The Results Are In: In:

The Results Are In: In: BA s Packaging Breweries Survey T he latest installment of The New Brewer s continuing series of surveys dealing with brewery operational issues follows with the 2008 edition of the Packaging Breweries Survey. The ultimate goal of this exercise is to encourage you to consider your own brewery s data within a larger context and from a different perspective. Individual breweries may compare their numbers to those from the survey and draw their own conclusions based on those comparisons. In so doing, you may be led to insights not readily apparent before. With 97 total responses, we doubled the number of breweries participating in the survey from two years ago (in the March/April 2006 New Brewer) and we once again split the results into six annual production categories: Category 1: 0-5,000 barrels (41 respondents) Category 2: 5,001-10,000 barrels (14 respondents) Category 3: 10,001-15,000 barrels (8 respondents) Category 4: 15,001-30,000 barrels (14 respondents) Category 5: 30,001-60,000 barrels (4 respondents) Category 6: 60,001 barrels and above (16 respondents) The charts that follow show the average results of the responses to each question. As with past surveys, and despite the far larger response rate this year, the results should not be seen as true industry averages, but rather as snapshots of where the responding breweries stand at the time of the survey (August-September 2008). Also, please remember that this is a relatively small sampling, representing about 20 percent of domestic small packaging brewery operations. By Pete Johnson

What s Being Brewed When we look at the ale-lager sales percentages, a remarkable consistency in the split holds both with overall numbers and within the individual categories: roughly 85 percent ales and 15 percent lagers. Looking back to 2006, the split was on the order of 82 percent ales and 18 percent lagers. Is the 3-percent swing due simply to increased barrelage volume over the past two years? Are lagers lagging in popularity or does this reflect a broadening diversity of ale styles, particularly higher alcohol ales, being brewed by American small brewers? In terms of year-round and seasonal beers, the 30,001-60,000 barrel segment takes the prize for brewing the greatest average number of both (10.3 and 9.5 respectively). Category 6 is the most evenly split, while Category 2 has the fewest combined styles brewed over the course of a year. As a whole, the survey results show the average year-round styles being brewed as 7.6, with seasonals weighing in at an average of 6.9. Looking back to 2006 numbers, the overall average of year-round beers has increased by two and seasonals by one. Turning to individual styles, / Craft Brewing Insurance PROPERTY GENERAL LIABILITY WORKERS COMPENSATION LIQUOR LIABILITY EQUIPMENT BREAKDOWN AUTOMOBILE Over 70 insured brewery locations Secure protection from a leading insurer Superior inspection services remain the top-selling styles at 39.6 percent, but are down from 44.7 percent in 2006. s and stouts continue to lead the lowest sales volume styles with a combined 22.6 percent of respondents tagging them as laggards. Category 6, made up of the largest small brewers, has the largest percentage of lagers as their highest selling style than any other category. With exception of the smallest brewers, draft accounts for approximately two-fifths of small brewer sales. The