#BBC18: Julia Herz of the Brewers Association

Julia has provided the introduction on every single BBC since its inception and always offers a dynamic presentation of the current state of craft beer and how that is pertinent to beer bloggers.

Transcript

1. 8/9/2018 1 Brewers Association Boulder, Colorado 3 Brewers Association Membership 50K+ MEMBERS • 70%+ of U.S. Breweries • Retailers, Wholesalers, Allied Trade and Homebrewers Promote and Protect 4
2. 8/9/2018 2 5 The Big Picture Prohibition Repealed 1933 7 1985 The New Brewer Magazine 8
3. 8/9/2018 3 9 TODAY… Alcoholic Beverage Sales Category Sales in billions BEER* $111.46 (2017) SPIRITS <$80 (estimated-2017) WINE $62.7 (2017) US MARKET *$26B for Small and Independent Craft Brewers 10
4. 8/9/2018 4 11 Domestic Imports Totals All figures in ‘000s of bbls (1 bbl = 31 gallons) 1988 178,720 9,398 316 188,434 2017 136,982 34,428 24,868 196,278 Change -41,738 25,030 24,552 7,844 The U.S. Beer Market by Volume • Big 2 = 67% • Imports = 17% (estimated) • Craft = <13% (98% of the 6K+ breweries) • Others = 3% (estimated) from Pabst 3 share, + others 13
5. 8/9/2018 5 Overall Beer Bottles 40.6% 34% Draught 41.4% 10% Cans 18% 55% Package Breakdown 15 Only 46% of BA Craft Brewers in scan were up in the 1st half of the year vs YA The Patterns are Accelerating 2017 Scan Data Source: IRI MULO+C, (12/31/17) BA Craft Definition Mid Year Source: IRI MULO+C, (7/1/18) BA Craft Definition National Size (CEs) Growth % 2017 Growth % 2018 1,000,000+ -0.5% -2.5% 100k to 1M 6.0% -1.5% 10K to 100K 15.1% 5.4% Less than 10K 42.8% 30.8% Barrel Growth by Founded Date 19 6 7 12 13 15 17 18 12 6 5 0 2 4 6 8 10 12 14 16 18 20 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Craft Production Growth Rate 18
6. 8/9/2018 6 Total U.S. Alcohol Beverage Permits Grow Across All Segments 0 2,000 4,000 6,000 8,000 10,000 2010 2011 2012 2013 2014 2015 2016 2017 U.S. Brewery Permits 0 1,000 2,000 3,000 2010 2011 2012 2013 2014 2015 2016 2017 U.S. Distillery Permits 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 2010 2011 2012 2013 2014 2015 2016 2017 U.S. Winery Permits Almost 24,000 permitted alcohol suppliers in U.S. Majority in past seven years: 2010 = 9,803 2017 = 23,494 Source: U.S. TTB 2017. 20 Who is Drinking Craft Beer? Who is Drinking Craft Beer? 23 Copyright © 2017 The Nielsen Company. Confidential and proprietary. 65% 55% 42% 11% Regional Local National Not at all sure PREFERENCE IS REGIONAL/LOCAL OVER NATIONAL Source: Nielsen's Craft Beer Insights Poll (CIP) conducted May 2018 by Harris Poll (n=1,008 Craft Drinkers; n=416 weekly craft drinkers) Q: Which best describes the type of craft beer you typically purchase (select all) Only sold in my state, or neighboring states Only sold in my town or city Sold across the U.S. 26
7. 8/9/2018 7 Copyright © 2017 The Nielsen Company. Confidential and proprietary. 29% 50% 59% 59% 67% 68% 74% 74% 92% 95% Low alcohol content High alcohol content Made by Independent brewer Locally made Appearance Bitterness Ingredients Aroma Freshness Flavor Flavor and freshness are top factors Q: How important are each of the following when choosing a craft beer to purchase? % Responding Very/Somewhat Important Source: Nielsen's Craft Beer Insights Poll (CIP) conducted May 2018 by Harris Poll (n=1,008 Craft Drinkers; n=416 weekly craft drinkers) 27 Copyright © 2017 The Nielsen Company. Confidential and proprietary. NE STYLE (JUICY/HAZY) LIKELY TO APPEAL TO MORE FEMALES THAN HOPPIER CRAFTS Q: Compared to a few years ago, are you more or less interested in drinking the following types of craft beer? N/C More Less Net N/A 36 34 24 +10 6 36 32 28 +4 4 36 39 22 +17 3 Source: Nielsen's Craft Beer Insights Poll (CIP) conducted for the BA - May 2018 by Nielsen and Harris Poll (n=1,008 Craft Drinkers) N/C More Less Net N/A 39 39 17 +22 5 38 38 20 +17 4 42 24 31 -7 3 Percentages Juicy/Hazy Fruity Hoppy MALE FEMALE 28 Beer Styles (Estimated #’s) • American-Style Pilsener and International-Style Pilsener combined grew 70% over 2017. • Aged beers doubled. • Fruited American-Style Sour Ale and Berliner- Style Weisse grew (46% and 62% increases) • Irish-Style Dry Stout 4th largest % gainer with 56% growth. 46
