As the volume going directly through breweries has grown, so has the concern from traditional on-premise retailers and distributors as to the effects of breweries on their business. Let me start by saying that some of these concerns are valid and need to be heard by breweries that want to access wider distribution. In places where businesses with brewing licenses gain similar retail rights to pure retailers, brewers should be sensitive to the concerns of retailer accounts. For example, brewers should be cognizant that retailers will be aware of your pricing relative to theirs. Similarly, in states that give brewers the right to operate satellite locations, brewers should be aware that opening non-brewing locations or selling beer other than your own may bring push back from retailers who view them as competitors.

With that said, I do think that some of retailer complaints and fears are overblown, as there is growing evidence that brewery visits represent new demand and so are adding to the total volume of beer sold, rather than just shifting beers from one channel to another.

Brewery Visits Mean More Occasions

Let’s start with some data from a new survey the Brewers Association conducted with the help of CGA/Nielsen as part of their NCGA OPUS Survey in September, 2017. The data come from 1,447 people who said they had visited a brewery in the previous three months. Of those, a whopping 64% said that the brewery visit was either a different type of occasion or was in addition to typical on-premise occasions.

Q: As you have visited a Brewpub/Taproom or Brewery in the last 3 months, did that visit replace a visit to a bar or other on-premise establishment? (If you visited multiple breweries, please select the option that is most typical)

NCGA OPUS survey September 2017

In addition to the overall finding that nearly two-thirds of respondents indicated that brewery visits were an incremental occasion, what I find most interesting is that these results are strengthened as we move beyond beer’s typical core 21-34 age demographic (male/female had similar responses as well, within the margin of error).

(RELATED: The Demographics of Brewery Visitors)

The survey results underline previous research as part of the Brewers Association Craft Insight’s Panel conducted with Nielsen in June. That survey found that 12% of craft drinkers said that they were drinking more craft, and going to breweries was one reason why, another piece of evidence that many of these visits are incremental. Those findings also pointed to a more diverse set of brewery visitors driving this trend, bringing new people into breweries who might not be drinking craft (or beer) otherwise. Brewers would be wise to pay attention to these shifting demographics, and make sure their breweries aren’t just inviting to core craft drinkers, but a broader swath of the beer drinking population.

Traditional On-Premise Showing Long-Term Declines

The rise of breweries as community gathering places comes in a difficult era for beer volume on-premise, and for traditional on-premise channels in general. For example, as seen below, the number of bars has been in decline in the U.S. for some time, starting well before the popularity of brewery tasting rooms (data from the Quarterly Census on Employment and Wages for “Drinking places (alcoholic beverages).”

Number of Bars (NAICS 72241)

Some of the losses in drinking channels have been offset by an increased number of eating establishments, but this has proved challenging for beer, as neighborhood bar visitors tend to drink beer more frequently than at restaurants, and bars have higher beer velocity than restaurants (BA members can dig deeper into this data using the recent Nielsen/CGA Power Hour).

Again, these longer-term shifts are demand driven, and start with the consumer. Data show that beer lovers have shed purely drinking occasions and demand has grown for integrating beverage alcohol in more experiential occasions (including festivals, brewery visits, and outdoors activities). We can also see this in the form of Google search data. The graph below shows the ratio of searches related to the topics of “bar” and “brewery” in the U.S. since 2004 (both on the right axis). The ratio of searches shifted well before the actual ratio of breweries:bars (breweries divided by the number of bars shown above), suggesting that much of the growth we’ve seen in recent years is pent up demand. The third line in the graph (left axis) is the “premise use” volume from the TTB, a good indicator of at the brewery sales.

Search Trends, Bars vs Breweries, and Premise Use

New Occasions Mean More Beer Drinkers

To sum, there is growing evidence that much of the growth in demand for experiential beer-drinking occasions was not being fully met by traditional on-premise channels. This created volume challenges for overall beer as traditional bars declined and their volume wasn’t fully matched in growing channels like eating. However, breweries have clearly tapped into this demand, and as we can increasingly see in surveys, many of the visitors driving at-the-brewery volumes are not just substituting those visits for traditional on-premise, but rather coming back to the beer category because their demand for an experiential beer drinking occasion is being met. There is also growing evidence that this has secondary benefits in broader distribution, and so there is some hope that over time, brewery visits can play a role in helping the overall beer category return to volume growth.