Craft Beer and Its Rising Popularity

The Brewers Association, which is the trade association representing small and independent brewers, defines craft brewers as small, independent, and traditional.

• Small brewers have an annual production of 6 million barrels of beer or less.
• In the independent brewers category, less than 25% is owned or controlled by a noncraft brewer alcoholic beverage industry member.
• Traditional brewers believe that most of the brewer’s beer volumes should have flavor derived from traditional or innovative brewing ingredients and fermentation.

Americans are increasingly moving toward craft beer due to its better taste, innovation, and brewing techniques. In 2014, craft brewers produced 22.2 million barrels of craft beer. Craft beer’s market share of the total beer market increased to 11% in 2014 compared to 7.8% in 2013, based on volumes.

In 2013, imported beer held 14% market share. Domestic beer’s market share was 78.1%. The Brewers Association has stated a goal to achieve 20% share of beer market by volume for the craft segment by 2020.

In 2014, craft beer touched an estimated value of $19.6 billion, or 19.3% share of the total US beer market retail dollar value of $101.5 billion.

In 2014, the number of operating breweries in the United States grew by 19% to 3,464. These craft breweries include 1,871 microbreweries, 1,412 brewpubs, and 135 regional craft breweries.

Boston Beer (SAM) is the leading craft brewer in the industry. Although it’s smaller than other alcoholic beverage companies such as Anheuser-Busch InBev (BUD) (ABI.BR), Diageo (DEO) (DGE.L), and Molson Coors Brewing (TAP), Boston Beer has huge opportunities in the fast-growing craft beer market.

The iShares Russell 2000 ETF (IWM) and the Vanguard Consumer Staples ETF (VDC) invest ~0.12% and 0.17%, respectively, in Boston Beer.