USA, AR: Arkansas brewers see production rise in 2021 to an all-time high

Arkansas' brewers saw production rise in 2021 to an all-time high despite supply chain snags and inflation increasing their operating costs, the Northwest Arkansas Democrat Gazette reported on August 7.

In 2021, the state's brewers produced 50,509 barrels of suds, seltzer and other adult beverages, according to information provided by the Alcoholic Beverage Control Division of the Arkansas Department of Finance and Administration; that's up by 33% when compared with 38,066 barrels in 2020 and beats 2019's record year of 40,819 barrels by 25%.

When converted to gallons, Arkansas produced 1.56 million gallons in 2021, up from 1.18 million gallons in 2020 and also an increase compared with 2019's previous record of 1.26 million gallons. A barrel of beer contains 31 gallons.

In March of 2020, Arkansas saw its first covid-19 cases followed by mandated closures of restaurants -- a key revenue source for many craft breweries. Closures also hit breweries' taprooms -- also a source of income for many operations. Since then, Arkansas brewers have seen their business return to normal, but they still face supply chain snarls that lingered after the worst of the pandemic and higher costs for key inputs, from aluminum cans to grain, due to shortages and international conflicts.

Brewers working under the state's Small Brewery permit reported a total production of 35,085 barrels of beer in 2021, up 37% from 23,553 barrels in 2020. For the first time, Black Apple Cidery in Springdale production was reported under its Small Brewery permit even though it produces strictly hard cider and no malt beverages. There were a total of 46 active Small Brewery permits in 2021, with six of those operations reporting no production in the period.

Brewers working under the Microbrewery Restaurant permit produced 15,424 barrels, up 911 barrels, or 6%, from the 14,513 barrels reported in 2020. There were a total of 11 permits for the segment, with three listed as inactive or canceled and three active operations reporting no production for the year.

Lost Forty Brewery in Little Rock is still Arkansas' largest beer producer by a large margin based on 2021 numbers. Operating under a Microbrewery Restaurant permit, Lost Forty reported making 14,939 barrels in 2021, up 5% from 14,224 barrels in 2020. The beer maker produced 27% of the state's beer in 2021.

John Beachboard, a brewer and owner at Lost Forty, noted in 2021 Lost Forty opened a second taproom and brew house called Camp Taco next door to its Little Rock operation in the former Rebel Kettle space. Camp Taco acts as a research and development arm for Lost Forty, where it can experiment and work on small batch products.

"People like local beers," Beachboard said. "The local experience isn't going away."

Bart Watson, chief economist for the Brewers Association, a trade group for craft brewers from across the United States, noted Arkansas' production numbers were solid, with Arkansas seeing a bounce-back year in 2021 after the troubles faced in 2020.

He said Arkansas' production numbers in 2021 were a little more positive when compared to national trends, with most brewers seeing growth.

In 2021, beer production was up 1% to 187.6 million barrels in the United States, according to information from the Brewers Association. Of that number, craft brewers made 24.5 million barrels of beer, a nearly 8% increase, with craft beer having a 13% market share.

Watson said while production is up, that doesn't always equate to brewer's profits following suit. He noted higher costs to make beer and to ship it drag on brewers' bottom line. Over the past year beer-makers have had to raise prices or deal with smaller profit margins as their production costs increased.

"The brewer has to decide if they're going to eat their margin or increase their prices," Watson said.

Tony Guinn is a brewer and co-owner of Gravity BrewWorks in Big Flat in Baxter County and is the president of the Arkansas Brewers Guild. In response to emailed questions,Guinn said 2021 had its challenges but things are looking good overall for the state's beer makers.

"I think our breweries are a resilient bunch -- we were all taking packaging (particularly cans, if we can get them), some expansion, new equipment, modifying plans. Many still have staffing issues. All of us are working hard -- one (brewer) said he was practically living in the brewery."

He said customer support and quality products are a hallmark of Arkansas' craft brewers, but they still face pressures from outside forces.

"The barley situation in Ukraine and Russia still looks grim, and there have been harvest issues with grain around the world, so it doesn't look like there will be any relief there," Guinn said. "Supply issues are still a reality. So, many breweries have raised prices or are planning to do that."

Springdale-based Core Brewing and Distilling was Arkansas' second-largest producer in 2021, producing 8,878 barrels, up 185% from 3,117 barrels the year earlier.

Jesse Core, chief executive officer of Core Brewing and Distilling, said in a recent interview the company's leap in production was due to a return to its roots and a focus on producing quality product. Core Brewing and Distilling opened a series of brew pubs around Northwest Arkansas and in other parts of the state starting in 2015 but began to close them in 2019. Nowadays it operates a renovated taproom at its brewery and a single pub at Northwest Arkansas Regional Airport.

"We got away from what we were really good at -- making good stuff for the people ," Jesse Core said. "We got out of the pubs and focused on distributing and strategic partnerships like our relationship with the University of Arkansas. It's a lot more fun."

The state's other top producers, all working under Small Brewery permits, include third place Black Apple Cidery with 4,605 barrels, up from 4,530 barrels in 2020. The cider maker had reported under a small farm winery permit in previous years but began reporting under the Small Brewery permit when it opened a satellite taproom in Bentonville.

Leo Orpin, Black Apple co-founder, said his products are distributed statewide in Arkansas and in parts of Oklahoma, and he hopes to begin sales in southern Missouri in the not-too-distant future. He said the cider maker was on track for 12% growth in 2022.

Ozark Beer Company in Rogers ranked fourth with 4,069 barrels, down slightly from 4,471 in 2020. Bentonville Brewing in Bentonville ranked fifth, producing 3,524 barrels, up 57% from 2,235 barrels in 2020.

07 August, 2022