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Breweries, Wineries and Dis- Property Protection Ensures That All Growers Have Tilled Spirits Producers

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Breweries, Wineries and Dis- Property Protection Ensures That All Growers Have Tilled Spirits Producers 2017 Stewardship Report Dear Valued Brewers Association Member: Thank you for making 2017 a successful year for your association. Among the numerous programs and activities high- lighted in this report, the below milestones illustrate the BA’s organizational purpose: to promote and protect American craft brewers, their beers and the community of brewing enthusiasts. INVESTING IN A HEALTHY SUPPLY CHAIN To further the development of a healthy and sus- PASSED! tainable raw materials supply chain, the Brewers — CBMTRA — Association Research and Service Grant program awarded $440,000 to 19 projects in 2017. Since the inception of the grant program in 2015, the BA has provided more than $1.2 million in funding for 60 projects—addressing public barley and hop variety development, hop disease and hop aroma—as well as supported affiliated national and state-level grower leadership. REDUCING THE FEDERAL EXCISE TAX: In October, the BA announced an agreement with PASSAGE OF THE CRAFT BEVERAGE the United States Department of Agriculture-Agricul- MODERNIZATION & TAX REFORM ACT tural Research Service to fund public hop breeding In December, the 115th United States Congress passed for developing and releasing disease-resistant aroma H.R.1, the Tax Cuts and Jobs Act. Included in this hop cultivars into the public domain, in support of legislation is the Craft Beverage Modernization & Tax hop growing efforts throughout the U.S. Research to Reform Act (CBMTRA), a two-year provision that lowers develop and release hop cultivars with no intellectual the federal excise tax for breweries, wineries and dis- property protection ensures that all growers have tilled spirits producers. access to high quality, disease-resistant cultivars need This reduction in federal excise tax represents to sustain production at levels required by brewers. more than $80 million in annual savings for America’s small brewers. SUPPORTING BREWING EXCELLENCE The effort to bring meaningful federal excise tax To equip our members for excellence in brewing, the relief to small brewers has been a primary political BA Technical Committee and staff expanded the BA’s objective for the Brewers Association (BA) for almost educational resources through the introduction of 10 years. The BA played a leading role within the bev- new hands-on instruction workshops, quality analysis erage alcohol coalition (Brewers Association, Beer videos, best practices publications, online webinars, Institute, Distilled Spirits Council of the United States, and an expanded in-the-field ambassador program. American Craft Spirits Association, Wine Institute and These resources address safety, sustainability, supply WineAmerica) to advocate for this historic change in chain, quality, draft beer quality and engineering public policy, and will now focus its efforts on making topics, relay industry guidelines and metrics, and help this two-year provision permanent. bridge the gap in technical acumen. 2 | Brewers Association 2017 stewardship report Take Craft Back In October, the BA launched its first consumer aware- ness campaign, “Take Craft Back,” as a humorous rallying cry to bring attention to a serious issue: how Big Beer is seeking to permanently alter the craft land- scape by presenting acquired brands as if they were truly, authentically independent. Along with the BA’s many other promotional activities, Take Craft Back sought to raise awareness of beers from America’s small and independent craft brewers. The campaign created millions of impressions and campaign video views among beer lovers, seeing greater reach than any promotional campaign in BA history. Addition- ally, nearly 12,000 beer lovers directly pledged their support via TakeCraftBack.com. PROMOTING INDEPENDENCE LOOKING FORWARD The craft brewing community has entered a time of Independent Craft Brewer Seal increased competitiveness. Quality is now a baseline. The independent craft brewer seal was We know it’s hard out there. Breweries will have to released on June 27 to differentiate beers work harder and smarter to differentiate their beers from small and independent craft brewers through quality, innovation, marketing and branding. and beers from global ale companies. All of us at the BA are here to support you, and to equip Many in the beer community have taken you with resources and tools you need for success. immediate steps to obtain the seal art and We look forward to serving you. incorporate it into their brewery marketing and brand efforts. Cheers, To date, more than half of all craft brewing com- panies, representing 75+ percent of craft brewer volume of beer, have taken steps to use the seal. Since the launch, sightings of the seal “in the wild” on Bob Pease bottles, cans, six-pack holders, growlers, tap handles, President & CEO brewery t-shirts, front doors and more are increasing. Brewers Association Reception from the