odd group out here is Category 1, where draft is almost 51 percent of sales, and brewery tasting room sales are a healthy 13 percent. Category 3 (10,001-15,000 barrels) also enjoys robust tasting room sales (13.5 percent) and is the group closest to parity for draft to packaged sales. Selling the Beer In line with past results, the larger breweries have a significantly greater geographic distribution, with an orderly progression of number of states sold in as annual barrelage increases. However, the over-60,000-barrel operations sell in an average of six fewer states compared to 2006 and have been displaced by the 30,001-60,000 barrel group for most states sold in (24.8). Continuing with SALARIES & WAGES % CHANGE SINCE 2006 Brewery Manager Category 1:................ +19% Category 2:................ +12% Category 3:................ -31% Category 4:................ +18% Category 5:................ equal Category 6:................ +18% Other Salaried Brewing Staff Category 1:................. +9% Category 2:................ +15% Category 3:................. -8% Category 4:................ +16% Category 5:................ equal Category 6:................. +7% Brewing Staff Hourly Wage Category 1:................ +10% Category 2:................. +6% Category 3:................. +9% Category 4:................ equal Category 5:................ +14% Category 6:................. -3% Sales Staff Salary Category 1:................ -17% Category 2:................ -20% Category 3:................ -20% Category 4:................ +22% Category 5:................ +12% Category 6:................ +14% HOW MANY YEARS HAVE YOU BEEN IN BUSINESS? Specialized claims handling Over 15 years experience insuring microbreweries and brewpubs Whalen Insurance Agency 71 King Street, P.O. Box 478, Northampton, MA 01061 www.whaleninsurance.com (800) 235-0355 Avg. 0-5,000 bbl (41)...6.1 5,001-10,000 bbl (14)...10.7 10,001-15,000 bbl (8)...14.9 15,001-30,000 bbl (14)...15.8 30,001-60,000 bbl (4)...16.3 60,001 and over (16)...16.6 56 The New Brewer January/February 2009 www.beertown.org

HOW MANY DOLLARS PER BARREL ARE SPENT ON: Advertising Marketing 0-5,000 bbl (29)...$2.38...$5.33 5,001-10,000 bbl (12)...$2.60...$5.12 10,001-15,000 bbl (7)...$6.64...$15.41 15,001-30,000 bbl (12)...$2.23...$8.44 30,001-60,000 bbl (4)...$0.76...$6.88 60,001 and over (10)...$2.51...$12.15 WHAT SIZE IS YOUR BREW SYSTEM (IN BARRELS)? Avg. 0-5,000 bbl (40)...18.4 5,001-10,000 bbl (14)...25.3 10,001-15,000 bbl (8)...39.4 15,001-30,000 bbl (14)...46.7 30,001-60,000 bbl (4)...60.0 60,001 and over (16)...179.1 WHAT PERCENTAGE OF YOUR SALES IS: Ales s 0-5,000 bbl (41)...83.7...16.3 5,001-10,000 bbl (14)...91.0...9.0 10,001-15,000 bbl (8)...83.7...16.3 15,001-30,000 bbl (14)..84.6...15.4 30,001-60,000 bbl (4)...88.3...11.7 60,001 and over (16)...80.4...19.6 the progression theme, we find the number of sales staff on an orderly upward curve as barrelage increases until the big bump at Category 6. This number is admittedly skewed by a single brewery in the group, which if removed puts the number at much more manageable 28 full-time equivalents. Advertising and marketing dollars follow a rough 1:2 ratio for breweries up to the 15,000-barrel level. Beyond that, marketing increases exponentially compared to advertising with ratios of 1:4, 1:9 and 1:5 respectively for categories 3 through 6. Category 3 merits special attention as the leading spenders