In recent years, craft beers have achieved remarkable popularity in the U.S. and Europe thanks to the unique flavors and exceptional quality of many of these beverages. Understanding the various sectors of the craft and microbrew industries can provide added insights into this fast-growing area of the economy. Craft beer sales make up only about 10 percent of the overall beer industry. According to the Brewers Association, craft breweries are defined by their “small, independent and traditional” qualities. Craft beers are available in an extensive array of flavors, brewing styles and recipes to suit nearly every taste and preference. As the demand for craft beers continues to expand in the U.S., Canada and Europe, consumers will have access to even more choices in the beer marketplace.
Microbreweries are distinguished primarily by the amount of beer and ale they produce. According to the market segments recognized by the Brewers Association, microbreweries produce less than 15,000 barrels of beer annually and sell at least 75 percent of the beer they produce to off-site wholesalers and retailers. Some microbreweries sell directly to retailers, restaurants and bars; others maintain relationships with wholesalers who market their beers and ales to retailers and consumers.
Brew pubs typically combine the culinary activities of a restaurant with a small-scale on-site brewery. These establishments sell at least 25 percent of the beer they produce directly to consumers. Some brew pubs offer to-go orders for their food and beer products; others cater exclusively to customers who order and consume menu items and beer on-site. Depending on the business model and desired clientele, brew pub menus vary widely from region to region and from company to company.
Contract Brewing Companies
In some cases, breweries may be partly or wholly employed by other corporate entities to produce beer for distribution or sale. Both sides of this equation may be referred to as contract brewing companies:
- The contractor who commissions the production of beer for resale or distribution is considered a contract brewing company and is classified as such by the Brewers Association.
- The company contracted to produce the beer is also considered to be a contract brewing company, regardless of whether it produces all of the beer sold by the contractor or whether it simply supplements the contractor’s own beer production.
The contractor company is typically responsible for designing packaging, handling marketing efforts and distributing the beers and ales on behalf of itself and the brewery that actually produces the beer.
Regional Craft Breweries
Breweries that serve a specific region and that primarily produce traditional or innovative beers for wholesale or direct-to-retailer distribution are classified as regional craft breweries. These larger operations typically produce somewhere between 15,000 and 6,000,000 barrels on an annual basis. Because their beers and ales are designed specifically to be sold in a specific region, they may feature unique flavors and distinctive packaging to appeal to consumers in their geographical area.
A more general classification for breweries of a certain size, regional breweries may produce craft beers or other types of beer and ale for distribution in a relatively limited area. These breweries may produce a number of beer types, including Lagers, Stouts, Malts, Porters and Ales. Like craft regional brewery operations, regional breweries also produce more than 15,000 barrels and less than 6,000,000 barrels of beer annually.
Large-Scale Corporate Breweries
The greatest portion of beer sales come from large corporate breweries that produce beer for the mass market. Many of the major players in the beer industry are household names among beer drinkers and offer consistent taste and quality. However, the beers produced by these corporate entities often lack the distinctive qualities that characterize most craft beer creations. Corporate brewery operations produce and sell more than six million barrels of beer each year and typically use national marketing campaigns to promote and sell their beers to consumers. Large-scale distribution networks are required to ensure fast delivery of these perishable products to retail outlets across the country and around the world.
Similar to a wide selection of beer brands and brewers, it’s also good to have choices for specialized business services as well. Chortek LLP has been a trusted business advisory and accounting services provider for diverse businesses, including food and beverages for over 65 years. We can assist you in development of better accounting systems, internal process controls, and tax strategies for improved profitability, management of working capital, and long term stability. Chortek LLP – Offering beer barons small and large, a better choice for accounting and business advisory services.
We are a member of the Brewers Association, Wisconsin Brewers Guild and FaB Wisconsin. Please visit these organizations to find information, resources and opportunities related to the brewing, beverage and food industries of Wisconsin and beyond.