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The Beer Industry's Bright Spot

Wednesday, 23 Mar 2011 | 4:15 PM ET

These are heady days for craft beer makers as the category continues to show steady growth despite slumping sales in the overall beer market.

AP

According to the latest figures released by the Brewers Association, US craft brewers reported an increase of 11 percent by volume and 12 percent in retail sales in 2010.

The growth—which represents more than one million barrels, or the equivalent of more than 14 million new craft cases—comes at a time when total US beer sales are slumping.

"Beer lovers increased their appreciation for American craft brewers and their beers in 2010," said Paul Gatza, director of the Brewers Association. "Craft brewers' stories resonate with Americans who are choosing small, independent companies making delicious beers.”

In order to be considered a "craft" brewer, a company must be independently owned and produce less than 6 million barrels per year of beer.

These smaller brewers have been enjoying growth for several straight years. In 2009, the craft beer industry grew 7.2 percent by volume and 10.3 percent by dollars.

Still, even with the additional market share, the segment still accounts for only 4.9 percent of volume and 7.6 percent of retail dollars within the $101 billion dollar US beer market. But it is a bright spot in an otherwise gloomy story.

As a whole, US beer sales were down about one percent, or 2 million barrels, in 2010, continuing a downward move that saw beer sales drop 2.2 percent in 2009.

The trend has larger brewers taking notice. MillerCoors, the second largest US brewer behind Anheuser Busch-InBev , has had success with its Blue Moon brand, which the company calls the largest selling craft beer brand.

Blue Moon sales rose an estimated 25 percent in 2010 but those sales are not reflected in Brewers Association’s craft beer category, as MillerCoors doesn’t fall within the association’s definition of a craft brewer.

Samuel Adams
Samuel Adams

It’s not just the big brewers impacted by boom in craft sales. Boston Beer , the maker of Samuel Adams and the nation’s most successful craft brewer, is on the verge of outgrowing the category.

In fact, the Brewers Association altered their definition of craft brewer in January, raising the brewing threshold from two million barrels to six million barrels.

Boston Beer is expected to cross the 2 million barrel threshold either this year or next. It's a key threshold, as brewers falling within the "craft" definition also receive federally mandated tax advantages.

While the craft beer business grows, so too does the number of players entering the marketplace. The Brewers Association reports the number of small and independent brewers has climbed to its highest count since prohibition.

With more than 100 breweries opening in 2010 alone, the total number of breweries operating in the US now stands at 1759, a level not seen since before prohibition when the US brewery count topped out at 1751.

Nearly all of the brewery growth has come within the last 30 years, with records indicating there were less than 100 breweries operating in the US as recently as 1980.

The craft beer boom doesn’t appear as if it will be slowing down anytime soon. According to the Brewers Association, another 618 breweries are currently in the planning stages.

Questions? Comments? Email us at consumernation@cnbc.com

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