Need economic growth? Take a cold craft beer (industry).
Michigan State University has published a one-of-a-kind study, published in the journal Beverages, which shows the respectable economic impact of the entire burgeoning beer and craft beer value chain on the state of Michigan. Not only does the study accurately quantify Michigan’s industry, it also provides a model for all states to accurately measure their own craft beer industry.
The industry is also a major driver in Michigan, generating nearly $ 500 million in gross state product in 2016, contributing nearly $ 1 billion and 9,738 jobs in the total global economic contributions. The impact could change the lens in which craft beer is viewed, said Trey Malone, MSU agricultural economist and lead author of the study.
“Our results show that state governments could generate economic growth by creating a business climate conducive to the growth of the craft beer value chain,” he said. “It’s definitely an industry that deserves to be encouraged.
The value chain, which the researchers describe in detail, goes well beyond the brewery from which the pint was purchased.
Michigan had three microbreweries in 1993; today there are over 330 – and that number is growing. By comparison, Michigan has more than twice as many breweries as the United States as a whole in 1978.
Michigan ranks fourth in number of breweries – the first east of the Mississippi River – and 11th overall in craft beer production. To fuel this growth, the production of hops and barley has grown exponentially in quantity and quality.
“Specifically, hops grown in Michigan have clear attributes that differentiate varieties from those grown in Washington, Idaho and Oregon – large hop-producing states,” said Steven Miller, co-author of the study. and director of the Center for Economic Analysis and assistant professor. the economics of agriculture, food and resources. “In fact, there is untapped potential for local hops and barley; the economic impact would be greater if consumers demand local ingredients in Michigan craft beers.
Hop and barley growers would appreciate this as well. Every pint drawn, every open can, trickles over them.
“Every dollar they earn comes from someone who buys a Michigan beer,” said Phil Howard, study co-author and MSU associate professor of community sustainability. “And that’s not the case with Budweiser or Coors Light.”
As the industry grows, so does the variety of contributors to the value chain. The number of maltsters, producers of specialty malt, has increased to meet demand. Wheat and rye are also grown in Michigan, providing a nearly complete local agricultural value chain for craft beer production – one of six states that could achieve this status.
Along with brewers, maltsters and farmers, lawmakers also play a vital role in the development of the industry. States can hinder or support the development of local and regional breweries and restrict entrepreneurial activity at all levels of the value chain.
“State laws regulate every step of the value chain, and that’s great,” said Malone. “In Michigan, the legislative approach can be boiled down to cautious but gradual. “
By comparison, states such as Mississippi and Alabama have only recently made home brewing legal. Even southern Michigan’s neighbor Indiana authorized Sunday beer sales last year.
“Some states are focusing on attracting new industries to create new jobs, but economists now recognize the value of import substitution as a way to boost regional economies; the ‘buy local’ movement, which increases purchases in its own region, is a key embodiment of this concept, ”said Malone. “So regulation without a full understanding of the economic contributions can leave money and opportunities on the table.”
And it’s a concept that deserves to be toasted.
Robert Sirrine, MSU Extension, and Ashley McFarland, University of Minnesota, also contributed to this research.
(Note to media: please include a link to the original article in the online coverage: https://www.mdpi.com/2306-5710/5/2/35)