brewpubs are considered this brings the total number of craft breweries to 2,075 in operation nationwide. Below is a map of existing breweries per million people according to the most recent data available by the Brewers Association. (Please note the data was rounded to the nearest million and includes all known breweries including non-craft)
Looking at the map, the the first thing that jumps out is the lack of breweries in the deep south. None of these states have more than 4 breweries per million people, compare that to the brewery rich Pacific Northwest or New England which have no less than 10 breweries for every million. There are many potential reasons for this, one might be stricter alcohol laws, particularly as they relate to ABV percentages, another might be a preference towards spirits over beer. It is important to understand the existing brewery landscape to fully grasp the growth that is being planned for the beer industry in this country.
One way to measure the growth of the brewing industry is to take a look at planned breweries by state. The brewers association defines a brewery in planning as “any party expressing interest in opening a brewery.” While the definition itself raises potential concerns as to the data’s accuracy for the sake of this post lets assume the large majority of the breweries in planning will follow through with their interest and eventually open.
When examining the available data it appears that brewery growth rates have gone parabolic, as an estimated 1,273 breweries are currently in the planning stage. Compare that with the 2,126 breweries currently in operation as of July 1st 2012. Thats a growth rate of an astronomical 60 percent! Below is a map showing the distribution of the planned breweries across the nation as of 2/12/13. (Please note the Brewers Association’s “Find US Brewery” directory is updated daily)
The void of breweries per capita in the deep south appears to be on its way out, and fast. With the exception of Arkansas, Mississippi, and Alabama the southern states that previously had 4 or less breweries per million have a significant number of breweries in the planning stage. Texas, Florida, and Georgia are leading the way with Louisiana and South Carolina also having elevated numbers of breweries in planning. Is supply catching up with demand? It certainly appears that it might be.
The rich get richer. The Pacific Northwest, California, and Colorado are states amongst the top in the number of planned breweries. It will be interesting to see how this plays out over time, as there is no doubt these areas have robust craft beer cultures. With so many new breweries in the planning stages in these areas it appears that a bubble of sorts maybe forming and undoubtedly the point of market saturation maybe drawing near. These offer a catch 22 to prospective breweries as I would assume they have high demand for premium craft beer, yet they also have some of the highest levels of competition for the finite craft beer consumer dollar.
Lack of growth in the Plains region. I found it interesting more breweries weren’t being planned in this region with all the talk of America’s new found energy reserves in the Great Plains and the subsequent migration to these states. I have read of cities and towns in the Dakotas being overwhelmed by the influx of people. To me this area would seem to be ripe for future development of multiple breweries to meet the demand that if it isn’t already there soon will be.
Minimal growth in New England and the Mountain West. Both of these areas ranked towards the high end of existing breweries per capita. It appears these markets may have reached their saturation point as the growth rates are far less than other areas in the country. It will be interesting to watch these areas to see if growth will pick up in future years or if it will continue to slow and if these per capita rates will be the same in which growth in other states begins to slow as well.
Planned growth in Kentucky and West Virginia continue to lag the nation. Both states ranked towards the bottom of existing breweries per million people and both ranked in the lowest rank for planned breweries. It appears that as strong as the craft beer movement is, it may have a harder time gaining traction in Bourbon Country.