UPDATED – Guest Column- A Different View of Some Alcohol Industry Statistics

Update:

Recently the Brewers Association updated its private count of breweries.   According to BA records, it noted that there are 2,822 breweries of which they count 2,768 as “craft” breweries.    However, 45% of these craft breweries are actually brewpubs and are more like restaurants in many ways.  Likewise only 119 breweries (4%) are larger than 15,000 barrels and are presumably seeking distribution beyond their immediate local market.  The excitement and growth of the under 15,000 barrel group (51%) will put intense competitive pressure on the 4% of regional breweries as they look over their shoulders at the 1,412 microbreweries coming into local markets.    Many of these regional breweries have experienced tremendous growth and their market values reflect this.  Boston Beer recently was listed having a market capitalization worth $3.2 billion.  Yuengling has been valued at $1.8 billion.   The values of some other top 25 domestic breweries were subject to a March 31, 2014 article here.  It is a good time to be in the beer brewing business with multi-million valuations and growth rates of 18% in craft beer volumes!

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The “Exciting” World of Alcohol Industry Statistics

The number and address of federal permits for wineries, distilled spirits plans, importers and alcohol wholesalers is a matter of public record.  The Department of Treasury’s Alcohol Tax and Trade Bureau (TTB) is the primary federal regulator of alcohol. On its website, TTB lists every permittee by business name, permit number, state and address. As of September 19, 2013, it noted 24,080 alcohol wholesalers; 12,599 importers; 8,964 wineries; and 1,078 distilled spirits plants. (This does not include the 755 wholesale permits in Puerto Rico or 233 other federal permits for wineries, importers or distilled spirits plants there.) This information is available publically at the TTB website here.  This site is updated weekly with a specific link to new permittees added since the previous update.

Unlike wineries, importers, distilled spirits plants, and alcohol wholesalers, there is no government-provided source of the name and location of those licensed to brew beer.   Information requests must be filed with the TTB to determine the number of breweries and size ranges.  Since brewer information data is “protected” under the privacy provisions of the Internal Revenue Code, the TTB will not reveal addresses and locations of individual breweries like they do for wholesalers, wineries and distilled spirits facilities but the TTB is helpful in providing aggregate data.

According to the TTB, as of June 2013, there are 2,278 breweries in the United States.  As the chart below illustrates, 78% of these breweries produce less than 1,000 barrels a year. 91% of the nation’s breweries produce less than 7,500 barrels a year.

The TTB numbers are an important step towards “apples to apples” comparisons of data for the wholesaler and supplier tiers. The government statistics clearly show that there currently are at least ten times as many alcohol wholesaler permits as there are breweries in the United States. However, that goes against the narrative certain advocates have tried to foster by claiming a great imbalance in wholesaler numbers due to “consolidation” and in the “rapidly growing” brewer count.

As with all numbers, the truth lies somewhere between the positions.  There are not 24,000 beer distributors in the United States. And there are not 950 or 250 either. The federal number recognized by the TTB is growing as is the federal number of breweries.  Some of these 24,000 TTB wholesale permits are for wine or spirits sales only.   The biannual Beer Serves America report recognizes 3,728 beer distribution facilities by utilizing various state and federal public records, member databases, Census Bureau statistics as well as Dun & Bradstreet information.   Beyond the traditional distributors affiliated with larger brewers, there is a growing multitude of distribution options whether from an independent craft beer distributor or from wine and spirits wholesaler operations and which in total employ 130,000 Americans.  The numbers and types of distributors will vary from market to market.  For example, there are at least seven vibrant beer distributors serving Philadelphia today and many are not affiliated with the larger brewers.  The numbers of distributors recognized by the TTB continue to grow as barriers to entry are low.  NBWA provides a link on its website to help navigate the process.

By the same measure the number of breweries is by itself a bit misleading.  While the growing overall number of breweries in the United States should be celebrated, as noted earlier most of the breweries in the United States start and stay small with 91% being less than 7,500 barrels of production a year.   The number of breweries and their small size does not beget apples to apples comparison to the number of wholesalers.  The nature of brewing and distributing a heavy, perishable and temperature controlled product such as beer does not lend a “brewery to distributor” comparison in national numbers.  The number of breweries with national distribution is quite limited; instead there is a more recent focus on regional breweries and distributors are competing every day to bring these regional breweries into more states and territories to serve more consumers.

The Nielsen Company notes there is more consumer choice in alcohol than any other category it tracks.  Independent beer distributors play a critical role in providing that choice. Hopefully, future debates will strike the right balance in highlighting breweries entering new markets and the number of distributor operations ready to continue to bring to American consumers the greatest choice and variety of alcohol in the world.

Submitted by Paul Pisano, NBWA