Beer: The Latest Beacon of Hope

Up until recently, I had never been a big fan of beer. My parents drank wine more often than beer in our house, and when I spent five months studying abroad in France, I found myself drinking far more wine than beer. So while my taste buds adapted to wine, and I began to figure out what tastes and flavors I preferred and didn’t prefer, my taste for beer never really evolved.

That is, until I went to my first craft brewery. By now you will probably have realized that I am a huge fan of the local foods movement. I love shopping at farmers markets, eating at locally sourced restaurants, and searching for artisanal products; I’m far more likely to buy something if someone tells me they’ve crafted it by hand from an old family recipe that’s been passed down through generations. So it’s no surprise that I eventually fell for locally produced beers.

One of my best friends took me to Harpoon Brewery in Boston. Far and away the best thing about it was the atmosphere: It was impossible not to have fun. Seating was communal-style, and the brewery’s large open space was divided by long wooden tables and benches that made it easy to make new friends with whoever happened to be sitting next to you. We each ordered a flight, and beyond the aesthetically pleasing array of colors laid out in front of us was the incredible of variety of flavors we got to experience. It was just fun — fun to try each different beer and compare, to share giant salted pretzels, and to sit back and enjoy the conversation as our beer buzz began to set in.

So, if I, a combined beer skeptic and newbie, could be converted, then I knew there had to be something bigger at play. I decided to do a little research into the craft beer industry in the United States, which, as it turns out, has been absolutely booming over the past decade. In 2015, there were only 4,548 small, locally owned breweries. That number shot up to 5,301 in just one year. And in 2016 alone, the craft beer industry was estimated to have contributed $68 billion to the U.S. economy.

Interestingly enough, it wasn’t until recently that small businesses began to play a dominant role in the beer industry. As of 2012, almost 90 percent of the beer industry was owned by two massive companies: Anheuser-Busch InBev and MillerCoors. That number isn’t shocking when you consider other industries in the United States in which a similar phenomenon occurs: groceries, pharmacies, advertising, and books. But it does beg the question, why the sudden spike in popularity of local brewers?

The New York Times lauds craft breweries as the latest antidote to small towns and cities that have lost manufacturing jobs or watched industries decline. For these towns, the popping up of craft brewers has become a form of economic revival for both locals and the tourism industry. “Across the country, in once-bustling manufacturing centers, breweries are giving new fizz to sleepy commercial districts. If alcohol-based businesses were blamed for a breakdown of society in the Prohibition era and beyond, breweries are now being seen as a force for good,” writes C.J. Hughes in this article.

With the added incentive of the recently lowered tax rate on U.S. beer production, particularly for small breweries, as well as the combined support of the local government and community in the form of subsidies, entrepreneurs have been looking for opportune spaces to launch small breweries. Large, open buildings with high ceilings in up-and-coming locations and in walking distance of residential areas have become the model that everyone seems to be following.

“Beer is one of the unambiguously happy stories in the U.S. economy,” writes Derek Thompson for The Atlantic earlier this year. Between 2008 and 2016, the number of breweries grew six-fold and the number of employees grew by 120 percent. This acceleration somehow managed to happen at a time when average U.S. beer consumption decreased and beer prices rose. Nowadays, Americans may be consuming less beer, but when they do, they’re willing to spend more on a higher-quality product.

The Atlantic attributes the success of the craft beer industry to two major phenomenons: consumer demand and historical reasons. Just as we’re seeing in other food and beverage markets, consumers are demanding better flavor, more variety, and are choosing to support more local businesses. But the beer industry also has a caveat that doesn’t apply to other similar industries.

At the end of the Prohibition, in order to promote safe drinking, the beer industry was split into a three-tier system, in which the producers (brewers) sold to middlemen (wholesalers/distributors) who then sold to retailers. By requiring an independent middleman, the beer industry became inherently inefficient and impossible to monopolize. This system allowed room for small breweries to prosper while limiting the power of beverage giants. The beer industry stayed this way until the Reagan administration weakened antitrust laws, and MillerCoors and Anheuser-Busch became two monopolistic players.

But as of today, it looks like the consumer demand for more variety, local producers, and better quality may be overcoming the power of the beverage giants. The shipments of major brewers have decreased over the past decade and the desire for more unique flavors has expanded. The New York Times said it well: “Whether craft breweries are a fad or will endure may come down to drinkers’ tastes, but evidence suggests passion for the product is high.”