If you’re a fan of fine craft beer, there are probably a slew of reasons to justify shelling out a little extra cash for a well-made brew. There are a plethora of ways to describe what makes a beer unique. For others, the term “craft” suffices. To better understand what is meant by the term “craft,” consider the following information.
A “craft beer” is defined by the Brewers Association as “a small and independent brewer in the United States.”. The term “small” refers to a brewery that produces less than 6 million barrels of beer per year (approximately 3 percent of U.S. annual sales). Breweries that are classified as “independent” are those in which a member of the beverage alcohol industry does not own or control more than 25% of the company (or an equivalent economic interest).
Regulating craft breweries falls under the purview of the Tax and Trade Bureau (TTB.gov). The ttb.gov website provides more information than even the most knowledgeable consumer could ever desire.
Craft brewing operations can be summarised in the following way:
The use of new and evolving ingredients and techniques in the reinterpretation of historic styles.
Yeast, hops, and grains all have their own distinct flavours, aromas, and characteristics.
Independent breweries with a strong connection to their local area.
Individual brewers with distinct marketing strategies and targeted markets/regions.
With their unique product styles and creative brand identities, craft brewers have a distinct place in the market place.
Craft brewers are defined as local if they are within a 10-mile radius of the brewer’s location.
Microbreweries, Brewpubs, Taproom Breweries, Regional Breweries, Contract Brewing, and Alternating Proprietorships are all types of craft breweries.
In 2019, there will be 1,952 microbreweries.
More than 75% of its beer is sold off-site and it produces less than 15,000 barrels a year. Retail stores, take-out, and on-site taprooms/restaurants are all examples of off-site dining. Each state has its own laws that govern the distribution of craft beer. As an illustration, while some states permit brewers to distribute their own product, others mandate the use of a system known as Three Tier Distribution. (The term “monopoly” is used by the general public.)
In 2019, there were 2,929 visitors to the brewpub.
More than a quarter of its brews are sold on-site, and the restaurant serves a significant number of customers. Restaurant and bar customers can purchase brews made in-house. Similarly, local and state laws govern the ability of Brewpubs to sell take-out and distribute to off-site accounts in this case.
Breweries with Taprooms: 3,073 in 2019
One that sells at least 25 percent of its beer on site and does not provide significant food services.
In 2019, there were 238 regional breweries.
A brewery that can produce anywhere from 15,000 to 6,000,000 barrels of beer per year.
The Brewing Company:
A company that contracts with a different brewery to make its beer. Breweries may also contract out their own private label brews. Brewing and packaging are generally left to the producer-contract brewery’s brewing company, which handles marketing, sales, and distribution (which is also sometimes referred to as a contract brewery).
Accepted by TTB with specific rules. Tenant breweries are licenced to brew in shared breweries while taking physical control of the facility. Conversely, “alternating proprietors” are responsible for all brewhouse obligations, including record keeping, tax payments, and label or formula approval,” Brewers Association/TTB.
In 2019, there were 8,500 breweries in the United States in all categories defined by the Brewers Association. State-by-state distribution tends to mirror local demographics. Compared to 2018, the annual increase in 2019 was +8.9 percent.
Craft brewing analysts may have a difficult time evaluating the industry in 2020. From 700 to 100 new microbreweries opened in the first year of 2018 compared to the same period in 2019. The percentage of closings versus openings has increased from 15% in 2017 to 80% this year. Finally in 2019, closings almost equaled openings in terms of numbers. Brewpubs (which combine a brewery with a restaurant) are expected to experience declining sales by 2020.
I’m not afraid to join the ranks of self-proclaimed experts in the craft brewing market following Covid19, as there is no shortage of opinions. In 2020 and 2021, turn-key operations in the beer industry may be available to those who want to get involved in the science and art of brewing. However, fairness and honesty should always be the watchwords in any transaction you enter into. As a business owner, I can attest to this.
What are the best ways to prepare for a rise in the popularity of craft brews? A recent blog post by Dorothy Gaiter (How Wine Can Stop Its Return to An Era of Snoot) advised the industry to reject the image of wine as snooty. According to one of the premises, restricting access to wine to those with higher education and privilege meant they were limiting their customer base. So she said, “A diverse demographic in the wine industry can only bring great benefit,” exactly. In my opinion, these ideals have led to exponential growth in every industry that has adopted them, and they have opened up previously inaccessible markets.”