In March, the Motley Fool reported on “3 Charts Every Beer Investor Needs to See”. Their basic summary was that when you dig into the numbers to realize that the craft beer market still has plenty of growth left. I fully agree with the sentiment, but I was looking for some more numbers to help make more of the situation.
As one of The Fools’ charts points out, alcohol consumption numbers have been relatively flat since 1985. The percentage of the adult beverage consumers has been hovering between 55% and 71% of the population and should be a non-issue for the purposes of this discussion. Another cool fact is that beer consumption versus wine or spirit consumption is a majority of the alcohol consumed (53%) in the US according to the World Health Organization.
In fact, all the numbers The Fools dove into were relevant and interesting, but I had another question that I needed to answer. The chart released by the Brewers Association showing the number of breweries since the 1880s is a great record of the recent explosion in craft brewing and small craft breweries, but there’s no reference point to know what that number of breweries really signifies.
The information missing is the total population of the US to know how many people are served by each brewery on average. Comparing total breweries in the 1880’s versus 2013 isn’t really all that useful without context. After all, population numbers have steadily increased over time across the globe and the US is no exception. Since 1900 when census numbers started, the total US population has grown more than 400%.
As the numbers stand for 2013, each brewery in the US is serving far fewer people than in the 1880s when the US had 2,011 total breweries. By 1900, there was one brewery for every 43,000 people yet last year, there was only one brewery for every 125,000 people.
If the ratio in 1900 was to hold true today at 43,000 people per brewery, that would mean the US can sustain at least 7000 breweries. I am hesitant to try and predict what an exact sustainable number is, but I think somewhere between 4,000 and 6,000 breweries is probably the right zone. It’s safe to say there’s a substantial amount of growth that’s probable, it’s a question of how much more growth is sustainable.
There are many other factors that could affect growth over the coming years. Important issues such as the health of the economy, the federal and state tax code, and even the alcohol distribution network are causes for growth or stagnation. (Here in Florida, the recent legislation that passed the House is so dire that Cigar City is talking about leaving the state altogether.)
At the end of the day what is important to remember is that craft beer isn’t some marketing ploy, it’s far more tangible than anything marketing can offer. It’s delicious beers brewed with passion. The safe bet in this industry is that we should continue to see growth in the double digits through 2016 and solid growth overall for at least the following few years after that as more people discover that the craft beer section in the liquor store is worth visiting.
Joel is a craft beer enthusiast, marketer, poker player and inventor.