The American Beer Deserts Are Disappearing
Important update : This post is narrowly correct but the conclusions are basically upside-down. Read to the end to see what I got wrong.
Writing at Forbes, Gary Stoller points to some findings by CR Research on the state of craft brewing. You are familiar with almost all of this—the data are trumpeted by the Brewers Association each year. But there’s one stat here I hadn’t seen: growth in new breweries per state. It was the stat that caught Stoller’s eye, too, because he titled his article, “Which States Had Most Craft Brewery Growth? Not The Ones You'd Expect.”
Actually, they’re exactly the states I’d expect.
The biggest growth isn’t happening in states that are known for craft beer—it’s happening where there’s little presence or where the number of breweries lags behind the population. Nationally, there are 3.3 breweries per 100,000 people, according to the CR Research data. Of the top twenty states that saw the fastest explosion of new breweries, sixteen fall below that line. If you divide the states by those above and below the average number per 100,000, Here’s what new brewery growth looks like in states with high (above the mean) and low densities of breweries:
Low-density states: 25.3%
High-density states: 19%
The pattern is similar if you break them into three groups, with high-, medium-, and low-density states:
Low density growth: 26.2%
Medium density: 23.8%
High density: 15.9%
A local brewery is no longer the province of a few states like Oregon, Colorado, and Michigan. The other states are catching up as craft beer becomes a ubiquitous feature of American life. I would love to see where the new-brewery growth is happening within those states, too. It’s probably happening outside the major urban areas where there are already a lot of breweries and in the small cities and towns.
Depending on your proclivities, you can consider this either good news or bad news. It’s great news if you live in a beer desert that is about to get its first brewpub. It may not be great news if you operate a large regional brewery that has depending on supplying these deserts with craft beer. Generally, though, I think we can consider it good news. Those new breweries will act as evangelists for craft beer (read: anything more interesting that mass market lager) and expand the overall market.
Update. Remember, it’s always about the base. How did I not catch that? I didn’t have numbers of actual brewery openings for this post, just the percentage growth, and although that unnerved me however slightly, I charged ahead. Well, Brewers Association economist Bart Watson set me straight on Twitter. Of course you have to look at actual figures. If California’s brewery count grows by 10%, a lot more actual breweries would have opened than if Mississippi’s brewery count grew by 15%.
I’ll render Bart’s tweets into text for easier reading:
“A lot of this is the result of the differences between percentages and absolute figures. In fact, if you look at the absolute change in breweries per capita, this relationship totally reverses. Leading states are adding 2X+ as many breweries per capita as the bottom states. So yes, the deserts are disappearing as deserts, but the gap between them and the leaders in terms of breweries per capita is actually growing.”
”Since we're on this, and it might make another interesting post. The relationship goes back a long while. You can predict 60% of the variation in new state TTB licenses in the past year based on the number of breweries a state had in 2000!”
“From a really simplistic business perspective, that's insane. Why would you open where there is already the most competition? It begins to make more sense when you think about things like market development, talent pipelines, regulatory structure, etc.”