Author Archives: Tomas Sluiter

2013 Year to Date Sales

Sales and volume up double-digits in first six months of 2013

Source

Boulder, CO • July 29, 2013The steady and sustained growth of American craft brewing continued during the first half of 2013, according to mid-year data released by the Brewers Association (BA). The not-for-profit trade association, which represents the majority of U.S. breweries, announced that during the first six months of 2013, American craft beer dollar sales and volume were up 15 percent and 13 percent, respectively. Over the same period last year, dollar sales jumped 14 percent and volume increased 12 percent.

During the first half of 2013, approximately 7.3 million barrels of beer were sold by small and independent¹ craft brewers, up from 6.4 million barrels over the first half of 2012. American craft beer continues to grow despite decreased overall beer sales, which were down two percent through the first six months of the year.

“Demand for beer produced by small and independent brewers has never been higher, as evidenced by increased production and the hundreds of new breweries joining the playing field each year,” said Paul Gatza, director of the Brewers Association. “Beer drinkers nationwide are responding positively to high-quality, full-flavored, diverse offerings from American craft brewing companies that continue to innovate and push the envelope.”

Opening your own brewery

So…You’ve been a home brewer for years, you’ve won a few awards in local competition. Everyone enjoys your beers and you enjoy making them.

Or maybe you and some friends in college made beer every weekend that after a while ended up being rather drinkable. With every sip you thought to yourself, “Can I do this?”

Or perhaps, you’re tired of working in a drab building, staring at a computer all day going over spreadsheets. The soft rock droning from a radio in the cubicle next to you makes you wonder – Will this always be my life?

Regardless of where you are or what you are doing, there is a dream you have. You think of it every day. This dream is always there.

You want to open your own brewery.

And you’re not alone. The industry has seen amazing growth in the last several years. 2011 saw 88 new Brewpubs and 187 new Microbreweries. 2012 saw 99 new brewpubs and 301 new microbreweries. The final report of 2012 shows there’s 2,403 breweries in the U.S. That’s the highest number we have seen since there were 2,011 breweries in 1887 – Before the temperance and prohibition movements, when local breweries were at the center of every community.

In Portland, where I brew and soon plan to open my brewery, there are already 51 breweries. (Perhaps another couple by the time I finish this article) and according to my friends at the SBA, there’s at least 50 New Brewery Business Plans in their queue to be pitched to banks right now.

At what point is there enough? Are we too late? Have we reached a saturation point? These are good questions to ask yourself. They will certainly be posed to you by your friends, family, investors and your bank.

And the answer is no. We have not reached a saturation point. Starting your own brewery is possible and we can help make it happen. We are not even yet seeing a slowdown. Craft beer has just this year only reached 7% of overall beer sales. The product vacuum and demand is still strong and the movement of consumers seeking out local, independent, craft artisan products appears to be spreading.  We have just now reached roughly the same amount of breweries there were at the pre-prohibition peak.

But lets consider population: In 1887 there were 51,465,053 American Citizens. This year there are 316,278,000 of us. That’s alot of thirsty people – adjusting for capita, we should have room for 14,802 Breweries before we reach the Pre-Prohibition per capita peak. That’s room for at least 12,399 new breweries.

Granted, this number would largely be comprised of small, local, brewpubs, rather than production breweries, but that’s plenty of room for all you aspiring brewers to ditch that tie, don the rubber boots, and grab the mash paddle. Opening your own brewery is an obtainable dream and we can help make it happen.

Growth and Sales

The defining trend over the past several years is that microbrew sells. And sales are robust. I’ve been telling potential investors, banks, friends and clients that the greatest challenge startup breweries face is their ability to accommodate growth. 2012 again saw double digit growth. The data from the Brewers Association reflects this:

“In a year when the total U.S. beer market grew by one percent, craft brewers saw a 15 percent rise in volume and a 17 percent increase in dollar growth, representing a total barrel increase of almost 1.8 million.

With production at 13,235,917 barrels in 2012, craft brewers reached 6.5 percent volume of the total U.S. beer market, up from 5.7 percent the previous year. Additionally, craft dollar share of the total U.S. beer market reached 10.2 percent in 2012, as retail dollar value from craft brewers was estimated at $10.2 billion, up from $8.7 billion in 2011.”

