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Beer is a job creator

Microbreweries are, anyway.

Craft brewing in Texas could add 52,000 jobs and mushroom into a $5.6 billion industry by 2020 if state lawmakers next year ease restrictions on breweries and restaurants that make beer on-site, a study prepared by the brewers claims.

That compares with the estimated $608 million economic impact that smaller, independently owned craft breweries made in 2011, according to the analysis made public Monday by the Texas Craft Brewers Guild.

“If you get a really vibrant industry going, with all the multiplier effects, to me it’s not unrealistic,” Brock Wagner, who founded Houston’s Saint Arnold Brewing Co. in 1994, said of the projected growth.

Wagner and other Brewers Guild members have already begun meeting with legislators and wholesaler groups ahead of the 2013 legislative session.

They are pushing for changes to the state alcohol code that would allow shipping breweries like Saint Arnold – which sell their product to wholesalers, who distribute it in turn to stores, bars and restaurants – to offer a limited amount of beer directly to consumers and allow brewpubs to package some of their beer for off-site retail sales they way they do in states with strong brewing industries.

Wagner said the changes would encourage more Texans to open breweries and help startups and established breweries alike by providing additional revenue that can be used to expand marketing efforts and reach new beer drinkers.

“Changing the laws will make many of these businesses much more viable,” he added. “If the law changes, we will change our staffing overnight – literally, add another 50 percent.”

We are well familiar with the microbrewers’ efforts to get the Lege to update its archaic and obsolete laws regarding beer distribution. I of course hope that the fourth time is the charm. I don’t recall them making an explicit economic argument for their case in years past; certainly, they appealed to basic free market principles, which the beer distribution duopoly most certainly is not, but I don’t recall jobs being part of the pitch. Of course, they didn’t have these numbers before now. Here’s more on that.

The Texas craft beer industry is having measurable positive economic impact on local and regional economies throughout the state to the tune of $608 million, according to the Economic Impact of the Texas Craft Brewing Industry study released today by the Texas Craft Brewers Guild. Texas craft brewers are also creating jobs, accounting for 51.2 percent of all the state’s brewery jobs, a remarkable figure given only 0.7% of the beer consumed in the state comes from Texas craft brewers.

The study, authored by University of Texas-San Antonio Economics Professor Scott Metzger, founder and CEO of San Antonio-based Freetail Brewing Co., also models how the economic impact of the Texas craft beer industry could reach $5.6 billion annually in just eight years.

“$5.6 billion sounds astounding, but given what’s happening across the country with craft beer, it’s not. It’s actually conservative,” Metzger says, calling the 2011 figure “the tip of the iceberg.”


“Given consumer demand and planned increases in capacity, a tremendous opportunity exists for ongoing and future growth — provided legislation may be passed allowing Texas’ craft brewers the same access to market enjoyed by brewers in other states and by the Texas wine industry,” Metzger says.

 

“In other states, brewers can sell their packaged goods directly to consumers through tasting rooms. In other states, brewpubs can sell their beer off premises, at festivals, for instance, and as packaged goods in retail stores, not just at their brewpub location,” explains Metzger.

 

“These sales opportunities other brewers benefit and grow from are lost for Texas craft brewers — and they add up.”

Download the entire report, official press release and supplemental materials here.

I have not had the chance to pore through these reports in detail yet. I suspect there may be a bit of puffery in there, as is often the case with studies like these, but the thing about a small population is that it doesn’t take much for it to have rapid and sizable growth. Further, the vast majority of microbreweries are startups, and as the CBPP points out, that’s where the job creation action is.

There is an emerging consensus among economists that young small firms — not small firms in general — are particularly important “job creators.” A 2010 study finds no systematic relationship between firm size and job growth, after controlling for firms’ age.[22] It thus is important to distinguish between startup businesses, which the study finds “contribute substantially to both gross and net job creation” (as well as to gross job destruction when they fail, as many startups do), and other small businesses, which on average generate no more net job growth than do larger businesses.[23]

Similarly, as CRS notes, recent research “suggests that small businesses contribute only slightly more jobs than other firms relative to their employment share. Moreover, this differential is not due to hiring by existing small firms, but rather to startups, which tend to be small.”[24]

So there you have it. Do your part for job creation in Texas and pick up a sixpack or two of your favorite microbrew. It’s the right thing to do.

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  1. [...] knew this had to be true, and Off the Kuff has the stats to back it [...]

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