The number of U.S. brewing companies is at an all-time high, but domestic beer production will likely hit a decade-low before the calendar flips to 2020.
According to the Beer Institute (BI), a national trade association representing the American brewing industry, U.S. brewers have shipped an estimated 2.6 million fewer barrels of beer year-to-date (YTD) through October compared to 2018.
The softer shipments represent a 1.8% decline versus last year, when U.S. beer companies combined to sell roughly 142.3 million barrels of beer through the first 10 months of 2018.
If that rate of decline holds through the remainder of the year, more than 11,000 permitted U.S. breweries would ship about 163.6 million barrels in 2019.
However, based on an analysis of domestic tax paid shipment figures from the Alcohol and Tobacco Tax and Trade Bureau (TTB) from the last nine years, U.S. brewing companies have traditionally shipped between 24 and 26 million barrels during the final two months of the year.
If beer sales were to rebound in November and December, it’s possible the industry could ship about 165.6 million barrels in 2019, which would still represent a roughly one-million-barrel decline versus last year.
Nevertheless, at the start of the decade, 2,343 permitted breweries combined to ship 181.1 million barrels.
So, how did the industry lose more than 15 million barrels of domestically-made beer since 2010?
In a note to Forbes, National Beer Wholesalers Association chief economist Lester Jones, who has researched the beer industry for nearly 20 years, suggested there could be discrepancies in the data as more breweries producing a wider variety of beverages has created “confusion and delay” with reporting.
“The industry has changed dramatically in just 10 years,” he wrote. “Larger legacy brands have lost significant share to countless alcohol beverage innovations.”
Indeed the country’s two largest companies — Anheuser-Busch InBev and Molson Coors — have shed a combined 26 million barrels since 2010. During that time, craft brewers have added about 15 million barrels of beer to the category, according to the Brewers Association.
Meanwhile, sales of White Claw, a flavored hard seltzer that makes up about 60% of the sub-segment, are projected to top $1.5 billion in 2019.
“These innovations are slowly blurring the lines of the standard industry accounting for beer, wine and spirits,” Jones wrote. “All this makes for a tough job of accurately and reliably reporting industry trends.”
While that may be true, it’s well-documented that beer has slowly ceded market share to wine and spirits over the last two decades. According to Cowen, which cited figures from the Distilled Spirits Council, beer accounted for 54% of total beverage alcohol dollar sales in 2003. By 2018, that figure had fallen to 46%.
As consumers have shifted more of their spending to spirits, beer’s share of total alcohol servings has also fallen below 50%, Beer Institute chief economist Michael Uhrich reported earlier this year.
While traditional beer production will likely continue to decline over the near-term, category sales have been helped by the emergence of hard seltzers such as White Claw and Truly.
There are now upwards of 100 different hard seltzer brands, and most are classified and taxed as beer. Those products, which have brought consumers back to the beer category, have also helped breathe life into retail beer sales.
According to market research firm IRI, which tracks sales at large off-premise retailers, volume sales of beer were up about 2% through November 3rd, driven in part by a 40% increase in flavored malt beverage and hard seltzer sales.