in both advertising and marketing by a wide margin. Clearly, moving beyond the 15,000-barrel level takes a lot of hard work and a lot of cash! To raise that cash, one might suspect that the Category 3 breweries would be charging on average higher than some of the other groups, but this isn t the case. On average, the 10,001-15,000 barrel operations have the lowest mean prices for kegs among all categories and one of the lowest for cases. At the high end on both kegs and cases are the smallest breweries (about 10 percent above the next highest prices on cases and 20 percent on kegs); on the low end for cases are the largest breweries (about 9 percent below the price of the next lowest group) and the 10,001-15,000 barrel breweries for kegs (around 9.5 percent less than the next lowest group). www.beertown.org The New Brewer January/February 2009 57

WHAT STYLE OF BEER ACCOUNTS FOR YOUR HIGHEST SALES? HOW MANY BRANDS DO YOU BREW? 0-5,000 bbl Amber Amber Ale Amber/ Blonde American American Hefeweizen American American Belgian Ale Belgian Ales Belgian-style Tripel Blonde Blond Ale Blonde Ale Cream Ale Dark Ale Fruit HefeWeizen Honey Ale India /Double /Hefe/Alt Irish-Style Ale Light (no well-defined style) Oktoberfest /Amber Pilsner Red Ale Scottish Ale Steam Vienna-style Vienna-style 5,001-10,000 bbl Amber Ale American Biere de Garde India Nut Brown Scottish Ale Summer Witbier 10,001-15,000 bbl Amber American Wheat White 15,001-30,000 bbl Amber Amber Ale Dry hopped ale ESB Extra Fruit beer Saison Scottish-style Ale 30,001-60,000 bbl Bock w/ ale yeast English Scottish/Amber 30,001-60,000 bbl Wheat Ale Amber Ale Wheat Ale Amber ale Golden Year Seasonal Round 0-5,000 bbl (40)...5.8...7.6 5,001-10,000 bbl (14)...6.0...5.6 10,001-15,000 bbl (8)...8.8...4.5 15,001-30,000 bbl (14)...7.1...6.6 30,001-60,000 bbl (4)...10.3...9.5 60,001 and over (16)...7.7...7.8 The Costs of Doing Business On the other side of the ledger, the costs of raw materials and labor vie for being the largest expense of breweries across the board (averaging 25 percent of annual expenses for categories 1-3 and 21 percent for categories 4-6), with packaging materials ranking third (12 percent of annual expenses for categories 1-3 and 19 percent for categories 4-6). Two years ago a different picture emerged as it was labor and packaging costs that were battling it out for top honors and ingredients were a solid third-place finisher. Not that any affirmation of dramatically increased ingredient costs are needed, but there you have it. HOW MANY STATES DO YOU SELL BEER IN? 0-5,000 bbl (41)...3.4 5,001-10,000 bbl (13)...6.6 10,001-15,000 bbl (8)...10.9 15,001-30,000 bbl (14)...17.5 30,001-60,000 bbl (4)...24.8 60,001 and over (16)...20.8 HOW MANY SALES PEOPLE DO YOU EMPLOY (IN FULL- TIME EQUIVALENTS)? 0-5,000 bbl (41)...1.4 5,001-10,000 bbl (14)...2.3 10,001-15,000 bbl (8)...2.1 15,001-30,000 bbl (14)...6.5 30,001-60,000 bbl (4)...6.3 60,001 and over (15)...41.7 www.beertown.org The New Brewer January/February 2009 59

