As many of you are aware, starting this brewery is a second job for me. My ‘day job’ is an engineer here in town, and that’s also what I got my degree in. As a result, I’ve spent several years of my life staring at large sets of numbers. I’ll admit it, I have a bit of a soft spot for data.
As our statistician at work says “in god we trust, all others bring data”.
(click the comic for the source link)
As a result of this obsession with data, I’ll admit I got a bit excited when I saw this infographic posted on facebook:
It was courtesy of floatingsheep.org and there is a full description of the study and some statistics (yes!) at the end if you’re interested in the full deal: source. The general jist is that they aggregated a bunch of tweets at the end of june and then compared the incidence of the word ‘beer’ to that of the word ‘church’, and then plotted it depending on which was more prevalent. After tracking down the source, I immediately began perusing their site and I immediately knew that I had found some like minded people. They also have a great one called ‘the beer belly of america’ which looks at bars per capita according to the google maps directory.
This hit very near and dear to me, because about 2 years ago, I started crunching away on a business plan for a brewery, and this data is right up my alley.
I’m a big fan of writing business plans, because it not only forces you to put down on paper what you intend to do, but it also makes it very apparent where you may have holes in your plan. First and foremost in the business plan is to answer the big picture question ‘how is this going to work?’. One of the sub questions to that quickly becomes ‘is there a market for this?’.
In true engineering fashion, I tackled this question in the only way I know how: find some data.
Oh sweet, sweet data.
I present to you, an excerpt from the Wanderlust Brewing Company business plan. (note: this data is a couple years old now, but I think it’s still pretty valid from a big-picture perspective, and I really enjoyed putting it together).
National and Local Beer Market
Total US beer sales are steady at approximately 205 million barrels of beer a year1 (31 gallons = 1 beer barrel/BBL). This equates to a market of approximately $101 billion dollars1. This has been consistently between 203 million barrels and 212 million barrels since 20022. However, the craft brewing industry has been steadily on the increase over the last several years. In 2008, the craft brewing industry accounted for 8.5 million barrels, and in 2009 9.1 million barrels1. In addition to the craft brewing industry being on the rise, imported beers have also been cutting into the market of the big 3 breweries over the last several years, going from 11% of the market in 2004 to 14% in 2007. This is suspected to be true because the interest in unique and differentiated beer styles has been on the rise, and many imported beers do not have corresponding styles which are currently brewed in the US.
These trends all indicate that the American beer-drinking community, although not getting significantly larger, is trending towards more flavorful, unique beers. This unique trend is what will be leveraged by Wanderlust to market and sell a line of unique beers, which will provide the beer drinking community access to beer styles which are more commonly associated with premium or imported beers.
The most recent report from the Brewers Association states that approximately 45,000 barrels of beer were brewed in Arizona last year, which means that less than 0.5% of all the craft beer brewed in the US is brewed in Arizona currently. However, Arizona has a population amounting to ~2.5% of the US population. Assuming craft beer consumption is somewhat uniform across the population, Arizonans consume approximately 227,000 barrels of craft beer per year. Although these estimates make some rough assumptions about the beer-drinking population, even at a conservative estimate, there is a sizable market in Arizona which is currently being filled by out-of-state craft breweries.
A independent consumer propensity report was recently commissioned by, and completed for the City of Flagstaff. The report gives a weighted number indicating this propensity of local buyers from various categories to purchase a product versus the national average. Although actual sales numbers cannot easily be derived from this data, certain trends can be observed. Of interest in this report was a breakdown of propensity to buy certain beers. A specific look was taken at the microbrewed beers which were reported.
There were 15 categories or brands of microbrewed beers named in the report, and 4 demographic groups divided up by residence and homeowner status. Of these groups, the second homeowner group was ignored as it is believed that this group is not representative of somebody who lives in Flagstaff a majority of the year. The three remaining groups are new movers (somebody who moved in the last 1 year, but whose primary residence is Flagstaff), tenured homeowners, and students.
For reference, a number of 100 indicates a similar propensity to buy a product to the national average. A chart showing the propensities for each of the demographic groups to purchase each of the microbrewed beers or categories of beers is shown in the chart below.
It should be noted that two categories of microbrewed beers within the new movers demographic were over 400, but the scale of the chart was ended at 400 to illustrate the other groups. These two categories for new movers were Oregon Microbrews (score of 869) and Full Sail beer (also from Oregon, score of 551). As can be seen in the above chart, the majority of microbrews score well above 100, indicating that Flagstaff has a propensity higher than the national average to purchase microbrews. The noted exceptions to this are Catamount and Celis, which are not readily available in Flagstaff.
The data from the buyer propensity survey indicates that Flagstaff is a very strong market for microbrewed beers, and as was noted above, most of this market pull is currently being filled by out-of-state breweries.
1The Brewer’s Handbook, Ted Goldammer, 2008
2All figures pertaining to competitive brewery capacities are from Brewers Association (www.brewersassociation.com) 2009 industry annual report.
A little overboard? Maybe. But in the end, it really helped me say with confidence “hell yeah, another brewery in Flagstaff!”. In fact, if you look at the numbers, it says that craft brewing has plenty of room to grow, and Arizona is primed and ready for even more incredible craft beer!
Don’t you love data?
As a result of this obsession with data, I ended up with a pretty detailed business plan, but one that I had a lot of confidence in by the end of the adventure of putting it together. And that, my friends, is really what helped me take the leap into the brewery business.
Now I know that at the end of the day, the bottom line is that I need to brew some delicious beers to really make this thing happen (which should go without saying), but it’s nice to know that I’m not starting behind the 8 ball on this endeavor.
It certainly doesn’t have the impact that an infographic on churches, bowling alleys, firearms, and strip clubs does, but I think it’s pretty interesting data nonetheless.
I really dig what the guys at floatingsheep.org are doing, and although it’s tough to recreate any of their graphics due to the custom searches involved for assembling data, there are lots of data sources out there which have some interesting (and very accesible) results. It wasn’t terribly hard to find the data I used for the business plan, and I thought it was a good way of answering some of the uncertainties.
Finally, I want to bring it on home to say that there is going to be plenty of data to go around here at Wanderlust once we’re up and running, I made sure of it. The process engineer in me started drooling when my control panel showed up at the brewery about a month ago. I opted for the touchscreen controller upgrade since it allows for a lot more options on brew day, but it also has a certain engineering appeal. It’s also got an ethernet port on the bottom, with full data logging and internet enabled capabilities.
Here’s a picture of one installed at another brewery (mine is under several layers of plastic wrap right now from the concrete cutting).
It’s going to make some beautiful beer……..