Artist of the day: Artist of the Day, October 8, 2022: the story of Microbrewery [Craft beer] (#1668)

Although the term "microbrewery" was originally used in relation to the size of breweries, it gradually came to reflect an alternative attitude and approach to brewing flexibility, adaptability, experimentation and customer service. The term and trend spread to the US in the 1980s and was eventually used as a designation of breweries that produce fewer than 15,000 U.S. beer barrels (1,800,000 liters; 460,000 U.S. gallons) annually.

Microbreweries gradually appeared in other countries, such as New Zealand and Australia. Craft beer and microbreweries were cited as the reason for a 15 million L (4.0 million US gal) drop in alcohol sales in New Zealand over 2012, with New Zealanders preferring higher-priced premium beers over cheaper brands

Craft Beer Is the Strangest, Happiest Economic Story in America

Corporate goliaths are taking over the U.S. economy. Yet small breweries are thriving. Why?
The monopolies are coming. In almost every economic sector, including television, books, music, groceries, pharmacies, and advertising, a handful of companies control a prodigious share of the market.

The beer industry has been one of the worst offenders. The refreshing simplicity of Blue Moon, the vanilla smoothness of Boddingtons, the classic brightness of a Pilsner Urquell, and the bourbon-barrel stouts of Goose Island—all are owned by two companies: Anheuser-Busch InBev and MillerCoors. As recently as 2012, this duopoly controlled nearly 90 percent of beer production.

This sort of industry consolidation troubles economists. Research has found that the existence of corporate behemoths stamps out innovation and hurts workers. Indeed, between 2002 and 2007, employment at breweries actually declined in the midst of an economic expansion.

But in the last decade, something strange and extraordinary has happened. Between 2008 and 2016, the number of brewery establishments expanded by a factor of six, and the number of brewery workers grew by 120 percent.

Preliminary mid-2017 numbers from government data are even better. They count nearly 70,000 brewery employees, nearly three times the figure just 10 years ago. Average beer prices have grown nearly 50 percent. So while Americans are drinking less beer than they did in the 2000s (probably a good thing) they’re often paying more for a superior product (another good thing). Meanwhile, the best-selling beers in the country are all in steep decline, as are their producers. Between 2007 and 2016, shipments from five major brewers—Anheuser-Busch, MillerCoors, Heineken, Pabst, and Diageo, which owns Guinness—fell by 14 percent. Goliaths are tumbling, Davids are ascendant, and beer is one of the unambiguously happy stories in the U.S. economy. The same effect is happening at liquor distilleries and wineries. Employment within both groups grew by 70 percent between 2006 and 2016, thanks, in part, to the falling real costs of booze-producing equipment and the ease of advertising local businesses on social media.

When I first came across these statistics, I couldn’t quite believe them. Technology and globalization are supposed to make modern industries more efficient, but today’s breweries require more people to produce fewer barrels of beer. Moreover, consolidation is supposed to crush innovation and destroy entrepreneurs, but breweries are multiplying, even as sales shrink for each of the four most popular beers: Bud Light, Coors Light, Miller Lite, and Budweiser.
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The source of these new jobs and new establishments is no mystery to beer fans. It’s the craft-beer revolution, that Cambrian explosion of small-scale breweries that have sprouted across the country. The West is leading the way—cities with the most craft breweries include Portland, Denver, San Diego, Seattle, and Los Angeles—but the trend is nationwide. In Illinois and Idaho, brewing jobs grew by a factor of 10 between 2006 and 2016, according to the Bureau of Labor Statistics. According a BLS economist that I spoke with, 2016 was likely the best year for job creation at breweries in American history.

But what explains the nature of the craft-beer boom? From several interviews with economists and beer-industry experts, I’ve gathered that there appear to be two big reasons—a straightforward cause and a more complex and interesting history.

The first cause is something simple yet capricious—consumer tastes. “At the end of the day, the craft-beer movement was driven by consumer demand,” said Bart Watson, the chief economist at the Brewers Association, a trade group. “We’ve seen three main markers in the rise of craft beer—fuller flavor, greater variety, and more intense support for local businesses.” These factors are hardly unique to the beer industry. One could use the same descriptors to explain the concurrent rise of fast-casual restaurants, like Sweetgreen and Dig Inn, or the growth in expensive coffee from $5 lattes at Starbucks to a $55 cup of Esmerelda Geisha. There is, perhaps, a new trendiness to rare beer and expensive coffee that is luring new entrepreneurs into the space.

Craft breweries have focused on tastes that were underrepresented in the hyper-consolidated beer market. Large breweries ignored burgeoning niches, Watson said, particularly hoppy India Pale Ales, or IPAs, which constitute a large share of the craft-beer market. It’s also significant that the craft beer movement took off during the Great Recession, as joblessness created a generation of “necessity entrepreneurs” who, lacking formal offers, opened small-time breweries.

But the triumph of craft beer is not just about a preference for hops and sours. It’s also a story about America’s regulatory history, and how a certain combination of rules can make innovation bloom or wilt.

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