8. 8/9/2018 8 Beer Styles (Estimated #’s) • German-Style Doppelbock and Pumpkin Beers both posted 40% decreases in entries • Session IPA posting a 25% decrease in entries, and going against the grain of hop forward beer style growth. 46 Copyright © 2017 The Nielsen Company. Confidential and proprietary. WEEKLY DRINKERS PAIRING BEER SELECTION BASED ON SPECIFIC FOOD/MEAL MOST OFTEN Source: Nielsen's Craft Beer Insights Poll (CIP) conducted May 2018 by Harris Poll (n=1,008 Craft Drinkers; n=416 weekly craft drinkers) Base: Drink Craft Beer With Food At Least Sometimes How often do you typically select the craft beer you will drink based on the specific food item or meal you are having/plan to have? ALWAYS/OFTEN SELECT CRAFT BEER BASED ON FOOD 8% 13% 9% 5% 22% 30% 23% 20% TOTAL CRAFT DRINKERS TOTAL WEEKLY CRAFT DRINKERS M ALE CRAFT DRINKERS FEM ALE CRAFT DRINKERS ALWAYS OFTEN 30 Where Are We Drinking Beer? Sales S&I Craft Beer Overall Beer ON-PREMISES 30% 18% OFF-PREMISES 60% 82% AT THE BREWERY 10% <1% 16
9. 8/9/2018 9 Copyright © 2017 The Nielsen Company. Confidential and proprietary. BREWERY/BREWPUB/TASTING ROOM VISITS OFTEN ADD OCCASIONS (ESPECIALLY NON-CORE DRINKERS) • Source: Spring 2018 (BA) – Total U.S. Q: As you have visited a Brewpub/Taproom or Brewery in the last 3 months, did that visit replace a visit to a bar or other on-premise establishment? (If you made multiple visits, select the option that is most typical) 38% 32% 25% 5% No, visiting a brewery was a different type of occasion where I wouldn't have gone to a bar Yes, I chose to visit a brewery instead of a traditional bar/on-premise drinking establishment No, visting a brewery was in adition to my typical bar/on-premise occasion Yes, though I would be generally be reducing my bar occasions 21-34 33% 39% 23% 6% 35-54 37% 30% 28% 5% 55+ 45% 27% 25% 3% Male 36% 31% 27% 6% Female 42% 32% 23% 3% 32 34 35 Copyright © 2017 The Nielsen Company. Confidential and proprietary. Copyright © 2017 The Nielsen Company. Confidential and proprietary. ABILITY TO EXPERIENCE CRAFT BEER TOP AMONG REASONS FOR TASTING ROOMS Q: Why have you chosen to visit a brewery tasting room rather than go to a traditional bar? Source: Nielsen's Craft Beer Insights Poll (CIP) conducted May 2018 by Harris Poll (n=1,008 Craft Drinkers; n=416 weekly craft drinkers) 0% 10% 20% 30% 40% 50% 60% Ability to sample various beers (e.g. flights) To learn about different beers I know the beer will be fresh Offer tours of the brewery Offer beers that are not available elsewhere Better atmosphere More knowledgeable staff Offer food pairings with beer More family friendly Craft Drinkers Weekly Craft Drinkers • Tasting Rooms drive beer lover interest – HALO for brands. • Tasting Rooms are sourcing NEW beer sales that did not exist before. • Beer lovers like “at the source” experience. • Glassware, beer clean glass, fresh beer, clean draught lines, beer diversity and informed servers. Brewery Tap Rooms are Good for Beer 35
10. 8/9/2018 10 Working On Behalf of Beer Julia’s ‘On The Horizon’ For Beer • .05 • Cannabis • On-line shipping • Regulatory/Policy • Water and raw materials • Will the marketplace get more fair? 38 • On vs off premise are different animals • Hundreds -- if not thousands -- of beers often not included for ‘craft sales’. • Craft does not mean same craft to everyone. So qualify. Dissecting Craft Brewer Data 36 • Federal Excise Tax: • 2 year recalibration sunsets on December 31, 2019. • More than 50% of congress supported recalibration. • Breweries are doing what they said they would do • Hiring new employees • Investing in Economic Development (new tasting rooms, canning lines, etc.) • Increasing employee benefits (401Ks, healthcare) • Increasing charitable giving Government Affairs 39
11. 8/9/2018 11 The Tariffs: Where brewers buy equipment and how they package could impact the bottom line. Government Affairs 40 • OSHA How to Survive an OSHA Inspection Online Brewery Safety Training – 25,000 lessons completed! • Brewers’ Responsibilities and Obligations under the U.S. Food Safety Modernization Act (FSMA) Good Manufacturing Practices for Craft Brewers – • Food Safety Plan for Craft Brewers • Wastewater Management Guidance Manual Technical Resources 42 Hops • Citra has replaced Cascade as the largest acreage aroma hop variety. • As of 2018, Idaho has surpassed Oregon as the number 2 hop producing state as well as number 2 in acreage Malt • There are now at least 50 US craft Maltsters. Craft Maltsters Guild Member Malt Houses https://craftmalting.com Ingredients 43 44
12. 8/9/2018 12 47 Ambassadors 48 Julia Herz, Craft Beer Program Director @HerzMuses