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Craft Beer Shows No Signs Of A Slowdown

Stocks in this article: BREWBUDSAMTAP

Emily Smykal, KAPITALL: Lets face it, in today’s economy, many investors are wary of committing their funds to a small business. But certain niche markets are experiencing rapid growth thanks in large part to the success of small businesses. Craft beer in particular deserves a closer look.

According to the Brewers Association (BA), the US beer market overall in 2012 was up 1% from 2011, with an approximate value of $99 billion, selling 200,028,520 barrels of beer (where 1 barrel equals 31 US gallons)

(See our related infographic covering Big Beer's decline.)

Within the market, craft brewers grew 15% by volume and 17% by dollars compared to growth of 13% by volume and 15% by dollars in 2011. As small businesses contributing to the economy, craft brewers provide roughly 108,440 American jobs including service staff.

And compared to the national average, the craft brewing industry experiences higher rates of openings and lower rates of closures. The US Small Business Administration estimates that 10-12% of all businesses open and close each year. In craft brewing, those figures are approximately 17% and 2%, respectively.

As of March 18, 2013, the BA reported 409 brewery openings in 2012 and just 43 brewery closings. In total, 2,347 craft breweries operated for some or all of 2012, including microbreweries and brewpubs.

In addition, craft brewers are making a bigger push into foreign markets. The BA reports craft beer export volume increased 72% over 2011, with an estimated value of $49.1 million. While the primary obstacle to exporting craft beer is its limited shelf life due to a lack of pasteurization, brewers are devoting more resources to beer varieties that contain natural preservatives.

The BA considers any brewery producing 6 million barrels of beer or less per year to be a craft brewer, with less than 25% of the craft brewery owned or controlled by an alcoholic beverage industry member who is not a craft brewer.

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