Economic Development, Food Service & Agriculture, and Travel & Tourism

Beer distributors pour $2 billion impact on state economy

March 6, 2013
| By Pat Evans |
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New Holland Brewing crafts $1M expansion with beer garden and stage
Holland-based New Holland Brewing is a regional craft brewery and distillery that values “creativity and artistry.” Photo via fb.com

The burgeoning Michigan beer industry is doing more than quenching a thirst — it’s creating jobs and making a strong economic impact.

In 2011, the state’s craft beer industry contributed more than $24 million in wages and $133 million in overall economic impact in Michigan. The state is fifth in the nation in breweries per capita with more than 120, and the sales of Michigan craft beers make up less than 4 percent of beer sales in the state.

These statistics were before expansions by some of the state’s largest breweries such as Short’s Brewing Co., Founders Brewing Co., Bell’s Brewery and Arcadia Brewing. Many other breweries were started, expanded or have plans to expand.

Currently, Founders Brewing is in the midst of a $26 million expansion project and will hire another 52 people in the next three years. The hires would bring the company to about 200 employees.

While Founders and Bell’s are quite a bit larger than most of the area’s breweries, each brewery has a sizeable staff. From small nano-breweries, such as the Mitten Brewing Co. that hires about 20 people, to a mid-sized brewery such as Brewery Vivant, which employees between 45 and 50 people at a given time, Michigan breweries employ thousands of people.

Jobs in breweries range from office and management to production and restaurant work.

In addition to the breweries, the distributors who get the beer to those customers are an economic force in the state.

A recent study, America's Beer Distributors: Fueling Jobs, Generating Economic Growth & Delivering Value to Local Communities, by Bill Latham and Ken Lewis of the Center for Applied Business & Economic Research at the University of Delaware, is one of the first of its kind.

It shows the impact that distributors have on a state’s economy, and it’s an impact that often is overlooked.

“The beer distribution sector is a hidden gem that has been tremendously undervalued in previous economic reports,” Latham said. “Fueling more than 345,000 direct and indirect jobs across the country, beer distributors add $54 billion to the nation’s gross domestic product and offer far reaching benefits to brewers, importers, retailers, consumers and government agencies at all levels.”

The study found these results in Michigan:

  • Michigan beer distributors directly employ 4,763 people
  • When the impacts of Michigan distributor operations, capital investment and community involvement are considered, the total number of jobs is 13,400
  • Michigan beer distributors generate nearly $2 billion in total economic impact
  • Michigan beer distributor activities contribute $427 million to the federal, state and local tax bases. This does not include an added $326 million in federal, state and local alcohol excise and consumption taxes on beer sold in Michigan
  • The Michigan beer distribution industry contributes $553 million in transportation efficiencies for the beer industry each year
  • Beer distributor contributions to local community activities generate $5.5 million annually

Also starting to make a push into the economy is the Michigan hop industry. Hops are an integral part of the brewing process and some species can thrive in the Michigan climate.

Recently, The Right Place Inc. secured $20,000 from the Michigan Economic Development Corp. to study the advancement of the hop industry in Michigan. The pair recently funded Founders with a $2 million grant for its current $26 million expansion project.

The hop industry is in its infancy, but has huge growth potential.

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