Recent data from the Brewers Association identifies market dynamics that continue to pinch craft brewing.
As summer dawns, factors such as supply chain delays may be evident, while the impact of the nearly 50% drop in barley exports from Ukraine may not being.
Broad market forces like these have long been speed bumps for craft brewers, and even where craft beer is plentiful, small brewers and startups need to know what they’re getting into before risking savings. retirement.
Geodemographic business data often reflects key information in this effort, revealing where a new brewery could have the most success, despite outside market influences.
Abiah Shaffer, a Northern Colorado utility data scientist, grew up in Fort Collins. And he’s been interested in craft beer for a long time. This passion led her to focus a master’s thesis on the value of geodemographic spatial data in the planning of start-up craft breweries. “If you have to study something for two years, why not beer? Shaffer joked about his dissertation – Demography in Location Intelligence: A Study in Craft Brewery Site Selection (UMI number: 1595465).
Despite the exponential growth of the craft beer industry since 1980, Shaffer has noticed that the failure rate for breweries remains high. According to data from the Brewers Association pre-COVID-19, there was a 48.5% failure rate for breweries and a 24% failure rate for microbreweries during this period.
Many factors that often determine the success of a craft brewery are location-related, for example, changes in demand, low production, and limited availability or acquisition of ingredients. These observations led Shaffer to see the potential business benefits of applying geodemographic information to site selections, similar to how marketers target new product launches.
“Geodemographic data” is a class of spatial data built on layers of population segments linked to location-based criteria, such as where individuals live, work, shop and their demographic profiles. Analyzing this data involves classifying and ranking target audience data segments, relative to locations such as a potential brewery site.
Craft brewers rely on the engagement of their local community by appealing to ‘neo-local’ sentiment, providing a unique atmosphere and beers that local customers see themselves in. Neolocalism spurs “buy local” efforts and often gives new traction to a brewery in a location. Shaffer speculated that this intersection of interests could be leveraged to make informed business start-up decisions.
Theoretically, the integration of location science and GIS modeling can enable a new or satellite craft brewery to choose an ideal location that takes advantage of neo-local sentiment and market opportunities. Shaffer’s approach employs a traditional marketing use of demographic data, as well as identifying where that data overlaps with the area of influence of existing craft beverage establishments.
Shaffer began by developing a consumer profile model for a study area in Phoenix and examining the demographic trends of its craft beer consumers, including the top reasons a consumer visits a craft brewery; the distance a consumer is willing to travel to visit a brewery, and the correlations between proximity to home, work, shopping, or other destinations and a consumer’s decision to visit a brewery.
In the age of “big data,” including deep data from the US Census Bureau, the information to create and compare these market layers exists. “Census data is difficult to use, however,” Shaffer said. “Manuals are written on how to put them together, how to interpret them and how to manipulate them.”
Successful analysis therefore usually requires commercial software or consultants. Nevertheless, an investment in good planning can help avoid losing a larger investment later, as Shaffer’s study found for a model location that seemed ideal based on area factors but turned out to be the opposite by digging into the geodemography of the market.
“We’re all looking for acceptance and like-minded people,” Shaffer said of the importance of this data for business planning. Nevertheless, she recognizes that data alone is not a panacea; it is inherently subjective how and when surveys are conducted, and the cultural biases of study subjects.
Data can also be used to perpetuate population divisions, targeting corporate placements in ways that frustrate rather than strengthen communities, and further reinforce psychographics (i.e. the similarity of spirit of a market).
Post-COVID, many non-demographic factors also became influential in the successful establishment of a craft brewery, including outdoor spaces, distribution and packaging routes, price level, and “economic cluster” dynamics. related to the production of similar products, for example, seltzer water and hard cider.
Nonetheless, knowing who your customer is and where they spend time has always been essential to successfully opening a new business, craft beer or otherwise. Shaffer’s research and the availability of commercial tools to study census and other geodemographic data make this exercise easier than it once was, even if the rest of the global market remains unpredictable.
Cyril Vidergar can be contacted with ideas and comments at [email protected]