Hey, other states: Colorado craft beer contributes $1.7 billion to state economy

We often poke fun at other states just starting to roll back absurdly restrictive regulations that stunt the growth of their craft brewing industries. And sometimes we flat out tell regulators and legislators to do their jobs differently — but this is because we feel there is no real counter argument. Why not allow your local brewers to thrive? Proving our point, as usual, is the state of Colorado. The Colorado Brewers Guild commissioned a new study that showed craft brewing contributed almost $1.7 billion to the Colorado economy in 2015, up 44 percent from $1.15 billion the prior year.

Much of the growth came from local breweries expanding distribution out-of-state, as well as the addition of more retail outlets, according to the study, prepared by the Business Research Division of the University of Colorado Leeds School of Business.

“Colorado remains at the forefront of the craft brewing industry, ranking among the top states for number of breweries, per capita in production, economic impacts and favorable excise taxes,” the report stated.

Colorado boasted 350 breweries and brewpubs as of May 2016, with employment of almost 7,800 at the end of 2015. The number of brewery and brewpub licenses has tripled in less than a decade, the report stated.

“This report helps show that the Colorado craft beer industry is a very diverse collection of business models,” Steve Kurowski, director of operations for the Colorado Brewers Guild, said in a prepared statement. “We have small breweries, regional size breweries and brewpubs all brewing, providing jobs and establishing community in just about every part of Colorado.”

The Boulder-based Brewers Association pegs the economic impact of brewing overall at $2.7 billion in Colorado as of 2014, a figure that includes downstream wholesale and retail activities, as well as the impact of out-of-state brewery activities in Colorado, such as distribution and retail.

Inside the data

Overall, the Leeds report describes the craft brewing sector as fragmented by size. “Some small brewers have little reach throughout the state while others are on such a growth trajectory that they cannot meet current national demand,” the report stated.

Much of the data was collected through an online survey of the Colorado craft brewing industry. Almost 49 percent of respondents projected growth of more than 20 percent in 2016, with 45 percent expecting to exceed that level in 2017.

Respondents cited a lack of brewing and storage space, insufficient capital and cash, issues with workers and problems sourcing raw materials and brewing equipment as key small-scale challenges.

Larger issues included the competitive environment, distribution networks, government regulations and taxes.

Colorado’s brewing sector is undergoing enormous change, with grocery-store sales of full-strength beer and wine being phased in after passage of a bill in the Colorado Legislature this year. Craft brewers had long opposed such expansion, arguing that it would hurt their ability to secure shelf space as large grocery chains replaced mom-and-pop liquor stores. But the legislation signed by Gov. John Hickenlooper includes provisions to mitigate such impacts, including phasing in the expansion over 20 years and limiting grocers to selling full-strength beer and wine to 20 locations around the state. Grocers also could purchase existing liquor-store licenses.

Additionally, 14 Colorado-based craft brewers — including powerhouses such as New Belgium Brewing Co., Oskar Blues Brewery, Lefthand Brewing Co. and Odell Brewing Co. — pulled out of the Colorado Brewers Guild to form Craft Beer Colorado. The insurgence came because of conflicts with large national breweries that have acquired Colorado craft brewers, allowing them to have voting membership in the Guild, and concerns about the need to be proactive in dealing with regulatory issues.

Westword recently reported that the two groups will meet in October to attempt to resolve their differences.