WHAT PERCENTAGE OF YOUR SALES IS: WHAT IS THE ANNUAL SALARY OF YOUR BREWERY MANAGER? Draft Bottles/cans In-house tasting room/pub 0-5,000 bbl (40...50.8...36.2...13.0 5,001-10,000 bbl (14)...35.4...60.1...4.5 10,001-15,000 bbl (8)...41.0...45.5...13.5 15,001-30,000 bbl (14)...35.6...59.0...5.4 30,001-60,000 bbl (4)...43.7...53.7...2.6 60,001 and over (15)...35.6...63.7...0.7 0-5,000 bbl (28)...$42,700 5,001-10,000 bbl (14)...$46,700 10,001-15,000 bbl (8)...$55,900 15,001-30,000 bbl (14)...$71,500 30,001-60,000 bbl (4)...$75,900 60,001 and over (13)...$111,500 WHAT IS THE AVERAGE SALARY OF OTHER SALARIED BREWING STAFF? 0-5,000 bbl (19)...$30,900 5,001-10,000 bbl (12)...$34,800 10,001-15,000 bbl (6)...$38,700 15,001-30,000 bbl (12)...$41,200 30,001-60,000 bbl (2)...$40,000 60,001 and over (14)...$51,800 WHAT IS THE AVERAGE HOURLY WAGE OF YOUR OTHER BREWING STAFF? 0-5,000 bbl (31)...$11.40 5,001-10,000 bbl (14)...$11.67 10,001-15,000 bbl (7)...$12.21 15,001-30,000 bbl (14)...$13.39 30,001-60,000 bbl (3)...$15.42 60,001 and over (13)...$17.93 WHAT IS THE AVERAGE ANNUAL SALARY YOU PAY SALES STAFF? 0-5,000 bbl (23)...$28,900 5,001-10,000 bbl (14)...$36,700 10,001-15,000 bbl (7)...$40,300 15,001-30,000 bbl (13)...$57,700 30,001-60,000 bbl (4)...$66,900 60,001 and over (13)...$60,200 60 The New Brewer January/February 2009 www.beertown.org

WHAT STYLE OF BEER ACCOUNTS FOR YOUR LOWEST SALES? 0-5,000 bbl Amber American Hefeweizen American Barleywine Belgian Wit Biere de Garde Coconut Export Fruit Fruit German Pilsner Irish Red Irish Red Maibock Minor Seasonal Oatmeal Octoberfest Seasonal Seasonal Seasonals Seasonals Vienna Wheat Wit 5,001-10,000 bbl Abbey Dubbe Barleywine Belgian Black Golden Ale Hefeweizen Mai Bock Olde Ale Seasonal Sour Ales Stock Ale 10,001-15,000 bbl Cream Dubbel German Lite Pale Pilsner / 15,001-30,000 bbl Ale American Wheat Biere de Mars Brown ESB ESB Imperial Kolsch Oatmeal Pilsner 30,001-60,000 bbl Imperial Miscellaneous specialty brews Ordinary Bitter Smoke/Rauchbier 30,001-60,000 bbl Specialty Smoked Extra Special Bitter Ale Ale Dark Specialty Saison Belgian Abbey Imperial Saison Weisse Generally speaking, Category 5 breweries offer the best array of benefits at the highest levels for salaried staff and are either first or second best when it comes to hourly staff benefits, although on a small base of four responses. Of note is that 100 percent of responding breweries above 10,000 barrels provide medical coverage for salaried staff and at least 75 percent provide dental coverage. Regarding salaries and wages, average brewery manager salaries generally rose by healthy margins in all barrelage categories over the past two years, with the exception of the 10,001-15,000 group. This anomaly, however, is undoubtedly explained by the group s extremely small response rate of two in 2006. Sales staff salaries suffered considerably for the smaller breweries under 15,000 barrels. Looking to the results of the survey s final two questions, we find self distribution (an extremely important option for small brewers) has increased for the first four barrelage groups in the survey and clocks in at a healthy 44.5 percent for the smallest category. The final question dealt with membership in state brewer guilds and associations. The affirmative response levels were extraordinarily good, particularly when you consider that only about 60 percent of states have active organizations. The fact that 82.5 percent of survey respondents belong to state guilds is extremely heartening considering the extent to which the small brewing community is regulated at the state level. As WHAT IS THE MEAN PRICE, FOB YOUR LOADING DOCK, OF A: Case of beer Keg of beer 0-5,000 bbl (41)...$25.93...$106.51 5,001-10,000 bbl (13)...$19.91...$85.97 10,001-15,000 bbl (8)...$19.99...$77.50 15,001-30,000 bbl (12)...$21.11...$84.74 30,001-60,000 bbl (4)...$22.01...$85.20 60,001 and over (12)...$18.23...$80.54 www.beertown.org The New Brewer January/February 2009 61

