Craft Beer: A-Head of the Beverage Curve
In many places across the country, it’s hard not to notice the shift in product offerings at local bars and restaurants and in the beer aisle of the grocery store. The colorful, ornate tap handles of craft brewers have joined or replaced the classic blue, red, and silver posts of the traditional powerhouses, and bartenders are more like consultants than mere beer slingers. Shoppers whose only choice used to be how much beer to buy now are presented with an ever-growing, and at times bewildering, array of brands and styles, many of which might have been made at a brewery down the street. In fact, according to the Brewer’s Association (BA), the trade association that represents the craft beer industry, approximately 75 percent of the drinking-age population in the United States lives within 10 miles of a brewery. And if you’re somewhere in the Fifth Federal Reserve District, chances are that brewery is a craft brewery.
According to the BA, there were 403 craft breweries in the Fifth District in 2015, up from 269 the year before and 222 breweries in 2013. North Carolina led the Fifth District in 2015 with 161 craft breweries, up 59 percent from the previous year. Washington, D.C., had the fewest craft breweries in the District with just 10.
Combined, District breweries produced more than 1.3 million barrels of beer in 2015, a 54 percent increase from 2014. Not surprisingly, North Carolina produced the most craft beer in the District -- 675,469 barrels in 2015, which was an 81 percent increase over the prior year. Sierra Nevada helped boost the state’s total production, as the company’s North Carolina brewery started producing beer in 2014, but steadily increased production since then, which led to a large jump in overall volume in 2015. Although Maryland only had 60 craft breweries in operation in 2015, they produced a combined 258,926 barrels, which was the highest average production per establishment in the Fifth District.
In addition to Sierra Nevada, the Fifth District recently became home to eastern outposts for West-Coast-based craft brewers such as New Belgium (Asheville, N.C.) and Stone Brewing Company (Richmond, Va.). And in March 2016, Deschutes Brewery out of Portland, Ore., announced plans to build a facility in Roanoke, Va., which is scheduled to break ground in 2019. Family owner and president of Highland Brewing Company in Asheville, Leah Ashburn, says, “West Coast brewers are coming to the East Coast for good reason -- shipping a perishable, heavy product across the country is expensive! But they’re choosing locations that fit their cultures, and culture is so important in craft brewing.”
And in Richmond, Va., when asked about the recent opening of several new breweries, including the arrival of Stone Brewing Company, Adam Worcester (co-owner of Triple Crossing Brewing) said: “People ask me all the time if I’m worried about these other breweries opening up, but if all the Richmond breweries could get people to buy more Richmond beer, or more craft beer in general, that’s good for everybody. We’re all trying to make better beer to raise the quality of the whole industry in Richmond. It’s like a big fraternity of people that want to make great beer.”
Craft breweries such as these can have substantial economic impacts for the region as well. The Stone deal, for example, promised $74 million in capital investment and around 300 jobs, and the Deschutes facility plans on hiring nearly 100 people when they open.
For a more in-depth look at the economics of the craft brewing industry, see our Econ Focus article “Bottoms Up.”
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Views expressed are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of Richmond or the Federal Reserve System.
