THE GIST
Any brewery—no matter its size—benefits from having a variety of data and information to help with decision making. But as sales have slowed this year for craft beer and finding new customers has become more challenging, a lack of accurate and specific data could compound frustrations for the country’s smallest beer makers. Part of that is self-inflicted, as more breweries feel discouraged from providing the very data that would help them understand and navigate their own market.
Craft is -6.6% in volume during the most recent 52-week period in chain retail tracked by market research company Circana.
Collectively, all domestic beer made and shipped for sale in the U.S. is down -5.2% year-to-date in the most recent numbers reported by the Beer Institute. It fell -4.2% during the same timeframe last year.
All beer, but especially craft, has it hard right now, which is why the idea of sharing or not sharing production and sales data has created an awkward tension. Not too long ago, companies were eager to provide this data. Now that growth is hard to come by, sentiments have changed.
“When everyone’s up +85%, the numbers are irrelevant. When things are not as strong, when there’s more nuance, this is exactly when we need big response rates to see the nuance,” says Bart Watson, the chief economist for the Brewers Association (BA). “We’re really trying to stress that: When you’re down -5%, that’s when I need your numbers.”
In a Aug. 10 webinar presenting results of the BA’s midyear survey of craft breweries, Watson was candid about several caveats:
Before presenting the data, he noted that the midyear survey—designed to find out how much beer craft breweries have produced so far in 2023—has a lower response rate than the BA’s end-of-year survey, which is more comprehensive and reliable.
He also noted that it may be subject to some response bias, meaning that breweries who are increasing the amount of beer they brew might be more likely to respond to the survey than those whose numbers are declining.
This year, the survey captured responses representing about 1 million barrels of total craft beer production—just 8% of the 11-12 million barrels (BBLs) Watson estimates craft breweries have brewed so far in 2023. Watson characterizes this as “definitely down” compared to other years, though he notes the response rates from breweries vary from year to year. In 2022, Watson received responses totaling 3-4 million BBLs of production at midyear; three to four times what he received this year.
Though Watson weighted this year’s responses based on brewery size and triangulated them with other data sources, he noted that midyear survey results need to be taken with “some grain of salt.” Still, the BA survey found production declines in the low- to mid-single-digits for craft breweries, depending on their size.
Brewers use the midyear and end-of-year production data gathered by the BA in several ways, including to make business projections for the rest of the year and to share with distributor, retailer, and investor partners.
“Maybe members see less value in [the midyear survey] because we get less responses, but we’re trying to gather data that members have told us is useful for their business,” Watson says.
WHY IT MATTERS
Last year, Watson reported craft beer volume growth +5% at midyear. But looking back at 2022’s complete production numbers with the benefit of hindsight, Watson now says that while there was likely some growth for craft breweries at midyear, it was almost certainly lower than the +5% that the midyear survey indicated. He attributes this to a mix of response bias (breweries who were faring better tended to respond to the survey) as well as error due to small sample size.
As Watson notes, it’s appealing for small breweries to share their data with each other when their numbers are up, as they were for most breweries during the early to middle portions of the 2010s. In 2016, Watson received midyear survey responses that totaled 1.6 million BBLs of beer. While that’s not much more, volume-wise, than he received this year, he says that this volume came from a higher percentage of breweries than responded to this year’s survey.
Now, when the market is tougher, some small brewers are less inclined to report production. It’s understandable that brewery owners might not want to report negative numbers, but it’s a decision that doesn’t serve the interests of an industry reliant on such data to make accurate business decisions.
Brewers themselves have noticed the phenomenon. Speaking to VinePair’s Taplines podcast, New Glarus Brewing brewmaster Dan Carey recalls that during the industry’s booming years, brewers greeted each other at conferences not with “How’s it going?” but with “How much are you up this year [in terms of production]?”
“Brewers don’t ask that anymore,” Carey says. “But for a while, that was the introductory question.”
A lack of communication and accurate data makes it more difficult for breweries to benchmark themselves against the overall market. This is especially true of the smallest craft breweries, whose business models and trends can be quite different from what’s reflected in data from national market research companies. A brewery in Hattiesburg, Mississippi that only sells beer out of its taproom, for example, might not glean workable insights from scan data about beer trends in national grocery store chains. These small breweries are the bulk of the BA’s membership by numbers: Breweries that make less than 1,000 BBLs of beer account for 75% of membership.
“If you’re not getting data specifically from small breweries, the data that exists out there just isn’t useful for small brewers,” Watson says.
This is also true of the American Cider Association (ACA), whose members often don’t see their business models reflected in national data. According to Michelle McGrath, CEO of the ACA, more than 75% of U.S. cideries make less than 25,000 gallons of cider annually. (That makes the ACA’s membership composition roughly analogous to the BA’s in terms of scale: 25,000 gallons is about 800 BBLs of beer.) Most of those cideries are not selling cider through chain retailers whose barcode scans provide data to companies like NielsenIQ or Circana.
The ACA has therefore made it a top priority to poll its own members to provide accurate data on the cider landscape; a majority of ACA members report using this data to make business decisions or pitch retailers on selling their cider. The accuracy of this data has become critical to the goal of any cidery: selling more cider. McGrath says the ACA’s most recent survey had a more than 75% response rate.
“We do offer some pretty amazing prizes as incentives, but [members] also know how important the information is for us to achieve our objectives,” McGrath says.
Watson and the BA must be careful to get as many midyear survey responses as possible without overwhelming breweries with surveys, questions, and emails. Watson says the end-of-year production survey is intended to be more comprehensive, and therefore the BA prioritizes getting responses from breweries to that survey versus the midyear one. Watson also uses weighting and triangulation with additional sources of data to compensate for breweries that don’t provide data to the BA.
“One of my goals is to ask fewer surveys,” he says. “But there are some details you can only get from breweries themselves.”
Words by Kate Bernot