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Brewery Business 2012

Learn about trends in the Brewery Business and where to find more info about how to open your own Brewery or Craft Beer Business. Don’t forget you can receive free or low-cost training and free professional business advice, from your local Small Business Development Center!

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Silver Beer VatsBrewery Business Overview & Trends, 2012

SIC Code: 2082, NAICS Code: 312120

This Brewery Business industry summary is from First Research which also sells a full version of this report.

The US brewery industry includes about 400 companies with combined annual revenue of about $25 billion. The two major brewers in the US, Anheuser-Busch (Budweiser brands) and MillerCoors (Miller and Coors brands), are part of international brewing companies; The Boston Beer Company (Samuel Adams) is the leading US craft beer brewer. Counting brewpubs and microbreweries, the brewery industry in the US includes more than 2,000 establishments, according to the Brewers Association. Annual beer production in the US is about 230 million hectoliters, according to the Barth-Haas Group. The industry is highly concentrated: the eight largest breweries account for about 90 percent of industry revenue.

Worldwide, breweries produce about 1.8 billion hectoliters of beer annually. The largest international beer makers are Anheuser-Busch InBev (Belgium), SABMiller (UK), and Heineken (the Netherlands).

COMPETITIVE LANDSCAPE

The major driver of demand is consumer leisure activity. The profitability of individual companies depends on marketing, distribution, and operational efficiency. Large companies have advantages in marketing and sales, production economies of scale, and influence with distributors. Small companies can compete effectively by developing specialty products and serving a local or regional market. The industry is capital-intensive: average annual revenue per worker is about $900,000, but is much lower for smaller companies.

Competition among beers is with national, regional, and local brands, and imported brews. Competition also comes from other alcoholic beverages, especially lower-priced wine, and from nonalcoholic drinks.

This Brewery Business market research report summary is from IBISWorld which also sells a full version of this report.

  • The slower economy contributed to higher brewery revenues as consumers substituted beer products for more expensive distilled spirits.
  • This trend is expected to fade as the economic recovery gains steam and rising disposable incomes lead consumers to expand purchases of wine and spirits. For example, IBISWorld projects 2012 industry revenue will decline 0.2% to $24.5 billion as the shift back to wine and spirits begins to take hold.
  • The industry recently became even more heavily concentrated due to the 2008 mergers of Anheuser-Busch/InBev (now, Anheuser-Busch InBev) and Coors/SABMiller (now, MillerCoors): these two brewing companies new control 84.1% of the U.S. market.
  • The brewery business has deep roots in international trade flows: IBISWorld estimates imports will make up 14.6% of domestic demand in 2012 ($3.7+ billion), and exports will account for 11.5% of brewery revenue in 2012.
  • IBISWorld forecasts an average annual revenue growth rate of 1.0% through 2017, reaching $25.7 billion that year.
  • Profit margins are expected to tighten to 11.6% by 2017, due to price competition among the major players, and an increasing share of lower-margin craft breweries.
  • Craft brewers continue to create competition in the industry. IBISWorld projects that fewer new microbreweries will commence operations in the coming 5 years, relative to the previous 5 years through 2012. The number of new craft brewers is estimated to increase at an average annual rate of 3.9%, reaching 2,250 microbreweries in 2017.
  • Government belt-tightening could lead to excise tax increases, which could affect profits. However, most of this activity is expected at the state or local level rather than a broad national tax. IBIS World cites Connecticut and Maryland as states with new excise tax activity.
125 year Brewery Count Line Chart from Brewers Association

125 year Brewery Count from www.BrewersAssociation.org

Craft Brewers are an important segment of the U.S. brewery business. According to the Brewers Association, craft brewery market segments include Microbrewery, Brewpub, Contract Brewing Company, Regional Brewery, Regional Craft Brewery, and Large Brewery.

This craft brewery statistical excerpt from the Brewers Association describes the size of the industry:

  • Craft brewers currently provide an estimated 103,585 jobs in the U.S., including serving staff in brewpubs.
  • Growth of the craft brewing industry in 2011 was 13% by volume and 15% by dollars compared to growth in 2010 of 12% by volume and 15% by dollars.
  • Craft brewers sold an estimated 11,468,152 barrels* of beer in 2011, up from 10,133,571 in 2010.
  • The craft brewing sales share in 2011 was 5.7% by volume and 9.1% by dollars.
  • Craft brewer retail dollar value in 2011 was an estimated $8.7 billion, up from $7.6 billion in 2010.
  • As of March 26, 2012, the Brewers Association is aware of 250 brewery openings in 2011 (174 microbreweries and 76 brewpubs) and 37 brewery closings (12 microbreweries and 25 brewpubs).
  • 1,940 craft breweries operated for some or all of 2011, comprised of 1,063 brewpubs, 789 microbreweries and 88 regional craft breweries.

Independently authored Report on Craft Beer Industry available for download.

Brewery Business Customer Demographics

According to the IBIS World report mentioned above:

  • Consumers aged 35 to 44 account for the largest share (23.2%) of beer drinkers, while those aged 25 to 34 are the second largest share (22.8%), followed by 45 to 54 year olds (21.8%), 55 to 64 (13%), 65+ (9.7%), and 21 to 24 (9.5%).
  • The youngest age group (21 to 24) showed the strongest growth over the last 5 years ending in 2012, and also showed the greatest interest in purchasing premium and craft beers.
  • Beer drinkers were predominantly male (58%), but the share of female drinkers has been rising over the last 5 years, due in part to craft beers and flavored malt beverages.

Additional information on craft beer customers can be found in a variety of topical and trade publications, including:

Brewery Business Startup Costs

Microbrewery, Craft Beer, Brew Pub Business Plans

Craft Beer Media Outlets

Brewery Business Associations

Trade associations often are excellent sources of information on an industry. Here are some relevant industry associations:

Brewery Business Licensing Requirements

Sources

For the full text of any content in this Small Business Market Research Report from SBDCNet, the link has been provided for the report publisher, while a database article can be obtained from the local public or academic library or purchased from a document delivery service for a nominal fee.

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