How Big Will Craft Get? Oregon's Numbers are Suggestive

The Oregon Brewers Guild released the latest juicy batch of beer consumption and brewery statistics for the state, and it is as ever quite fascinating. Let's start with a few of the topline numbers and then jump into some thinking about what they mean.

• 22% of the beer consumed in Oregon was brewed here--and with the exception of 10 Barrel, these all conform to the general sense of "craft breweries."
• 63% of draft beer sold in Oregon is brewed in Oregon. (63%!)
• The amount of Oregon-brewed beer consumed in Oregon increased 11% in the past year, even while...
• The amount of beer brewed in Oregon increased only 3.5%.
• Oregon had 206 brewing companies operating 246 brewing facilities in 72 cities at the end of the year.
• Portland has 65 breweries and there are 95 in the metro area.

Lets break all this down a bit. The Oregon Brewers Guild is not concerned with craft beer, it's concerned with Oregon's breweries. As such it does not try to gather stats for "craft beer," which would include some portion of imported beer and craft beer made in other states. To make the Guild's stats consistent with the Brewers Associations', you'd include craft beer brewed in other states. Let's be extremely cautious and bump the "craft" share of the Oregon market up from 22% to 25% then. How does that compare with national stats? Oregon's market is twice as large: nationally, only 12.8% of beer sold is "craft."  The US market for beer is roughly 200 million barrels and if the country drank beer at Oregon's rate, that would put it at 50 million barrels.  

That's good, but the stats that most interested me were these: Oregon's consumption of craft beer--already the highest in the nation--continued to grow at an 11% clip. But its production only grew at about a third as fast, at 3.5%. Most of Oregon's beer production comes from just a handful of breweries--breweries that sell regionally or nationally. While breweries like Deschutes, Craft Brewers Alliance, Full Sail, and Ninkasi sell a lot of beer locally, they sell way more of it out of state. We can take this to mean that they're having a harder time selling their beer in growing markets outside Oregon.

I think we're seeing this reflected in recent stories about slowing sales for the big flagship brands even as the craft segment continues to grow. The craft segment is changing and becoming more local even as many big brands are expanding and trying to grab a piece of that ever-expanding pie.

I used to think Oregon was a cultural anomaly and that our progress in developing beer culture would not be replicated elsewhere. But I started thinking that when craft brewing had a 4% market share and Oregon was at 12%. Oregon is likely always going to be one of the national leaders in craft beer consumption and production, but it isn't anomalous--it's just ahead of the curve. And it's growing. What proportion of the national beer market will the craft segment on day occupy? At least 25%, I'd guess--and possibly well north of that.

Numbers of the Day: 17 and 47

The post has been updated below.

The Oregon Brewers Guild put out a press release today with the latest stats and figures on the state's beer industry.  It charts the ever-upward trends that now come to seem rote: 1.3 million barrels of beer brewed, up 11%; nearly one gross breweries operating 174 facilities in 59 cities; fifty-one breweries in Portland.  But what did leap off the page were these figures:

More than 17 percent of the 2.79 million barrels of all beer — both bottled and draft — consumed in the state were made in Oregon. For draft beer, that percentage is even higher, with Oregon breweries producing an estimated 47 percent of all draft beer consumed in the state.

Oregon-produced beer is all "craft" (admitting that the word has little real use)--or better yet, none of the beer made in Oregon is mass market lager.  The Guild helpfully points out that nationally, craft beer has only a 6.5% share of the beer market.  To put the 17% figure in context, the market for ales in Britain is currently just 14%.  You can also see the place of craft beer in the drinking ecosystem of Oregon: when people go out for a pint, they're drinking "craft" beer at an astounding rate--well over 50% when you consider the national craft and imported beers Oregonians are drinking alongside the local beers.

I have really tried to ratchet back the tub-thumping when it comes to writing about Oregon, but these are the kinds of stats that illustrate how mature our market is becoming.


Update.   I had an exchange on Twitter that reminded me of an important point these numbers reveal.  When we see that 17% of the beer market is craft (actually, the non-mass market is more than 20% with imports and beer from other states), we may think of this as shorthand for a discrete group--17% of beer drinkers are craft-beer drinkers.  This is where the 47% figure is a useful antidote.  In Oregon, a ton of people drink non-mass market beer.  When that Bud drinker goes out to a decent restaurant, he's probably drinking a Mirror Pond.  That twenty-four-year-old at Freddy's with the sixer of Pabst probably drinks a fair amount of Ninkasi.  As weird as it may seem to some beer geeks, the reality is that a lot of people don't think of mass market lagers as "swill."  It's just beer, and sometimes they like it.  Sometimes they like IPA.

It's why the notion of a low ceiling for craft beer is misguided.  There's no reason Oregon won't one day be a majority-craft market, and part of the reason is because the people drinking both the mass-market lagers and craft beers will be the same people.

Update to the update.   Oh, and I see that the Beeronomist has further analysis.  He hones in on the pub market as a point of focus.

Craft Beer Consumption Hits 15% in Oregon

The estimable Brian Butenschoen, Director of the Oregon Brewers Guild, may produce the best state-level craft beer data in the US. For an old researcher like me, getting his annual state of the state report is always catnip. Lately, it's all great news--but there's one eye-popper in the numbers that has my chin dragging the ground. First, the set up:

The Oregon Brewers Guild announced today that Oregon’s breweries crafted 1,085,000 barrels (or roughly 270 million pints) of beer during 2010, a 3.5 percent increase from the previous year. Retail sales of Oregon-made beer sold in the state totaled approximately $235 million in 2010. In total, the brewing industry contributes $2.44 billion to the state’s economy. Despite overall weak employment figures for the year in Oregon, the state’s brewing companies added 200 jobs in 2010 and directly employed more than 4,900 people.