beer community’s allied trade members along with wholesalers and retailers has also been positive and growing. And, the mark is catching beer lovers’ attention. Craft Brewer An American craft brewer is small, independent and traditional. Small. Annual production of 6 million barrels of beer or less (approximately 3 percent of U.S. annual sales). Beer production is attributed to the rules of alternating proprietorships. Independent. Less than 25 percent of the craft brewery is owned or controlled (or equivalent economic interest) by an alcoholic beverage industry member that is not itself a craft brewer. Traditional. A brewer that has a majority of its total beverage alcohol volume in beers whose flavor derives from traditional or innovative brewing ingredients and their fermentation. Flavored malt beverages (FMBs) are not considered beer. BrewersAssociation.org | 3 Industry Snapshot It is anticipated that this number will continue to RECORD BREWERY COUNT rise in the coming years, with the U.S. Tax and Trade Bureau (TTB) showing 8,863 active brewers permits as of December 31, 2017. This will continue the trend of increased competition in U.S. brewing. JOBS AND ECONOMIC IMPACT Brewery growth has driven tremendous job growth ,+ as well. The BA’s Economic Impact Report, a biennial analysis featuring economic data of craft brewing for BREWERIES all 50 states and the District of Columbia, showed More than 6,000 breweries operated in the that craft brewers contributed $67.8 billion to the U.S. United States in 2017, and 83% of 21+ adults economy in 2016, a 21.7 percent increase from 2014. now live within 10 miles of a brewery. Craft brewers were responsible for more than 456,373 full-time equivalent jobs, a 7.5 percent increase from 2014, with 128,768 of those jobs directly at breweries STEADY GROWTH and brewpubs. Although the craft market has become more compet- itive in recent years, craft brewers continued to grow and gain market share in 2017. The Brewers Association’s 2017 mid-year survey ECONOMIC IMPACT measured 5 percent production growth year-over- year for small and independent brewers. Full year IRI Group scan data numbers showed 4 percent growth , Jobs for BA-defined craft brewers, and given the contin- Craft beer full-time equivalent jobs— ued growth in non-measured sales, 5 percent overall a 7.5% increase from 2014. growth seems likely for the year. That would take craft brewer share of the U.S. beer market to roughly 13 percent by volume in 2017. Billion Some of the growth in market share has been driven Craft brewers’ contribution to by the continued rise in the number of breweries. the U.S. economy in 2016, a Although final numbers are still being compiled, it is 21.7% increase from 2014. certain that more than 6,000 American breweries oper- ated in 2017, a record number for the United States. 4 | Brewers Association 2017 stewardship report Based on preliminary Bureau of Labor Statistics (BLS) figures, those numbers could rise sharply in 2017, with Number of Operating ~10,000 new jobs being created between June 2016 and June 2017 in BLS data (QCEW, 2018). U.S. Breweries Finally, small brewery growth has been related to 8000 consumer demand for visiting breweries, a new expe- riential occasion that nearly two-thirds of brewery 7000 visitors say is a different occasion than a traditional 6000 on-premise visit (Nielsen). The annual BA-Nielsen survey found that the average craft drinker now makes 5000 six brewery visits a year, 3.5 near their home and 2.5 while traveling, fueling beer tourism. 4000 3000 2000 U.S. Beer Volume Share 1000 0 20162015201420132012201120102009200820072006 2017 (EST) % % % Want more statistics on the U.S. beer scene? Visit BrewersAssociation.org Import Craft Other Domestic BrewersAssociation.org | 5 Ensuring a Healthy Supply Chain Craft brewers produce approximately 13 percent of beer sold in the U.S. but consume well over a third of the hops and malt used by U.S. brewers. To meet the Brewers Association’s primary strategic objective—brewer access to an adequate supply of high quality ingredients—the BA puts member dues to work in support of public breeding programs, research and development, and strategic partnerships. PUBLIC HOP BREEDING PROGRAM In 2017, the Brewers Association executed a trust agreement with the United States Department of Agriculture-Agricultural Research Service (USDA-ARS) Research & to fund a public hop breeding program. Program Service Grants goals focus on development and commercializa- tion of competitive public aroma hop varieties with improved disease resistance and yield. The program will be located in the Pacific Northwest in order to leverage existing industry structure, but is intended $432,658 to produce varieties that can potentially travel to 2017 any U.S. hop-producing region. The execution of this grants trust agreement follows 18 months of developing a comprehensive program document that establishes goals and outlines the processes for achieving those goals. BA investment in this program represents a $1.2 million+ long-term commitment to hop industry stewardship, since 2015 exceeding $400,000 in future years.
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