Craft Beer 101: Entrepreneurship and Beer

There are more than 2,000 breweries in the United States, and craft beer has been continually increasing in popularity. Is the craft beer scene today the best it’s ever been?

The short answer: no. In 1870 there were about 4,000 breweries in the U.S. Today there are only about 2,800, which means that Ulysses S. Grant had more options for beer than you do today. In fact, today’s craft brew “revolution” is less a revolution and more a comeback.

Why has there been a renaissance for craft beer? A combination of technological change, consumer preferences, and the resilience of the entrepreneur. It’s cheaper and easier for brewers to get the brewing equipment they need than it was 50 years ago. Not only are the products being made more efficiently, but it’s also easier for brewers to share the equipment today than it was 40 or 50 years ago.

Why have consumer preference changed? It probably has a lot to do with the deregulation of home brewing in 1970. Before 1970, it wasn’t legal to brew beer at home. In the 1970s the federal government and many state governments made it legal to make home brew, which opened up a lot of people’s eyes to the possibilities of craft beer beyond the Millers and Buds of the world.

What does entrepreneurial resilience have to do with it? An entrepreneur selling craft beer has to overcome a three-tier distribution system to go from brewing her beer to selling to to the consumer. Selling your beer is a lot more difficult than just giving it away.

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