Please provide a detailed background on the U.S. craft beer industry, including growth projections and recent major acquisitions.
Hello! Thanks for your request for an overview of the market for craft beer in the United States. I understand you are especially interested in growth projections and recent major M&A transactions.
The short version is that the U.S. craft beer market industry generated retail sales of $23.5 billion in 2016 and the industry is expected to grow at a CAGR of 18.3% during the period 2014-2019. Recent major M&A transactions in the industry include AB InBev's acquisitions of Golden Road Brewing, Breckenridge Brewery, Four Peaks Brewing Co., Devils Backbone Brewing Co., and Karbach Brewing Co. and MillerCoors' acquisitions of Saint Archer Brewing Co., Terrapin Beer Co., Hop Valley Brewing Co., and Revolving Brewing.
Below you will find a deep dive of my findings.
RETAIL DOLLAR VALUE GROWTH AND SHARE
According to the Brewers Association, the retail dollar value of the U.S. craft beer industry reached $23.5 billion in 2016, a 10% increase from the value in 2015. Craft beer accounted for 21.9% of the $107.6-billion U.S. beer industry.
Nielsen provided sales figures as well, but the numbers are much smaller because only Nielsen-measured off-premise channels were considered. The firm reported the following U.S. craft beer dollar sales.
Year ended 02/02/13 - $2,955,812,759
Year ended 02/02/14 - $3,497,275,230
Year ended 01/31/15 - $4,034,240,227
Year ended 01/30/16 - $4,642,847,360
Year ended 01/28/17 - $4,776,468,132
Based on a Statista chart, it appears that craft beer's retail dollar sales share in the country is expected to grow at a CAGR of 5.86% during the period 2015-2020. Meanwhile, Research and Markets predicted in 2016 that the U.S. craft beer market will expand at a CAGR of 18.3% from $19.6 billion in 2014 to $45.4 billion by 2019.
VOLUME GROWTH AND SHARE
Craft brewers produced 24,570,469 barrels in 2016, as reported by the Brewers Association. How this number had changed since 2009 can be seen below.
2009 - 9.1 million
2010 - 10.1 million
2011 - 11.5 million
2012 - 13.2 million
2013 - 15.6 million
2014 - 22.1 million
2015 - 24.3 million
2016 - 24.6 million
It appears that, during the period 2009-2016, the number of barrels produced had grown at a CAGR of 15.27%.
Craft brewers' volume share of the country's beer market increased between 2011 and 2016 as well, as can be seen below.
2011 - 5.7%
2012 - 6.5%
2013 - 7.8%
2014 - 11%
2015 - 12.2%
2016 - 12.3%
Between 2015 and 2016, there had been a 6% increase in the total taxable production of craft brewers. The production volume of the U.S. craft beer market in 2016 breaks down into 73.0% regional craft breweries, 20.4% microbreweries, 5.5% brewpubs, and 1.1% contract brewing companies.
Yearly craft beer volume sales (in cases, not barrels) in Nielsen-measured off-premise channels is as follows.
Year ended 02/02/13 - 90,709,575
Year ended 02/01/14 - 105,105,897
Year ended 01/31/15 - 117,688,823
Year ended 01/30/16 - 130,348,236
Year ended 01/28/17 - 131,707,499
It appears, based on a Statista chart, that craft beer production volume, in barrels, is expected to grow at a CAGR of 8.05% during the period 2015-2020.
CRAFT BREWERY GROWTH AND SHARE
Based on information released by the Brewers Association, craft breweries made up 99% of the breweries in the United States in 2016. In that year, 5,234 out of 5,301 breweries were craft breweries. These craft breweries comprised 3,132 craft microbreweries, 1,916 craft brewpubs, and 186 regional craft breweries. Relative to 2015, the number of craft microbreweries, craft brewpubs, and regional craft breweries had grown by 21%, 11%, and 4%, respectively.
How the number of operating craft breweries in the country had changed over time can be seen below.
2009 - 1,596
2010 - 1,749
2011 - 1,977
2012 - 2,420
2013 - 2,898
2014 - 3,743
2015 - 4,504
2016 - 5,234
In 2016, 826 craft breweries opened and 97 craft breweries closed. A total of 128,768 people were employed by craft breweries in that year, 6,925 more than the 121,843 employees in 2015.
RECENT NOTABLE M&A TRANSACTIONS
Both law firm Dorsey & Whitney LLP and accounting and advisory firm Baker Tilly released reports on recent M&A activity in the U.S. craft beer industry. It appears from their reports that the recent major M&A transactions in the market were as follows:
AB InBev's acquisitions
Golden Road Brewing (September 2015)
Breckenridge Brewery (December 2015)
Four Peaks Brewing Co. (December 2015)
Devils Backbone Brewing Co. (April 2016)
Karbach Brewing Co. (November 2016)
Tenth and Blake Beer Co.'s (MillerCoors) acquisitions
Saint Archer Brewing Co. (September 2015)
Terrapin Beer Co. (July 2016)
Hop Valley Brewing Co. (July 2016)
Revolver Brewing (August 2016)
Foreign buyers' acquisitions
50% of Lagunitas Brewing Co. acquired by Heineken Holding NV (September 2015)
Ballast Point Brewing & Spirits acquired by Constellation (November 2015)
25% of Brooklyn Brewery acquired by Kirin Company (October 2016)
Two Beers Brewing Co. and Seattle Cider Co. acquired by Agrial Group (September 2016)
American Brewing Co. acquired by Pacific Brewing & Malting Co. (October 2016)
Victory Brewing Co. acquired by Southern Tier Brewing (October 2016)
Cigar City Brewing acquired by Oskar Blues (March 2016)
Prairie Artisan Ales acquired by Krebs Brewing Co. (June 2016)
Hilliard's Beer acquired by Odin Brewing Co. (June 2016)
Because of these M&A activities, four craft brewers, namely, Lagunitas Brewing, Ballast Point, Breckenridge Brewery, and Four Peaks Brewing, were removed from the Brewers Association's 2016 Top 50 Craft Brewing list. They ranked 6th, 11th, 47th, and 49th, respectively, in the 2015 Top 50 Craft Brewing list.
KEY LABEL TRAITS
According to Nielsen, the CAGR in the past four years and the craft beer market share of key label traits, in terms of dollar sales, are as follows:
Barrel/wood aged - 27.1% CAGR; 1.3% share
Sour styles - 61.7% CAGR; 0.5% share
Citrus flavor - 116.1% CAGR; 2.6% share
Tropical flavors - 135.4% CAGR; 0.5% share
Hop items - 30.4% CAGR; 2% share
To wrap it up, the $23.5-billion U.S. craft beer market is projected to grow at a CAGR of 18.3% during the period 2014-2019. AB InBev's acquisitions of Golden Road Brewing, Breckenridge Brewery, Four Peaks Brewing Co., Devils Backbone Brewing Co., and Karbach Brewing Co. and MillerCoors' acquisitions of Saint Archer Brewing Co., Terrapin Beer Co., Hop Valley Brewing Co., and Revolving Brewing are among the recent major M&A transactions in the market.
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