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N E I L R E I D , U N I V E R S I T Y O F T O L E D O
I S A B E L L E N I L S S O N , U N I V E R S I T Y O F N O R T H C A R O L I N A AT C H A R L O TT E
M ATT H E W L E H N E R T , U N I V E R S I T Y O F T O L E D O
Geographic Clustering of Craft Breweries in Select American Cities
Presented to Regional Science Academy Conference on Urban Empires - Cities as Global Rulers in the New Urban World, Poznan, Poland, August 15-16,2016.
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Traditional & Craft Breweries, 1887-2015
1873 1893 1902 1911 1920 1940 1949 1958 1967 1976 1985 1994 2003 20120
500
1000
1500
2000
2500
3000
3500
4000
4500Chart Title
TraditionalCraftAxis Title
Millennials
Neolocalism
Source: The Beer Institute and The Brewers Association
4,225 breweries 4,181 craft 44 non-craft
Under 6 million barrels annually
Surpassed previous high of 4,131 in 1873
2,471 craft breweries added since 2010
Market share 12.2% volume 21.0% by $ sales
Americans consume 3.4% less beer in 2014 than 2008
Resource Partitioning
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The Appeal of Craft Beer
Diversity, Quality, Innovation, Scale
Over 150 different styles of beer with highly differentiated flavor profiles and ABV levels
Higher Quality – better ingredients
Highly experimental and innovative – craft brewers are pushing the limits of innovation in terms of reworking traditional styles and inventing new ones
Highly flexible – small batch production means that craft brewers are able to respond to changing consumer demands
Highly engaged with the consumer and the local community - neolocalism
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Explaining the Geography of Craft Beer
Studies conducted at the inter-metropolitan and inter-state scales: Inter-metropolitan
Baginski and Bell (2011), McLaughlin et al. (2016), Moore et al. (2016) Found evidence that metropolitan areas with large numbers of craft breweries have larger shares of
millennials creatives whites more educated stronger neolocalism movement
Inter-state Florida (2012), Elzinga et al. (2015)
Higher income, Population size Median age Brewpub legality Knowledge spillovers – clustering of craft breweries
No studies at intra-metropolitan scale Do craft breweries exhibit geographic clustering at the intra-urban scale?
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Why might craft breweries cluster?
Facilitates inter-brewer collaboration The modern craft beer industry emerged out of the home brewing movement
1970s onwards - formed home brewing clubs where they shared ideas, exchanged recipes, and honed their skills. Very little in the way of a formal body of knowledge. Knowledge sharing. Tacit knowledge was critical. Spatial
proximity critical. Trust building.
95% of commercial craft brewers were home brewers
This culture of collaboration continued post-commercialization
“Craft brewers open their doors to others. They share equipment and help train one another’s staffs. Trade secrets? Craft brewers take pride in having none” (Brown 2015)
The craft brewing industry has embraced transparency, cooperation, community and quality (Harper 2015)
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Collaboration
Collaborative brewing Two or more breweries come together, devise a new recipe, and brew a beer
Opportunity for brewers to step outside their comfort zone
Excites consumers and generates market buzz
2016 Cincinnati Beer Week – 5 teams of 4-5 breweries each; each choose different ingredients and were given the task of producing a beer
Great opportunity for learning
“In collaborations you see things you might never have thought of on your own” (Vinnie Cilurzo, Russian River Brewing, Santa Rosa, CA)
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Collaboration
Helping others 2014 Sierra Nevada (third largest craft brewer) opened new brewery near
Asheville, SC
Purchases enough grain for all local breweries and, due to economies of scale, sell the grain to smaller breweries at lower cost
2008 and 2013 – Hops shortage – Boston Beer Company sold hops to local craft brewers (at cost) so that their production would not be curtailed
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Brewery Hopping
Explorer• Not interested in educating
themselves on craft beer• Wants to try new styles and
flavors• Makes an effort to visit many
breweries• Experience of going to the
brewery is second only to the quality of the beer
Enthusiast• Strong appreciation for the
brewing process and its history• Strives to educate themselves
on all aspects of the industry• Wants to try new styles and
flavors• Makes an effort to visit many
breweries
Loyalist• Loyal to certain beers or brands• Know what they like• Does not strive to try new styles
and flavors• Convenience important – local
retailers
Novice• New to the craft beer scene• Learning about craft beer• Influenced by friends
Source: Carpenter at al. 2013
Allows craft beer drinkers to brewery hop
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Methodology
Do craft breweries cluster in space? Ripley’s K
One of the most commonly used univariate spatial point pattern statistics
The K-function is estimated by calculating the ratio between the number of points within a range of distances d for each point and the overall density of points in the study area Is the actual number of breweries within distance d larger than
what would be expected in the case of breweries being randomly distributed throughout the city?
Also test for clustering in relation to other on-site alcohol outlets (bars, restaurants, clubs) Kulldorff’s D statistic
Does brewers to cluster relatively more than other on-site outlets?
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Data and Cities
Data on breweries were obtained from the Brewers Association
10 Cities Austin(TX) Charlotte (NC) Chicago (IL) Denver (CO) Minneapolis (MN) New York (NY) Portland (OR) San Diego (CA) San Francisco (CA) Seattle (WA)
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Summary of Results
City Number of craft breweries
Ripley’s K (absolute
clustering)
Kulldorff’s D (relative clustering)
Austin, TX 18 No No
Charlotte, NC 17 Yes No
Chicago, IL 37 Yes No
Denver, CO 51 Yes Yes
Minneapolis, MN 21 Weak No
New York City, NY 17 Yes No
Portland, OR 52 Yes No
San Diego, CA 54 Yes No
San Francisco, CA 19 Weak No
Seattle, WA 50 Yes Yes
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Results (Ripley’s K)
Evidence of absolute clustering in 9 out of 10 cities
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Discussion
Relative clustering results suggest that clustering may be due to zoning restrictions or other barriers
While craft breweries may not be more clustered than other on-site alcohol outlets, they still do cluster Does not mean they would not choose to cluster in the
absence of such restrictions Given the collaborative environment in the industry, lack of
direct competition among different breweries and the benefits of “brewery hopping” it is likely that they would cluster anyhow
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Where to go from here?
Study microbreweries and brewpubs separately Are there differences in clustering behavior among
microbreweries and brewpubs? Often faced with different zoning restrictions (bar/restaurant vs.
manufacturing) Likely to see them cluster in different areas Many cities are moving towards relaxing zoning restrictions for
breweries
Can we predict locations of new openings? At the city level (local breweries)? At the state level (regional breweries)?
Saturation vs. “underserved” markets How does such patterns correspond with entrepreneurial spirit
of cities?
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Thank You