Ihab Salloum[ad_1]
The Tax and Trade Bureau (TTB) recently released the August 2020 results for U.S. beer production, and they are right on track with expectations. When comparing August 2020 to the same month in 2019, there was a 2% increase in production, with 15,733,232 barrels produced in August 2020 compared to 15,411,347 barrels in August 2019. Over the period of January to August 2020, there was an overall decline in production of 1.9%. This decline can be attributed to the significant impact of COVID-19, which began to be felt in February 2020. As a result, there was a slight shift from kegs to bottles and cans, as people were not visiting brewpubs and taprooms as frequently.
The decrease in barrels produced seems to have affected the larger producers rather than the craft beer segment. However, there was a notable increase in barrel quantity delivered in bottles and cans in August 2020 compared to 2019, with a 10.4% increase. This indicates a significant impact on off-premise distribution. Kegs, on the other hand, are largely used in taprooms and brewpubs. From January to August 2020, there was a 4.8% increase in keg sales compared to the same period in 2019. When comparing 2019 to 2018, there was a 2.5% decrease in bottle and can volume.
It is safe to assume that COVID-19 has heavily impacted the distribution strategies of the craft beer industry. In August 2020, there was a 58% decrease in keg sales compared to the previous year. According to the Brewers Association, craft beer held a 13.6% share of the total U.S. beer market in 2019. The craft beer market consists of various segments, including Regional, Taproom, Microbreweries, Brew Pubs, and Contract producers. In 2019, the craft beer market saw a 3.6% increase in barrel production compared to 2018, while the industry as a whole experienced a 1.6% decrease.
Using data from the TTB, we can determine that in 2019, there were 6,113 craft brewers producing less than 60,000 barrels, compared to 5,847 in 2018. This represents a 7.7% increase in production for this group. However, for brewers producing between 60,001 and 6,000,000 barrels, there was only a 4.1% increase in production. It is important to note that brewers producing over 6,000,001 barrels are considered large corporate producers and are not classified as craft beer producers according to the Brewers Association.
The Brewers Association has defined several categories of craft brewers, including Regional, Taprooms, Microbreweries, and Contract producers. None of these craft brewers produce more than 6 million barrels. In the year-to-date period of 2020, there has been a decrease in total industry beer production, including craft brewers.
Taproom operators have seen a significant drop in sales due to the lockdown measures, resulting in reduced keg sales and an increase in can and bottle sales. However, similar to wine sales, there has been a positive trend in the premium branding market.
Looking ahead to 2021, small craft beer producers will face the challenge of recovering from a deep hole caused by the pandemic. Some small brewers are expressing concerns that the hole might be too deep, with estimates from the Brewers Association suggesting as high as 20% of small brewers leaving the industry. Cheers!
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