Status of Small Alcohol Suppliers: Still Growing with Bright Spots and Bumps
by Pamela S. Erickson |
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Small suppliers of beer, wine and distilled spirits continue to grow albeit at a slower rate overall. Some areas of the country do better than others for some products and there are spots where local markets may be saturated. Here is a summary:
Beer: The growth of breweries continues upward and surpassed 7,000 in 2018 according to the Brewers Association. While the overall 2017 beer sales and production dropped by about 1%, craft beer (as defined by the Brewers Association) grew by 5%–not the double-digit rates of the past, but still healthy. This equates to a 12.7% market share. Because a number of small beer companies have been purchased by large corporate entities, they no longer meet the Brewers Association definition of “craft.” Thus, the total share of these products is probably higher. The “craft” segment is dominated by “regional” breweries which account for 70% of production.
While beer can be made anywhere, small beer suppliers have predominated in a few states, but that is changing.
Wine: The wine industry continued its growth trajectory going from 9,091 wineries in 2016 to 9,654 in 2017 and California continued its dominance with 45% of the nation’s wineries and 86% of the production. Other states in the top five included Washington, Oregon, New York and Texas. As with previous years, the vast majority of wineries were very small. While every state has at least one winery, climate and soil do make a difference for growing wine grapes. So not every state is likely to be a major wine producer.
Distilled Spirits: This segment of the industry has grown over the past five years to reach revenue of $14 billion, according to an industry market report. The number of businesses has grown by 19% and employees by 7.2%. According to the American Craft Spirits Association, the number of distilleries grew in 2018 to reach 1,835 by August. Thirty four percent were concentrated in five states: California, New York, Washington, Texas, and Colorado. The next five with 18.4% of the craft market are Oregon, Pennsylvania, North Carolina, Ohio and Florida. Overall market share is 3.2% by volume and 4.6% by value. One state not on this list is Kentucky which has seen an explosion of distilleries that produce whiskey, particularly bourbon. Kentucky makes 95% of bourbon whiskey and sales of that product increased by more than 50 percent. Not only have new distilleries popped up, but they are building facilities that cater to tourists so people can have the entire “bourbon experience.” And, people are talking about “Napa-fication” involving tours of distilleries in the countryside.
Funds, loans and government subsidies have become available for alcohol suppliers. Two decades ago, alcohol businesses had great difficulty getting bank or government loans. Many funding sources simply did not support alcohol businesses. That has changed. By looking at Small Business Loans granted for breweries, wineries and distilleries in 2009 versus 2018, one can see how much it has changed.
In addition, states have given a lot of subsidies to alcohol companies. These can be viewed at https://www.goodjobsfirst.org/subsidy-tracker.
Efforts are needed to examine regulations, resolve conflicts with other categories of licensees, and carefully evaluate promises of jobs and tax revenue (…as what goes up may come down!). Here are two examples:
Here are some questions state/local leaders should consider:
Sources: https://vinepair.com/articles/map-america-states-most-distilleries/ https://vinepair.com/articles/map-states-most-craft-breweries-2018/ https://www.statista.com/statistics/259365/number-of-wineries-in-the-us-by-state/ http://wineamerica.org/impact (by state, 2017) https://usawineratings.com/en/blog/insights-1/how-many-wineries-are-there-in-the-united-states-37.htm 7,762 https://www.winesandvines.com/template.cfm?section=widc&widcDomain=wineries&widcYYYYMM=201810 https://www.beveragedaily.com/Article/2018/07/18/Number-of-US-craft-distilleries-rises-by-26 https://www.ktuu.com/content/news/Brewers-are-hopping-mad-about-SB-76-482239291.html http://www.newsminer.com/news/alaska_news/alaska-house-slips-in-amendment-to-slash-brewery-distillery-serving/article_56334778-5293-11e8-8b46-ab91e5364912.html https://www.nbwa.org/resources/industry-fast-facts http://dls.virginia.gov/groups/abcrs/sm060518.pdf file:///C:/Users/Pam/Desktop/January%202019%20newsletter/*%20Number%20of%20operating%20craft%20breweries%20 3 Big Storylines that Defined Beer in 2018, By Chris Furnari, Dec. 31, 2018. 9 Beer And Spirits Predictions For 2019, By Tara Nurin, Forbes, December 18, 2018 2018_Craft%20Spirits%20Data%20Project_092418%20FINAL.pdf Brewers%20Association%20Celebrates%20the%20Year%20in%20Beer.html “Deschutes Cuts 7 Percent of Workforce,” by Justin Kendall, Dec. 17, 2018 “A 31% Increase In Number Of California Wineries Makes Financial Success That Much Harder,” By Thomas Pellechia, December 10, 2018, https://www.forbes.com. SBA.gov “Distillers dream of a “Napa-fication” of Kentucky,” by Clay Risen, New York Times News Service,, January 10, 2019. |