Six Years of Craft Beer: The Economic Impact
I can’t provide the specific numerical details to explain the impact that craft beer has had on our economy here in Buffalo. But, we went from Flying Bison alone in 2011 to some 20-plus breweries (depending on how wide you want to cast the net), in six years. So there is no question that the impact of local craft brewing has been positive, generally. All of these businesses create employment directly from brewery personnel to taproom, sales, and marketing jobs.
I think that there are two sectors primarily that benefit in an ancillary way, besides whatever good that breweries or brewpubs create directly. One of those sectors is clearly tourism: A surprising number of people plan their vacations around beer! For some, it’s the entire point of the trip, what’s come to be called a “Beercation.” For others, it’s more a matter of incorporating the beer available in vacation destinations they chose for other reasons into the overall experience. In both cases, our existing tourist economy is happy to add breweries (and distilleries) to their marketing efforts, I’m well aware.
Secondly, a greater amount of craft beer in any market also improves the bar and restaurant sectors. For example, not only will there be bars that specialize in, or at any rate carry, local and craft beer more generally which provide employment, but, those bars will need to be supported by more drivers from distribution companies and more salespeople from the same and breweries. As well, there is the underlying support bars and restaurants need. Examples range from services like refrigeration repair or line cleaning businesses, or merchandisers, folks who make coasters or t-shirts, to people who make advertising print material from stickers to posters.
Now, to the extent that local craft beer is displacing existing big brands rather than growing the beer category itself, this might be more modest than I am depicting. But, I see Buffalo’s breweries and distilleries providing a fair amount of business for a lot of other local businesses. Certainly, our vendor list in Quickbooks seems quite long!
Employment: A Look at the Numbers
The most recent figures published by Buffalo Business First would have you believe that 732 people are employed by craft beer in the region, from Southern Tier in Lakewood to Woodcock Brothers in Wilson. However that is surely not entirely accurate in at least a couple of ways. Number one is just the way that businesses total up employees, counting full-time and a certain number of part-time employees as full-time-equivalents to get a number. So, accepting that, any number is closer to an estimate then the true number, and it’s also in flux. But, as well there are people employed because of craft beer indirectly – not at breweries themselves, but because these breweries are making beer. So, a good example would be the need for a distributor to take on more drivers and maybe an extra warehouse manager or warehouse help. Or, something that didn’t really exist so much or in quite the same way before craft beer, what we call a bottle shop: like Village Beer Merchant or Brewed and bottled in Lewiston. They employ some people as well and sell entirely craft beer. Then, there’s the bars that really specialize in only craft beer. Sure, some of them were a different kind of bar under prior ownership or before seeing the craft beer light, and so they have not necessarily gained employees as a result– though they have probably increased revenue if they have chosen the craft path. But, there are also bars that exist really because craft does, the kind of beer geek bars do you find beer geeks in, or planning vacations to drink in.
Driving Development and Construction
The breweries we have right now in Buffalo vary tremendously in terms of their impact on construction. Some, like our own, Community Beer Works, are largely a DIY affair so far — though we have paid for plenty of plumbing, concrete pouring, electricity, and the like along the way. Others started out more with a few million dollars in their pocket and thus spurred much larger initial construction efforts. In most cases so far, however, we have seen largely adaptive reuse rather than new builds, which is awesome to me. One exception is Flying Bison Brewing Company’s move from Ontario Street in Black Rock to their current facility in Larkinville. However, I know they looked high and low for a good fit of an old building; way back in their pre-history, they almost opened up in the old Phoenix Brewery! And, their new purpose-built space is gorgeous and serves them very well indeed.
Neighborhood development is another area where we see again generally a beneficial impact. So much so, in fact, that a Buffalo based urban planner is associated with coining the very term “Beer Oriented Development.” On the West Side, Community Beer Works and Resurgence together helped bring new life and traffic to the upper end of Niagara Street, where are you now see development such as the Crescendo Lofts and a number of other smaller scale pieces coming together. Big Ditch took advantage of a burgeoning restaurant scene in the shadow of the Electric Tower, ranging from Tappo and Deep South Taco to their south all the way up to early stakeholder Seabar to the north. Flying Bison Brewing Company and Buffalo Brewing Company added to the momentum built by the Zemskys and Hydraulic Hearth in Larkinsville, while just to their south another district — the Old First Ward — is being invigorated by Gene McCarthy’s reinvention as a brewery/neighborhood tavern with the Barrel Factory & Lakeward Spirits across the way and Riverworks just across the river. And Thin Man has put some energy back into a somewhat forlorn block of Elmwood Ave. And that’s only the present, there are still more breweries a’coming!
