Craft Beer, A Driving Force in the U.S Economy

I’ve been an avid traveler over the last 20 years. In recent years I’ve noticed when doing my research on where to stay, what sights to see, etc., every destination now has its “must visit” breweries at the top of the lists of things to do. I find that I can’t take a vacation now without making a stop at the local breweries and taprooms. It’s become a tradition of mine, so to speak.

I am not alone in this tradition. According to the Brewers Association, Craft breweries are a flourishing economic force at the local, state, and national levels. The craft brewing industry contributed $82.9 billion to the U.S. economy in 2019, with more than 580,000 jobs. This includes breweries, wholesalers, retailers, as well as non-beer products like merchandise, supplies, and food that taprooms and breweries sell.
So why is it craft beer has become such a driving force in our economy?
Well, the growth of craft beer is due to several factors according to the AAEA (Agricultural & Applied Economics Association). The growth is driven by five (5) factors. (1) The demand for variety, (2) increased income among beer consumers, (3) consumer organizations and associations, (4) the spread of information and knowledge within the craft beer industry, as well as (5) the growth in technology and emerging capital. Not to mention craft beer is delicious!
Craft beer has a more rich and distinct taste, unlike mass-produced beer. Most brewers are passionate about the taste and flavor of their beer. They take pride in maintaining and improving the quality of their beers instead of concentrating on mass productions and marketing campaigns. The aromatics and smooth taste of an IPA in the summertime, or the warming caramel flavors balanced with dark malty bitterness of a porter in the winter is comfort only craft beer can give.
The demand and growth of craft beer is largely associated with the growth in consumer desire for variety. Microbrewers chose product characteristics that appealed to the masses, resulting in milder “watery” beers. As microbreweries grew, craft brewers began filling the needs of consumers not fulfilled by macro beer. The success of the farmers’ markets is a good example of this trend.
Along with demand playing a role in the growth of the craft industry, the increase in income of craft beer consumers plays a large part. The craft beer industry expanded as incomes increased substantially in industrialized countries after world war II. This is demonstrated in a study by Bentzen and Smith (2017), Pokrivčák et al. (2017), and Li et al. (2017) who discuss how increased incomes stimulated the craft beer market in Denmark, Slovakia, and China after world war II. Craft beer is typically more expensive than standard mass-produced beer. So, it’s not surprising that high-income consumers are more likely to buy craft beer (Elzinga, Tremblay, and Tremblay, 2015; Gómez-Corona et al., 2016; Murray and O’Neill, 2012). Higher-income buyers stimulate an increase in demand for more expensive products, which goes hand in hand with the demand for more variety.
With the growth in an industry comes consumer associations and communities that help to drive the industry forward. Consumers created associations to help mobilize craft beer enthusiasts like myself. These associations helped to stimulate interest, and sustain the demand for specialized products against mass-produced beer. Helping to develop more experienced and successful entrepreneurs and brewers within the industry.
The increase in home-brewing and small brewers was enhanced by the growing access to technical equipment and capital needed to allow brewing on a smaller scale. It wasn’t always easy to find financial backing or appropriate equipment for small scale brewing. The rapid development and growth in the craft sector has made technology and capital more accessible. Ultimately adding to the growth of the industry as a whole.
The question is now, can the craft industry withstand a pandemic?

Due to the 2020 pandemic, the future of a lot of industries are in question. According to the Brewers Association, overall U.S. beer volume sales were down 3% in 2020, while craft brewer volume sales declined 9%.  However, the 2021 models are showing growth of 6-7% over the 2020 sales, but production levels still fall below 2019, meaning it will take craft until 2022 to recover to its previous levels, and longer to fully return to the growth trend it had been following of 3-4% per year.
All in all, I think the future of craft beer is bright. It’s still a beloved market. Once the economy bounces back, so will craft beer. It just may take a year or so.
Make sure to stop by your local breweries and grab a tasty brew!
Shout out to all my local breweries here in St Petersburg, FL. – Cycle, Cage, PAW, Grand Central Brew House, Bayboro, 3 Daughters, Overflow, Green Bench, St Pete Brewing, If I Brewed the World, Dissent, Avid, Flying Boat, Right Around the Corner, and so many more. St Pete wouldn’t be the same without you.