2015 FINANCIAL REVIEW

Transcription

1

2 2015 FINANCIAL REVIEW In addition to activity, strategy, goals, and challenges, survey respondents also provided financial information from 2013 and Select results are provided below: Percentage breakout of volume by cans 14% Percentage breakout of volume by 12 oz. bottles 36% Percentage breakout of volume by 22 oz. bottles 3% Percentage breakout of volume by 750 ml. bottles 3% Percentage breakout of volume by kegs 41% A/P invoices processed per week per A/P employee 131* A/P vendors per A/P employee 668* A/R invoices processed per week per A/R employee 92* A/R customers per A/R employee 261* Net beer revenue per barrel $380 Weighted average net beer revenue per barrel $236 Growth in beer volume (barrels sold) 33% Gross margin 40% Gross profit per barrel $168 Weighted average gross profit per barrel $97 Operating expenses as a percent of revenue 34% Selling expenses as a percent of revenue 13% Taproom and retail as a percent of revenue 5% Philanthropy as a percent of revenue 4% Direct sales marketing as a percent of revenue 1% G&A expenses as a percent of revenue Debt service coverage ratio Net beer sales per state Net beer sales per employee (total employee) Number of distributors per state * Employee-based ratios (A/R and A/P) represent a subset of survey participants. 17% 6.5 $2,900,000 $172,000 3

3 2015 CRAFT BREWERY FINANCIAL BENCHMARKING SURVEY RESULTS EKS&H, the leading audit, tax, and business consulting firm serving the craft brewing industry, conducted its annual survey of clients and friends based on 2014 financial statement results. The survey covered a variety of information including strategy and performance questions related to sales, operations, employment, and distribution. The survey also gathered a variety of key financial information for the past and present year. 31 breweries from across the country, more than half of which are in the top 50, participated in the survey. These breweries represent 2.6 million barrels of annual production. This industry report provides highlights of the data gathered with analysis to answer the questions that successful craft brewers ask. Industry festivals and distribution channels are two of the most critical elements to a craft brewer s success. As such, participants were asked about these factors. The number of distribution partners ranged from 1 to 600, the average was 55. The average number of festivals participated in was 56, and the average number of festivals hosted was 6. DISTRIBUTORS & FESTIVALS # of Distributor Partners Distribution to # of States Festivals Hosted Festivals Participated AVERAGE

4 Survey participants ranged in size from 1,100 barrels to roughly 1 million barrels of beer sold. We are very pleased with the variety of breweries represented and feel that it is great sample of the Craft Brewing industry that is thriving in today s market. The average net beer revenue per barrel of $380 compared to the 2014 survey average of $353 is reflective of survey participants that are on the smaller end of the production spectrum where taproom sales or high-end beer releases (i.e. sour or barrel aged) have a large impact on revenue per barrel. In our 2014 survey there were 5 breweries with under 20,000 barrels sold whereas the 2015 survey had 12 breweries with under 20,000 barrels of beer sold. The weighted average net beer revenue per barrel of $236 in our 2015 survey is representative of the larger craft breweries who have a higher amount of their sales through draft accounts as well as certain regional breweries that don t hit higher price-point sales. The weighted average net beer revenue per barrel was $239 for our 2014 survey. Overall profitability has remained strong within the craft brewing industry with an average profit margin of 9%. However, with the market getting tighter with new breweries and shelf space getting tighter there are signs within the survey population that financial performance is not as good as prior years for a small percentage of participants. This can be reflective of several internal and external pressures. Because most participants are small in size the amount of investment in facilities or personnel can have a large negative impact early on. As the breweries grow into their new cost structure they may return to profitability. Breweries also may be struggling to keep up with demand for increasingly differentiated products and less loyalty than prior consumer generations. With less consumer loyalty breweries must continue to find new and eye-catching ways to stay in front of the consumer market. This trend of tightening financial performance is one to keep an eye on in future years as the market continues to grow and market dynamics continue to change.

5 Our participants showed an increase in average volume sold in cans to 14% versus 2% in the prior year. As participant data was collected as of December 31, 2014 we expect that the number of participants offering cans as a packaging option has significantly increased. With all but 4 breweries in our 2015 survey participants having sales under 100,000 barrels it is not a surprise that the average percent of volume sold in their home state was 69% and that an average of 84% of sales volume came in their top 5 states. This is another data point we expect to keep an eye on in the future with the increasing number of local breweries consumers can choose from in each state and consumers focusing on local beer offerings. The marketing challenge for beer sales in markets outside their home state will be tougher even for those breweries with great industry recognition and reputation. Success in your non-local markets is not solely based on having a cool label or good beer any more. PERCENT SALES IN THE TOP 5 STATES Top state 1 Top state 2 Top state 3 Top state 4 Top state 5 69% 7% 4% 2% 2%

6 For more information about the 2015 EKS&H Craft Brewery Financial Benchmarking Survey (including instructions on how to participate) as well as any of the audit, tax, or business consulting services offered to the industry, please contact Mike Madden at or