Economic Impact of Craft Beer on
Minneapolis
Several recent studies show that craft breweries have major economic impacts on their communities. This article reviews several of these studies and estimates the economic impact of craft brewing on Minneapolis.
The Brewers Association, a craft brewer trade association, conducts two surveys: an annual Beer Industry Production Survey and a bi-annual Brewery Operations Benchmarking Survey. Using data from these surveys and the IMPLAN software model, the Brewers Association has estimated the economic impact of craft brewing nationally and on each state.
IMPLAN is an accepted software model developed by MIG, Inc. to use national industry data and local county level economic data to create various multipliers to estimate the total economic impact of various activities and measure the economic relationships between various sectors in the economy.
Using the IMPLAN model and its production and operations data for Minnesota craft breweries, the Brewers Association projected that the craft beer industry had a $1.3 billion impact in 2014 on the Minnesota economy. Adjusting that number for increased production and increased craft breweries (from 73 to 105) the craft beer industry had a $1.6 billion impact on the Minnesota economy in 2015.
The Brewer’s Association provides economic impact data for 2014 but has updated production data for 2015. I have adjusted the 2014 economic impact data up proportionately to account for 2015 production increases. Statewide craft beer production increased from 528,643 barrels in 2014 to 631,955 barrels in 2015 (1.2%). The Brewer’s Association reported that Minneapolis’ 23 craft breweries in 2015 produced 126,549 barrels of beer in 2015. Statewide production increased by 1.2% from 2014 to 2015. Assuming an economic impact proportional to the amount of barrels produced, Craft Beer had a $317 million impact on the local Minneapolis economy in 2016.
Mike Lipsman, Harvey Siegelman and Dan Otto with the Strategic Economics Group, (Lipsman 2015), in their study The Economic Impact of the Craft Beer Industry in Iowa for Iowa Wine and Beer Promotion Board drill a little deeper into the data and provide employment estimates. They estimate direct labor income at 4.91% of total impact which is $35,180,628. Payscale.com estimates the average brewery salary at $35,681 which, based on direct labor income provides for 436 direct brewery jobs.
Lipsman et. a1. (2015) also discuss the impact of indirect and induced employment. Indirect employment measures the employment based on the value of goods and services purchased by brewers from businesses in the area. Induced employment refers to employment created when workers from direct and indirect industries buy products and services from other local businesses. On their study in Iowa, Lipsman et. al estimated the indirect effects of brewery employment at 6.4% of brewery employment and induced employment at 18.2 % of brewery and indirect employment. This estimates 2015 indirect employment from Minneapolis craft breweries at 28 and induced employment at 79 for total employment attributed to Minneapolis craft breweries of 543.Table 1 Economic and Employment Benefits of Minnesota and Minneapolis Craft Breweries
Minnesota Breweries |
Minneapolis Breweries |
|
Craft Breweries |
105 |
23 |
Economic impact |
$ 1,582,747,563 |
$ 316,945,278 |
Barrels per year |
631,955 |
126,549 |
Sales # $278/barrel |
$ 94,793,250 |
$ 18,982,353 |
Labor Income |
$ 77,641,500 |
$ 15,547,714 |
Employment est. |
2,176 |
436 |
Indirect Employment |
139 |
28 |
Induced Employment |
397 |
79 |
Total Employment |
2,712 |
543 |