Portland, Oregon currently has 40 breweries within its city limits, more than any other city in the world. The state of Oregon has 91 brewing companies operating 121 brewing facilities in 50 cities.

Mmmm, sweet, sweet stats. But then there's the pièce de résistance:

Roughly 14.4 percent of the 2.7 million barrels of all beer - both bottled and draft - consumed in the state were made in Oregon. This is the highest for any state in the United States and was a 16 percent increase from 2009.

Brian is interested in how much Oregon beer Oregonians drink, not how much craft beer. But of course, the Oregon craft market includes beer from the rest of the United States, which means it's somewhere north of 15%. This is three times the national average. Moreover, Oregon now produces about a tenth of all the craft beer brewed in the US (over a million barrels of roughly ten million sold in the US in 2010).

These are pretty remarkable numbers. I've always felt that a five percent market share is a tenuous position. It's not enough to ensure anything more than a niche position, and with a shift in trends, could easily head the other direction. At 15-20%, you begin to hit a tipping point where craft beer is no longer a niche and where it's difficult to imagine it evaporating anytime soon. Congrats to the Guild, its members, and all the people who deliver and serve good beer in Oregon. You are way, way out in front.

Oregon Breweries Top a Million Barrels

For the first time since the 1980s, Oregon is back in the million-barrel club. This time, we did it without the help of Henry's, though. The Oregon Brewers Guild reports:

According to figures released today by the Oregon Brewers Guild, Oregon’s breweries crafted 1,050,000 barrels of beer, which represents an increase in production of 15.2 percent over 2008....

Oregon beer produced and consumed in state grew 7.8 percent by volume in 2009 to 358,000 barrels, outpacing the national craft beer growth rate of 7.2 percent by volume. Oregon’s breweries made 12.4 percent of the 2.894 million barrels of all beer – both bottled and draft – consumed in the state during 2009. For draft beer, that percentage is even higher, with Oregon breweries producing an estimated 38 percent of all draft beer consumed in the state.

Although a single major brewery can throw things out of whack a bit, it's still worth mentioning that Oregon accounts for one out of every nine pints of craft beer made in the US.

Of course, Oregon drinks more than just local beer. I did some poking around after I got this press release to see if we could contextualize our status in overall terms. Based on some private industry data (to which I don't have access, sadly, so don't ask), it looks like about a fifth of the Portland market is craft beer--or over a quarter in terms of dollars. If you add in imports, we move closer to one-third of the market--or 40% in total dollars. Now, it's hard to assess the actual "good beer" percentage here because not every import is good beer (probably a sizable chunk is Stella, Heineken, and Corona). Still that makes Portland's consumption pretty impressive.

I couldn't find similar numbers on state-wide comsumption.

To clarify some of the OBG numbers, I spoke to Brian Butenschoen, the director. For the record, the production numbers are those reported to the Guild, and so include contract-brewed beer. (Which means, that we did get a bit of help from Henry's after all.) On the other hand, the consumption numbers wouldn't include Henry's, so those are pretty solid craft-beer stats. Finally, it looks like Portland remains the number one consumer of craft beer in the country--not per capita, total. For me, that's perhaps the most amazing stat. The 29th-largest city, 1/15th the size of New York, and we put away the most craft beer. Let's just go ahead and hang onto the title of Beervana one more year, what say?
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Oregon Brewers Guild: Webby

Last night, the Oregon Brewers Guild held a website-launch party in the groovy offices of the web designers. For those of you who have been to the site in the past, you know it was ... under-designed. It had the happenin' style of them new internets, circa 1994. And some content from that era, too. As OBG Director Brian Butenschoen demonstrated the features, there were a couple of side jokes about how it was nice the new site had joined the 21st century. Indeed.

The current version is clean and easy to use and has a couple of features to which I'd like to draw your attention:

• Much of the design is structured around a blog. Thanks to the wonder of tags, this means there's an updated events page.
  
• The breweries page is updated and accurate, sorted by region or alpha.
• Proving its 21st-century cred, the site features Twitter, which I'll admit isn't something I've spent a lot of time studying.
  

It has stats and info you'd expect to find about the industry. If I could offer a little constructive criticism, I'd mention that the breweries listing could include more info--for example, the brewers' names, year founded, and hours of operation (in the case of brewpubs). It's possible that I'll figure out how to put a widget on my site that includes updated events info (does Twitter do that), which would certainly be handy. There's a feature called "Meet a Friend for a Pint" which essentially sends an email (except when I tried, it--then it sent an error message). Dunno if that's going to revolutionize anything, but I like the idea, anyway.

It would be cool if there was even richer information, like a database of the brewers in Oregon, with one- or two-paragraph bios. These guys are rock stars, and I imagine I'm not the only one who would like to know more about them. It would be a great way to feel an even more personal contact with the beer we love.

But hey, they just launched. It's a vast improvement, so let's not focus on the negative. Brian and president Van Havig deserve credit for finally dragging the thing into the new millenium. Congrats!