If you consume craft beer in any way, shape, or form, you've probably noticed that the industry has exploded over the past decade. In 2005 there were 1,394 craft breweries that, combined, accounted for only 3.1% of total U.S. beer sales by volume and 5.4% of sales by dollar value. By 2010 those figures had increased incrementally, with 1,600 craft breweries accounting for 4.4% of sales by volume and 7.6% of sales by dollar value. The "golden age" of craft beer really began in 2010, when both volume and dollar share growth rates jumped into the double digits despite significant sales contraction in the overall U.S. beer market.
The recently released figures for 2013 show craft beer holding a volume share of 7.8% and a dollar share of 14.3%! 2,768 craft breweries contributed to the 18% volume growth and 20% dollar growth that occurred during the year. This growth is astounding when viewed from any angle. As a result, there are many news organizations publishing articles that ponder whether we are in a bubble and when we should expect it to burst. I'll leave the response to Bart Watson, the Staff Economist at the Brewers Association - check out his post on the BA Blog here. It's certainly worth a read!
When we were researching our future location we knew that the exponential growth was being seen across the entire country. Still, as you would expect, there were and are regional differences in the craft beer market. The craft beer movement began on the West Coast in the mid-1970s. As a result, the most mature markets are scattered throughout California, Oregon, Colorado, and Washington. In the 1980s and early 1990s craft beer became popular in the Midwest, the Northeast, and the northern states of the Mid-Atlantic region.
While there are definitely exceptions, the lower Mid-Atlantic, the Southeast, and the South Central were generally the last regions of the country to fully embrace craft beer. As you might expect, some of the newer regions are currently experiencing the highest growth rates. In 2013, California, the West Region (including Oregon, Washington, and Colorado), and the Midwest saw dollar growth rates of 15.6%, 10%, and 16.2%, respectively. In contrast, the lower Mid-Atlantic, the South Central, and the Southeast experienced dollar growth rates of 16.9%, 19.7%, and 24.7%, respectively.
Back to the topic at hand: Virginia! As mentioned in the post explaining why we landed in Williamsburg, Robby and I spent significant time researching the craft beer market here in the Commonwealth. In terms of craft breweries per capita, Virginia is currently ranked 30th in the United States with 61 operating craft breweries (up from 48 in 2012) and a 21+ population of just under 6 million, which results in 1.02 craft breweries for every 100,000 21+ adults. Of those 61 breweries, two are regional breweries (over 15,000 BBL of production), 39 are microbreweries (produce less than 15,000 BBL and sell at least 75% off-site), and 20 are brewpubs (restaurant-breweries that produce and sell at least 25% on site, with the beer being brewed primarily for sale in the restaurant and bar). Total production in Virginia increased by 37% in 2012 (from 61,440 BBL to 84,059 BBL) and by 54% in 2013 (from 84,059 BBL to 129,103 BBL), making Virginia the 26th largest craft beer producer in the U.S.
The fantastic growth seen in Virginia's craft breweries and craft beer production doesn't mean that the market has been fully tapped, though (pun intended). Earlier in this post, California, Oregon, Colorado, and Washington were classified as mature beer markets. The table below compares the current state of craft beer in those mature markets to the current state of the craft beer market in Virginia. A few extra states that have seen accelerated growth over the past five years are included for a view into Virginia's future!
As you can see, Virginia has a very, very long way to go before the market is fully saturated. According to craft beer distributors in our local area, the craft market share by volume in the Commonwealth is still south of 5%. We can't wait to help our fellow craft brewers reach and surpass the national market share by volume!
*Special thanks to the Brewers Association for providing all growth rates, market share figures, and brewery counts. Also, special thanks to Dan Wandel from the Beverage Alcohol Client Insights group at IRI for providing regional dollar share growth in his presentation titled, "American Muscle: Craft Beer Sales Continue to Soar. 2013 Beer Category and Craft Beer Review."