Business

Study: Iowa craft beer industry flourishing

Iowans' thirst for craft beer has brewed up more than $100 million in economic activity for the state

Nick Stika of Iowa City packages freshly filled bottles of Oktoberfest beer on the bottling line at the Millstream Brewing Company Tuesday, Sept. 21, 2010 in Amana.  (Brian Ray/ SourceMedia Group News)
Nick Stika of Iowa City packages freshly filled bottles of Oktoberfest beer on the bottling line at the Millstream Brewing Company Tuesday, Sept. 21, 2010 in Amana. (Brian Ray/ SourceMedia Group News)
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DES MOINES — Iowans’ thirst for craft beer has brewed up more than $100 million in economic activity for the state, according to findings of a study prepared for the Iowa Wine and Beer Promotion Board that was released Tuesday.

Mike Lipsman, Harvey Siegelman and Dan Otto of the Strategic Economics Group conducted research indicating the economic impact of Iowa’s craft beer industry topped $100.2 million in 2014. It generated 1,520 jobs and increased personal income by nearly $42 million, mostly for food and drinking establishments, breweries and retail businesses.

“The craft beer industry is one of Iowa’s emerging manufacturing segments,” Megan McKay, a member of the Iowa Wine and Beer Promotion Board, said in a statement.

“Craft beer drinkers represent a wide range of ages and interests, meaning the industry will continue to grow, enhancing the state’s economy and making jobs for our residents,” McKay added.

According to the study, beer production by Iowa’s craft breweries and brewpubs is projected to increase from the 2014 level of 40,786 barrels to more than 146,000 barrels by 2019. Also, the in-state consumption of craft beer can be expected to increase over the same period from 33,446 barrels to 120,000 barrels. That should increase Iowa’s craft beer market share to 5 percent from the current 1.2 percent.

Iowa’s first craft brewery, Millstream in Amana, opened for business in 1985. Since then, 69 breweries and brewpubs have opened, but 15 have closed, leaving 54 operating in 2014. According to researchers, the growth spurt since 2009 owes major credit to a law change than allowed craft breweries to begin producing high-alcohol content (over 5 percent alcohol) beer. The number of breweries has doubled since 2009 to more than 50 in 29 counties across the state.

Nationally, craft beer sales equaled 21.8 million barrels and generated $19.6 billion in revenue last year — accounting for 11 percent of total beer sales by volume and 19.3 percent of total sales by value. In Iowa, last year’s craft beer production equaled 40,786 barrels with 33,446 barrels sold in state and the remaining 18 percent sold outside Iowa.

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Based on analyses done by the Brewers Association and the Beer Institute using 2012 data, Iowans consumed about four-tenths of a gallon of craft beer per capita (population age 21 and older) compared with a national average of 2.13 gallons. The researchers said Iowa’s low craft beer consumption rate cannot be attributed to an overall aversion to beer because the state’s overall per-capita beer consumption in 2012 equaled 33.65 gallons — above the national average of 28.17 gallons per capita.

Five Iowa breweries — Backpocket, Millstream, Toppling Goliath, Peace Tree and Confluence — accounted for 57.5 percent of the state’s total craft beer production, while about 60 percent of the craft breweries produced less than 500 barrels each during 2014, researchers said. Except for four brewpubs, Iowa’s breweries and brewpubs are locally owned, according to the Strategic Economics Group study findings.

Market research indicates the highest percentage of craft-beer consumers is the 25 to 34 years age group. The SEG study noted Iowa craft beer consumers include professional and blue-collar workers, and that there is a symbiotic relationship with craft beer and the popularity of bicycling in Iowa.

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