Brewery Growth is Both Urban and Rural

As the number of farm and rural breweries has grown, I’ve recently gotten several inquiries about whether rural breweries have increased in popularity in recent years. In absolute terms, the answer is an unqualified yes, but that answer is fairly unsatisfying, since breweries have simply increased everywhere. So prompted by a sharp question on Twitter, I decided to look at the number of breweries based on the population of various places over time.

To do this, I’m using the Census Bureau’s data on urbanized areas and clusters. Urbanized areas are regions of 50,000 people or more, and urban clusters run from 2,500 to 50,000 people. Anything else is considered outside an “urban” area – so this definition of rural will include small towns less than 2,500 people that aren’t associated with a larger urban area. (The U.S. Census Bureau has a fun story map series to illustrate these definitions.)

(MORE: Number of U.S. Breweries)

Rural Breweries Have Increased Overall But Decreased as a Percentage

The results are fascinating, and show that as a percentage, the number of breweries in rural areas and the smallest towns under 2,500 people has actually decreased as a percentage of all breweries since 2013, despite a growth of 129% in the number those breweries overall (note that total brewery growth has been 142% since 2013). I’ve used the 2010 Census population data for both time periods – if there were updated data by place and year, it might shift the results slightly.

Breweries per 100,000 Population

Pop (2010 Census), Urban Areas 2013 Current % Ch
<5M 0.45 1.26 183%
1M-5M 1.06 2.51 136%
100K-1M 1.11 2.77 149%
10K-100K 1.70 3.87 127%
2.5K-10K 2.11 5.00 137%
Not in a 2010 urban area 0.44 1.00 129%
Non-urban as % of Total 8.9% 8.4%

One big caveat on the data table above: a different method of analysis gives a higher number of rural breweries. For the table, I used zip+4 translated into urban areas via zip code tabulation areas. For the current data, as a check, I also did a geographic information system (GIS) analysis using ESRI’s ArcGIS Online. Although the results are very highly correlated, the GIS analysis found that a much higher percentage (15.6%) of breweries fall outside of Census Bureau defined urban places. The difference is likely due to the higher sensitivity of the GIS analysis, and that many breweries are just outside city limits, but still within zip codes covered by those cities. Because I can’t create a comparable 2013 GIS analysis, I’ll be focusing on the zip code analysis. That said, the GIS map is cool (that’s a technical term), so here it is. Click on an urban area and see how many breweries it has!

Breweries by Urban Area

Number of Breweries Per Capita Is Inversely Related to Urban Population

Compiling this data leads to a very interesting secondary finding – that the number of breweries per capita is actually inversely related to the urban population. For the largest urban areas – this makes a great deal of sense. Not only are those places typically pretty expensive, they are already going to have a very competitive landscape of food and beverage options. Currently there are only 100 more breweries in the most populated urban areas (5M+) as there are in rural areas/the smallest towns.

What I find more interesting is that the per capita numbers continue to increase as you move down in population, and that urban clusters with 2,500 to 10,000 people actually have the most breweries per capita. Those areas have 7.6% of the breweries in the country, despite only representing 3.5% of the U.S. population (although their population may be larger if you included outlying rural areas that use those clusters for commercial services). I won’t pretend to have a great explanation for this finding, but I’d bet it’s combination of lower costs, easier entry (via zoning/regulation), and lower competition. For some places, I could also see tourism playing a role, but I doubt a high percentage of towns that size are tourist destinations. Finally, as the difference between the GIS analysis and the zip analysis showed, it’s possible that many small towns are “bigger” than their defined population, and may actually draw on a bigger population base from outlying rural areas. All that said, I’m still open to other explanations for this finding.

State Is Still a Better Predictor than Population

One note of caution for any would-be brewery entrepreneurs looking for a location: these population findings are much weaker than state effects. Although this analysis is a bit messy since some urban areas cut across state lines, the size of an urban area is no longer a statistically significant explanatory variable for breweries per capita when included in a multiple linear regression that controls for state (the state variable is highly significant). Translated back into English – knowing what state an urban area is in is going to be a much better predictor of how many breweries per capita a city has than how many people it has (population of course matters for the total number of breweries).

So to sum, although the number of rural breweries has certainly increased, that increase is in line with the overall growth of breweries in the U.S. It will be interesting to watch those patterns in this more competitive environment. As the data show, those areas still have fewer breweries per capita, but obviously far less density to draw on. It will also be interesting to watch closing patterns. As one Twitter user suggested, it’s possible that the smallest towns will be brewery “canaries in the coalmine” due to their smaller population bases. Certainly something I’ll be delving into as we compile the final 2018 opening and closing figures.

Bart Watson, Chief Economist for the Brewers Association, is a stats geek, beer lover, and Certified Cicerone®. He holds a PhD from the University of California, Berkeley, where in addition to his dissertation, he completed a comprehensive survey of Bay Area brewpubs one pint at a time. You can follow him on Twitter @BrewersStats.

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