Concerning the viability of the craft beer industry it is important to note that while it is currently experiencing growth it is still vital to conduct market research before expanding or entering the market. Conducting market research does not have to be an expensive endeavor; in fact, much can be accomplished using inexpensive resources, merely requiring an investment of time. For example, the Small Business Administration has a wealth of information and links to resources available to conduct market research (SBA Demographics). Other sources of data for market research include the U.S. Census (Current Population Survey), Bureau of Labor Statistics (BLS Demographics) and state and county websites such as for Houston, TX. Once research has been completed an identity for a brand should be established.

The craft beer industry identifies itself though product differentiation and consumer education. Swaminathan defines these strategies as “identity for critique” and “identity for education” (2001, p.1171). Identity for critique can been seen in how the craft beer industry challenges the large domestic brewers such as AB InBev by demonstrating how craft beer is produced in smaller batches with fuller flavors rather than mass produced with mild flavors (Swaminathan, 2001). Therefore, a craft brewery may be labeled as a specialist organization while a larger brewer would be a generalist organization (Swaminathan, 2001). Identity for education seeks to “challenge the dominant culture’s perception of itself” which craft brewer’s do by  marketing themselves as local, American-owned companies with strong ties to the communities in which they conduct business (Swaminathan, 2001, p.1171). Conversely, large brewers have been experiencing continued consolidation as evidenced by the formation of AB InBev.

Industry experts such as Dick Cantwell,  Co-Founder of Elysian Brewing and author of The Brewers Association’s Guide to Starting Your Own Brewery was quoted as saying, “They [breweries] can’t all be the same and expect to survive” (First Drafts). Cantwell recommends breweries need to differentiate themselves from other brewer’s by offering an innovative product mix. To address this, more breweries are using a product differentiation strategy by offering barrel aged beers, limited edition beers, collaboration beers and utilizing local ingredients such as honey, pecans, rosemary and thyme. So, as it becomes increasingly important to differentiate, choosing a region to establish a brewery must also be considered.

So, given the growing amount of competition in the brewing industry, is there an area in the U.S. that has the right market conditions to support more craft breweries? According to recent research, the southeast United States has the lowest amount of breweries per residents in the United States (Baginski & Bell, 2011). In fact, Houston, Texas, the fourth largest city in the U.S., currently does not have any operating brewpubs and only within the past two years have there been more brewery openings. Additionally, Houston has over 40 colleges, universities and other higher educational institutions and research has demonstrated there tends to be more breweries where the surrounding population has higher education levels (Baginski and Bell, 2011). Finally, recent legislation has improved the business environment for brewers and the Texas Craft Brewers Guild has indicated the changes in the law will facilitate further growth for craft beer (Texas Beer Bills). Given this information, Houston just may be the next boom town for continued growth in the brewing industry.

 

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