Can Craft Breweries Transform America’s Post-Industrial Neighborhoods?

by on August 21, 2017 · 0 comments

in Ocean Beach

San Diego involved in new study which tells the story of craft beer’s astonishing rise and geographic clustering

By Richard Florida / City Lab / Aug. 15, 2017

I enjoy living in Canada for many reasons, but one downside has been my distance from my home country’s craft beer revival. Since Canada’s outmoded liquor laws prevent much of the good stuff from flowing across the border, I’m reduced to hauling cases back to Toronto from Michigan, where my wife’s family live.

While Canada has experienced a craft beer boom of its own, it’s impossible to compete with the sheer variety of brews being produced in America these days. Between 1985 and 2010, the number of craft breweries in the United States jumped from 27 to 1,754. Even more remarkably, between 2010 and 2015, the number of craft breweries has more than doubled, to 4,225.

A new study in The Professional Geographer tells the story of this trend, and explains its transformative impact on cities and neighborhoods across the country. As it turns out, the craft beer revolution, like many other urban economic phenomena, is highly clustered. The good news is that many of these clusters are taking shape in places that have been subject to disinvestment and deindustrialization.

Craft breweries find it beneficial to locate near one another so they can sell each other excess grain and hops, share equipment, and even train one another’s staff. The smallest breweries, in particular, garner large proportions of their revenue from their taprooms. Locating in a thriving brewery district can drive up foot traffic and attract beer tourists.

The study takes a deep dive into the locations of craft breweries or micro-breweries and brew pubs in ten cities: Austin, Charlotte, Chicago, Denver, Minneapolis, New York, Portland, San Diego, San Francisco, and Seattle. Of these ten cities, seven can be said to have distinct brewery districts. Using a Ripley’s K analysis, which is an equation for measuring the clustering of point data, the researchers found, “the strongest predictor of whether a craft brewery opened in a neighborhood was the presence of an already existing brewery in that neighborhood.”

However, the study finds that brewpubs and microbreweries sometimes locate in distinct neighborhood types. This is because brewpubs are allowed to locate in restaurant and retail districts, while craft breweries are often restricted to industrial districts. This kind of separation is the case in four of the ten cities: New York, Portland and San Diego, and to a lesser extent in Austin. In six of the ten cities microbreweries and brewpubs cluster together.

The most successful and concentrated brewery districts include Portland’s Pearl District, Charlotte’s NoDa, and Denver’s RiNo. Real estate concocted monikers aside, these neighborhoods owe at least part of their recent revival to microbreweries. Brewers and brewpubs work in concert with cafes, restaurants, and arts spaces to turn former industrial districts into 24 hour neighborhoods. NoDa, for instance, was a former textile manufacturing hub that languished in the seventies and eighties, and is now being revived largely through brewing. Denver’s RiNo, a former warehouse district by the railyards, now boasts nine breweries, 27 galleries, and a super-sleek BID funded website.

While craft breweries do in fact compete against one another in these brewery districts, their products tend to be much more differentiated than those of the big brewers, making competition less direct. A visitor to Seattle’s Ballard Brewery District might enjoy an On Your Left IPA from Peddler Brewing Company and a Flagship Red from Maritime Pacific during the same outing.

This is a change from an earlier era of beer production. In the 1960s, large American breweries like MillerCoors and Annheuser-Busch had completely monopolized the beer market. These conglomerates all offered, and continue to offer, a remarkably similar product, generously known as American pale lager. The dominance of the big brewers created a niche for small upstarts to inject more variety into the market, which is exactly what craft brewers have done in recent decades – something economists refer to as “resource partitioning.”

The rise of craft brewing also tracks with a desire, most pronounced among millennial consumers, for “adventure” and “variety” in the products they choose, according to the study. These desires are not so different from those I observed in The Rise of the Creative Class, as the Organization Age ethos of the mid twentieth century gradually gave way to the doctrine of self-expression that defines our current times. Unsurprisingly, millennials make up a majority (57 percent) of the people who drink craft beer on a weekly basis.

On the supply side, the most significant factor in craft beer’s rise was the federal legalization of home brewing in 1979. (Mississippi and Alabama were the last two states to legalize home brewing, in 2013.) The repeal of the last vestige of prohibition unleashed an army of bathtub beer enthusiasts who organized themselves into home brewing clubs. By 1988, there were more than 600 such clubs nationwide, boasting over one million members. Some 90 percent of professional craft brewers began as home brewers.

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