In mid-May, Julia Herz, the Craft Beer Program Director at the Brewers Association, predicted that the number of craft breweries would continue to increase even with the COVID lockdowns and economic uncertainty. A couple months later, the Brewers Association have released the first half of 2020 data and it looks like her prediction was on target. According to Bart Watson, Chief Economist at the Brewers Association in the 2020 Midyear Survey Shows Challenges for Craft Brewers (behind firewall):
As of June 30, the Brewers Association database showed 8,217 active craft breweries, up from 7,480 during a comparable time frame last year. Adding in large and other non-craft brewers brought the U.S. total to 8,341. Although considerable growth, that is a deceleration from mid-year 2019, where the number had increased by more than 1,000 during a similar time frame.
Looking at our database, the decrease is largely attributable to a slowdown in openings, more so than a sharp increase in closings. While it remains possible that closings will accelerate as 2020 continues, through the end of June, our database only shows 112 closings. That’s only 4% higher than the number we had found during the same time period last year. In contrast, we have only counted 301 openings, a number that is about 20% lower than the opening count through the first 6 months of 2019 (found by this point last year).
Regarding openings, we are actually surprised that the drop was only 20% lower — based on the lockdowns that we had experienced over the Spring. Yet in our interview below Ms. Herz stressed that breweries in planning actually had a hidden advantage in that they planned for an opening during a stressful economic climate. These breweries could not afford to rush their opening without proper due diligence. And based on monthly data inferred from the New Brewer Magazine, over 60% of the 301 new openings occurred after March 1 — right before the national lockdown.
As for closures, only a 4% increase shows the resilience and flexibility of small independent craft brewers. And according to the same monthly data, only 40% of the closures occurred after March 1 as brewers have modified business models to cope with the pandemic. Furthermore, the overall number of closures was affected by the retrenchment among larger craft brewery chains. Gordon Biersch, Rock Bottom, Granite City, and RAM closed a combined 18 brewpubs in the first half of 2020, representing 16% of all closures. Removing this number from the overall closures would actually show a 10% decline in the overall number of closures.
Mr. Watson alludes above that closures may accelerate in the second half of 2020, and the statistics referenced here relies on the Brewers Association obtaining valid non-member data. However, there is optimism that the craft beer industry will not only survive the pandemic but continue to grow. In the same article, Mr. Watson mentions the optimism expressed by smaller brewers – where they predict 12% growth in the second half. In six months we will discover the accuracy of this prediction or are smaller brewers “simply wearing rose-colored glasses”.