WHAT PERCENTAGE OF YOUR ANNUAL EXPENSES IS YOUR COST FOR: (bbl) 0-5,000 5,001-10,000 10,001-15,000 (26) (12) (5) Raw materials...24.5%...23.8%...27.9% Labor (including benefits)22.7%...27.5%...15.4% Insurance...6.5%...2.8%...2.7% Excise tax...4.4%...3.6%...3.5% Other taxes...5.1%...2.9%...7.9% (income, payroll, sales) Utilities...6.4%...5.2%...6.2% Packaging materials...13.2%...17.8%...9.2% Beer freight...2.7%...4.2%...5.2% WHAT PERCENTAGE OF YOUR BEER DO YOU SELF DISTRIBUTE? 0-5,000 bbl (35)...44.5% 5,001-10,000 bbl (14)...18.0% 10,001-15,000 bbl (8)... 4.9% 15,001-30,000 bbl (14)...11.1% 30,001-60,000 bbl (4)...6.3% 60,001 and over (13)...4.7% (bbl) 15,001-30,000 30,001-60,000 60,001 and over (10) (3) (10) Raw materials...22.1%...21.2%...19.1% Labor (including benefits)23.6%...25.5%...17.3% Insurance...1.5%...1.4%...1.2% Excise tax...7.1%...3.2%...6.7% Other taxes...3.2%...3.7%...4.6% Utilities...3.7%...2.4%...3.3% Packaging materials...20.6%...19.2%...18.5% Beer freight...3.5%...2.8%...3.5% WHAT PERCENTAGE OF SALES STAFF SALARY IS COMMISSION BASED? 0-5,000 bbl (22)...22.0% 5,001-10,000 bbl (14)...25.5% 10,001-15,000 bbl (7)...45.1% 15,001-30,000 bbl (13)...21.8% 30,001-60,000 bbl (3)...43.3% 60,001 and over (10)...18.9% DO YOU BELONG TO A STATE BREWERS GUILD/ASSOCIATION? Yes 0-5,000 bbl (41)...78.0% 5,001-10,000 bbl (14)...64.3% 10,001-15,000 bbl (8)...87.5% 15,001-30,000 bbl (14)...78.6% 30,001-60,000 bbl (3)...100% 60,001 and over (15)...86.7% Photos 2009 Shutterstock LLC and Getty Images 62 The New Brewer January/February 2009 www.beertown.org

WHAT BENEFITS DO YOU OFFER YOUR SALARIED STAFF? (bbl) 0-5,000 5,001-10,000 10,001-15,000 (36) (14) (8) Medical 58.3% 85.7% 100% Dental 13.8% 42.9% 75.0% Vision 11.1% 42.9% 50.0% Retirement 25.0% 21.4% 37.5% Profit sharing 11.1% 28.6% 37.5% Ownership share 11.1% 14.3% 0% (bbl) 15,001-30,000 30,001-60,000 60,001 and over (14) (4) (14) Medical 100% 100% 100% Dental 78.6% 100% 85.7% Vision 50.0% 75.0% 57.1% Retirement 92.9% 100% 85.7% Profit sharing 28.6% 25.0% 71.4% Ownership share 7.1% 50.0% 28.6% we enter even more uncertain economic and political times, it is crucial that small brewers come together at the state level to actively defend and promote their issues and interests. While this article has focused on some of the highlights within the data, the accompanying charts hold a wealth of information waiting to be analyzed and applied to your operation. As you consider the data within these charts, you will undoubtedly reveal something about breweries in general that is useful for your brewery in terms of future growth and continued success. Pete Johnson is programs manager for the Brewers Association from his home base in Chapel Hill, N.C. WHAT BENEFITS DO YOU OFFER YOUR HOURLY STAFF? www.supportyourlocalbrewery.org (bbl) 0-5,000 5,001-10,000 10,001-15,000 (36) (14) (8) Medical 33.3% 64.3% 87.5% Dental 11.1% 35.7% 62.5% Vision 8.3% 35.7% 50.0% Retirement 19.4% 21.4% 25.0% Profit sharing 13.8% 28.6% 0% Ownership share 0% 7.1% 0% (bbl) 15,001-30,000 30,001-60,000 60,001 and over (14) (4) (14) Medical 85.7% 75.0% 100% Dental 71.4% 75.0% 85.7% Vision 42.9% 75.0% 50.0% Retirement 78.6% 100% 85.7% Profit sharing 28.6% 25.0% 64.3% Ownership share 7.1% 50.0% 14.3% www.beertown.org The New Brewer January/February 2009 63