What we are seeing is a market vacuum being filled. Because of the complete eradication Prohibition had on small community breweries, and the subsequent national movement toward homogenization of products, we are just in the past decade seeing an overall cultural trend back to valuing local artisan craft products.  This cultural shift, combined with better technology, ingredients, and knowledge available to small breweries has led to a period of astounding growth – even in an economic recession.

My feeling is we will continue to see aggressive growth until we hit 10% of overall beer sales. And then we will see slower but still steady growth.

The challenge for startups then is smart planning. Many startups have had to upsize their brewhouse size dramatically within a couple years of startup. A good problem to have, perhaps – but product quality can suffer. And with so many new SKU’s coming into the marketplace every day  from so many excellent new breweries, a lapse in quality can be damaging to your brand.

As a result, we have seen many startups eschew the more modest 7 or 15 BBL systems and jump directly into a 30 BBL or 50 BBL system. And judging from recent conversations with fabricators, this trend is continuing. My concern with this is that at some point, when we march toward an inevitable slow-down, an equalization of demand with production, startups with large systems will have to sit on much unsold product. This will not only harm their profit projections, but diminish the quality of their beer and limit their ability to brew multiple styles.

A strategy startup breweries may want to consider is downsizing the size of their brewhouse and upping the efficiency. A four-vessel brewhouse – with a dedicated mash, lauter, kettle and whirlpool, can produce several brews in a single day. This maintains a favorable economy of scale while maintaining the flexibility to produce multiple styles and brew interesting, experimental brews.

One project I’m working on now is targeting a four-vessel 5 BBL brewery.  (Actually a five-vessel. There will be a dedicated, sealable mash tun for sour mashes and gelatinizing raw barley and other cereal grains) There will be several 20 BBL fermenters so that there can brew back-to-back double brewdays for a single batch of the expected main products. (IPA, Helles). Or small batches of experimental recipes can be brewed without having to store so much product.  We are leaving a footprint in the building for a future four-vessel 30 BBL brewery, when the need arises to expand, the 5 BBL system will stay in use for small boutique and pilot batches. This way growth can be accommodated, without potentially diminishing quality and maintain the flexibility to brew new and interesting styles that has become the hallmark of the microbrew revolution.

 

HACCP Preparedness

Hazard Analysis and Critical Control Points references a management system in which safety is addressed through the analysis and control of biological, chemical, and physical hazards from raw material production, procurement and handling, to manufacturing, distribution and consumption of the finished product. Thus far small production breweries have been not held to HACCP standards, but this may soon be changing.

Daytona is Brewing

Daytona Beach Brewing  Company is a startup small production brewery. We have been working with DBBC, to select a small, but efficient German nano system, and small semi-automated hand bottler. We have helped DBBC, who is on a limited budget, develop financial projections based on the small economy of scale, and target the purchase of a larger system by year three. When their target building is secure, we will be helping them on-site, engineer their draft system, glycol refrigerant loop, oversee instillation and develop water treatment, recipes and brewing protocols.

Glassware Matters

The IPA Draft glass by Speigelau, co-designed by Dogfish Head and Sierra Nevada.

The IPA Draft glass by Speigelau, co-designed by Dogfish Head and Sierra Nevada.

Size does matter – as does shape. Handcrafted micro beer deserves to be served in its proper glassware. Too often I find myself entering taprooms or brewpubs and every style is served in a 16 oz shaker pint – From Hefeweizens to Pilsners to Lambics. This not only does a disservice to the beer, but it deprives the customer of the optimal drinking experience. Proper glassware serves a function and it’s not just aesthetic. Whether the purpose is to retain effervescence, or focus aromas, it’s important to offer proper glassware with a trained staff.

And regarding Saké, most people have only experienced rough, warm table saké (futsu-shu) in small ceramic glasses. A good, well crafted Ginjo or Diaginjo is more properly presented slightly chilled, like a white wine, in glass stemware. Yes, stemware. This way the nuances and aromas of the saké can be enjoyed without the warming effect of ones hand.

There is excellent industry server training available. The Cicerone training offers a Certified Beer Server training program. And the Master Brewers Association offers Beer Steward Training courses.

In the last decade the quality and diversity of microbeer has been improving and expanding rapidly. It’s time that glassware and server training reflects this. And with that, my friends, I raise my Belgium tulip glass to you!