Friday, April 19, 2019

Diversity, growth among topics discussed at 2019 CBC

The 2019 Craft Brewers Conference was held at The Colorado Convention
Center in Denver, Colorado (Photo: © Brian Brown/Beer in Big D).

Arriving for the 2019 Craft Brewer's Conference (CBC), held last week in Denver, Colorado, immediate concerns went beyond the state of the brewing industry to that of an impending blizzard. Luckily the blizzard lacked bluster, at least in and around the city, allowing attendees to move about freely between conference seminars and downtown Denver breweries.

Naturally, one of the gathering's main draws was the Brewers Association's annual State of the Industry address given by Paul Gatza, senior vice president of the professional brewing division, and Bart Watson, chief economist.

According to data presented, over 7000 breweries operated all or part of 2018, with 1049 openings and 219 closures occurring (an all-time high).

That translates to a national closure rate of around 3%. Comparatively, the closure rate in North Texas was 2.67% for 2018, with 2 closures among 75 breweries operating all or part of last year.

Looking further at the chart above, the total number of breweries in the U.S. has nearly doubled in just four years. And, more are on the horizon. The federal government has issued over 10,000 active TTB permits, which means there are least 2500 or more breweries in planning across the country.

Locally, the brewery count in North Texas stands at 75 (breweries, brewpubs), with well over 30 others in development.

Regarding growth, craft beer grew only 4% overall for 2018, essentially remaining flat compared to 2017.

Looking at individual segments, breweries saw 16% growth, with brewpubs (restaurants with brewing operations) landing at 13%, and regional breweries staying stagnant at 0%.

Commenting on the results, Watson said he believes growth numbers in the mid-single digits aren't likely to change much unless brewers work to attract new drinkers. Along those lines, he and Gatza suggested breweries could try and appeal to other types of consumers by exploring things like beer hybridization (beer/wine hybrids, beer mixers, more barrel-aged options), adding distilling operations, and the use of cannabis.

Expanding craft beer's demographic* was another avenue discussed, with the topic of diversity being center stage during the conference. A panel led by Brewers Association diversity ambassador, Dr. J. Nikol Jackson-Beckham, focused on strategies aimed at adding fresh faces and voices to the craft beer conversation, whether that be through brewery partnerships with community organizations or by sourcing new talent into the industry's workforce.

A key point brought up in those proceedings was that founders and brewers (i.e. those invested in the company) should endeavor to engage groups they seek to draw into their business. Not only that, it should be done in such a way that it's not just about checking a box to say you've reached out. Sponsoring a group's philanthropic effort is one thing, but actually participating and working together sends a stronger message of community and inclusion.

As for other items of interest, additional data specific to Texas was presented in two side seminars:
  • While going over broader numbers related to pricing and promotion, Nielsen shared data on how displays in Texas are affecting sales. In this case, a retailer having a display presence with lower price discount incentives (as opposed to having no display with a higher discount) resulted in more volume sales. The smaller discount also allowed for improved margin.
  • An analysis done by Audra Gaiziunas, owner of Brewed for her Ledger - an accounting/finance/strategy firm for the beer industry, tracked the impact of working with a tour operator on a Texas brewery's bottom line. The tour operator paid the brewery $5 per head for a tasting and tour, while also providing attendees with a free beer token for use on a later visit. Data showed guests returning to redeem the token bought an additional 1.2 beers on average, resulting in a gross margin increase through the taproom of 2%.

* The typical craft beer drinker is a white male, 21-34 years old, with an average household income of $87,000 per year.

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