Do Tasting Rooms Support Market Growth?

Does a tasting room help you grow your brand in distribution? In 2016, 9.4% of sales from small and independent brewers occurred at the brewery—up from 7% in 2015. That increasing percentage may cause some concerns from distributor partners, but there is growing evidence that the halo effect of tasting rooms helps brand building in the marketplace. So, what do the data show?

Data Insights

The data do suggest that in 2016, microbreweries with tasting rooms grew faster than those without tasting rooms.

(Skip to the table if you just want to see the numbers)

However, let me state that the analysis presented below is fraught with challenges due to data limitations and causal inferences problems. For one, I’m combining data across a variety of regulatory and competitive market environments that may introduce biases. Second, there is always the risk of reverse causality. Brands that are successful in the market make more money, allowing the breweries the ability to build a tasting room. Financing might be a similar confound. A brewery with greater resources could potentially be more likely to build a tasting room and could also have more sales people in the field or have more funds to buy new equipment to expand more rapidly. So, take the findings below with a grain of salt and in the context of your own business, brand, and market environment.

To try to shed some light on this question I broke our annual survey data into two groups. Microbreweries that reported onsite sales, and those that didn’t. Now my second caveat. Very few breweries report zero onsite sales. Many breweries leave it blank, which could either mean they don’t have onsite sales, or that they just didn’t want to tell us what they were. Because the sample size of breweries that report zero is so low, I’ve thrown in breweries that left it blank, as well as breweries from states that have state reports I know are accurate (note: while this increases the sample size, it also may increase the risk of geographic bias as there are only 9 states with full excise tax data). This means I’m really comparing breweries that I know have tasting rooms to a control group that could more accurately be titled, “don’t have a tasting room or I don’t know if they have one.” And, to return to the potential problems above, breweries that don’t report could be different than those that do, so there’s potential selection bias here.

I’ll plan to repeat this analysis once the full California 2016 data set comes out–it’s a large data set that includes “tavern use” (i.e. own-premise) numbers, and having a full state data set eliminates some of the confounds above. Until that point, however, this is the best I have.

Growth with Tasting Rooms

Now that we are three paragraphs of disclaimers in, I’ll get back to the main point: the evidence does suggest that microbreweries with tasting rooms grow faster than those without tasting rooms, or at least faster than ones where we aren’t sure if they have a tasting room.

To eliminate one confound, I broke the micros into two groups: those that made 5,000-14,999 barrels in 2015 and those that made 1,500-4,999. The 1,500 was a somewhat arbitrary cutoff to try to include micros that are going to have some distribution and won’t be primarily tasting room focused.

Microbrewery Growth in 2016

Microbreweries with Tasting Rooms
Size (2015) 2015 Avg. 2016 Avg. Change Growth %
5,000-14,999 8,278 9,237 +959 11.6%
1,500-4,999 2,889 3,862 +973 33.7%
No Tasting Room/Don’t Know
Size (2015) 2015 Avg. 2016 Avg.  Change Growth %
5,000-14,999 7,831 8,133 +302 3.9%
1,500-4,999 2,816 3,344 +528 18.8%
All figures in barrels (1 bbl = 31 gallons).

(MORE: Draught Beer Quality Manual Updated to Reflect Current Best Practices)

As you can see from the table above, both size groups with tasting rooms grew faster in 2016 than the groups without them. And this wasn’t just from the tasting room. As I laid out in my previous post on onsite sales, microbreweries with tasting rooms only saw 12% of their growth coming from increased at the brewery sales.

We’ll see if the same finding holds in California, but for now, the data lend support to the hypothesis that tasting rooms aren’t just a good source of revenue for breweries, they also help brands outside the brewery as well.

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.

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