I look very much forward to two projects that Community Beer Works is engaged with and their future impact on their respective neighborhoods. Our long-planned—maybe, long suffering — expansion in the Lakeview neighborhood of Buffalo, at the corner of Seventh & Jersey, is underway. This neighborhood, really in the shadow of City Hall, has been somewhat distressed and overlooked as the rest of the West Side develops. On one hand, we are excited to be a force of stabilization for this little area, as well as serving the function of a great neighborhood third space when our tap room is open. On the other hand, as long time Buffalo residents with a sense of ethical business conduct, we do have concerns regarding any potential negative impact of gentrification. Surely, the arrival of our brewery will increase property values to the benefit of most — but not all — homeowners. We are sensitive to our impact. We hope to mitigate it somewhat simply by being the best neighbors we can be, and to some extent from hiring from within the neighborhood. As well, we will be a place where neighborhood associations of various types come together and plan or celebrate.
In Niagara Falls, we’re looking at a similar situation but more along the lines of commercial development. For this project, we’re partnering with Sam Savarino and the entire process was really initiated by the city itself when they sent out an RFP for the property we’re utilizing on Niagara Street between 4th and 3rd Avenue. In essence, the property had come off- and on- the tax rolls so many times, that the City felt it was best to find a real user for the property, especially because it sits on a really crucial, intact block that is also currently mostly vacant — only one business is managing to thrive there, and it is a high visibility commercial block. So, with this project we’re excited to bring economic activity back to a place where it really truly belongs naturally — a commercial zone — and in a city that really needs people like us to come take a chance.
When “Another New Brew” Might Be One Too Many
As regards bars, I would have to defer to others. My sense is, no. I feel as though really the number of bars ebbs and flows a little bit but never really changes much exactly. The types of bars certainly do, there are trends–been to a tiki bar lately?–but the absolute number of bars, not as much. Still, that’s not really my area to opine intelligently. I can say for sure that never has there been so many choices for beer in bars: local, regional and national craft brands definitely are abundant, and even the diveiest of dives will offer you some Sam Adamas, Sierra Nevada or Lagunitas by now.
I think Buffalo breweries have a lot of future growth to go. The question isn’t entirely one of how many breweries there are or will be, but rather the question of how many breweries will ultimately produce how many barrels of beer per year that is the maximum “craft” the market will support. The logic of capitalism dictates two things. On one hand it dictates a need for constant growth. On the other hand, and, to some does degree in contrast, there is a need to consolidate, to constantly find savings in always achieving greater economies of scale through mergers and acquisitions, or through the failure of competitors. So, we get and this historical cycle with a multitude of breweries as we have now dwindling to fewer eventually. But, Buffalo could sustain a fairly high number of smaller breweries making 85% of their revenue with on premise sales and not attempting to play the package/distribution game too hard.
Craft Beer’s Impact on the Big Boys – Like Bud and Blue
So far it seems as if most retailers – whether they are on- or off-premise retailers – have found more shelf space for craft rather than ceding the Big Boys’ shelf space. True, some compromises have been made. But, in general I have seen a lot of taps added at bars and a lot of extra shelving at Wegmans to accommodate their customer’s interest in craft beer. That said, the numbers speak for themselves – at this point nationally craft beer is approaching a 20% market share. International brewing corporations have responded as you might imagine to protect their market share. The strategy that is most talked about at this time is the outright acquisition of craft breweries, especially by Budweiser & MillerCoors, but there have been other interesting moves in that domain as well. For example, the marriage of Heineken and Lagunitas, or the acquisition of Ballast Point by Constellation Brands. I don’t foresee a future where the largest global brewing companies can completely quash the smaller and more locally focused breweries again as we saw by the mid-70s. However, there is undoubtedly a limit to the size that newer breweries will be allowed to grow to or will simply be capable of growing to with these transnational concerns and their massive bankrolls and ability to shape the market in their best interests.
Ethan Cox is the president of Community Beer Works, a brewery that opened in Buffalo in April 2012.