Brewconomy 101

Craft beer has become big business in Montana, where the state’s manufacturing sector has enjoyed the largest gains

By Tristan Scott
Head brewer Cole Schneider brews the Winter at Noon Dunkel. Greg Lindstrom | Flathead Beacon

The simple, thirst-slaking union of four basic ingredients – water, grain, hops, and yeast – has created a groundswell of economic activity in Montana, and the surging craft-beer industry shows no signs of slowing.

Beer is as old as civilization, dating back to when grain was first domesticated and borne of the discovery that moldy bread produced an odd sensation.

Since refined, brewing beer has become big business in Montana, and this month the industry celebrated its renaissance with the 2015 Montana Fall Brewers Festival in Missoula, which featured a two-day conference and a keynote address from Gov. Steve Bullock, as well as a contest and tasting event showcasing more than 154 Montana-made beers, including 30 festival-released brews from 42 breweries across the state and award-winning beers from the Flathead Valley.

Husband-wife duo Cole Schneider and Maggie Doherty, owners of the Kalispell Brewing Company in downtown Kalispell, took home two gold medals, winning the Best Dark Lager category for their Winter at Noon Dunkel and Best Light Lager for their Two Ski Brewski.

Down the road at Tamarack Brewing Co., co-owner Josh Townsley, who is president of the Montana Brewers Association, took home an award for Best Amber for the brewery’s Yardsale, and Best Double IPA for the Redemption Red, which also earned the Best of Show award.

And Tim Jacoby, head brewer at Flathead Brewing Co., won Best Belgian for the Swimmer’s Itch Saison.

The success of these small, local craft breweries is mirrored across the state and nationally. Last year, craft breweries produced 11 percent of the beer Americans bought, up from just 2.8 percent in 2004, according to the Brewers Association, a national trade group.

Montana’s craft brewing industry has more than doubled its workforce over the past four years, according to a study published by the University of Montana’s Bureau of Business and Economic Research, which relied on 2013 data, the most current figures available.

The number of people working for craft breweries went from 231 in 2010 to more than 480 last year, according to research economist Colin Sorenson, who authored the study, which was commissioned by the Montana Brewers Association (MBA).

At the time, 40 breweries were in operation, with another 11 breweries in the planning phase. And with more than 60 breweries projected across the state by the end of 2015, the workforce will continue to increase exponentially.

“I’d say it’s a safe bet that the next study will show closer to 1,000 direct jobs statewide,” Matt Leow, executive director of the MBA, said.

Those direct jobs and income flowing from Montana’s craft beer taps contribute to growth throughout the state’s economy, the study notes.

The report found that economic benefits include 673 additional permanent, year-round jobs; more than $18 million in income to Montana households; sales from businesses and organizations are $60 million higher; and tax and non-tax revenues, not including property taxes, were more than $4 million higher.

The study also found that the industry’s overall economic impact grew by about 20 percent over 2011 numbers, reaching roughly $60 million in 2013.

And with brewing falling under the major industry heading of manufacturing, Montana’s manufacturing sector has enjoyed the largest output gain of $41.6 million due to craft brewing operations, according to Sorenson.

The sales of all kinds of Montana entities benefited from craft brewing, notably construction, as well as state and local government, retail trade, and health care, according to the report.

The craft brewing industry is also spending more money in Montana, Sorenson said. He surveyed about 50 brewers for the report and found that nearly half of their spending is done in state, spreading their dollars through the construction, retail and health care fields.

At Kalispell Brewing, Schneider and Doherty purchase Montana malted barley and Montana-grown hops. After opening their doors in 2014, they have already increased their fermentation capacity from 40 barrels to 100, increasing their production volume by 150 percent.

That farm-to-brew ethos has been adopted by other breweries in the region and the state as well.

“Brewers are a major economic impetus, and craft brewing is an industry that relies on other industries and props them up across the state,” Cole Schneider said.

Leow said the 2015 Montana Fall Brewers Festival was sponsored by 32 businesses, including distributors, hop growers, attorneys, insurance companies, and others.

“It really highlights how many different industries are involved in craft brewing,” he said. “It’s not just about the beer. There are boiler and equipment manufacturers and growers who are all part of the economic engine.”

But under current state law, craft brewers face production constraints, and members of the MBA and other players in the state alcohol industry are seeking policy solutions to alleviate that pressure so breweries can grow with more momentum.

For breweries, a current 10,000-barrel limit means that breweries that sell over 10,000 barrels per year forfeit the ability to sell beer on premise. A bill proposed last session would have increased the limit to 60,000 barrels.

Additionally, the bill would have allowed brewers to co-locate a retail license under the brewer’s name, allowing them to sell beer past 8 p.m. for greater retail ability.

“A big challenge facing breweries is the 10,000 barrel limit, and especially as these breweries grow it is going to become more of an issue,” Leow said. “What it is effectively doing is punishing success.”

U.S. Sen. Jon Tester recently sponsored a bill to lower taxes and reduce regulations on breweries and distilleries by cutting excise taxes for small breweries in half, and reducing the taxes for distilleries by more than 70 percent.

Townsley, at Tamarack, said he’s not opposed to paying taxes, but as a small business owner, any savings will be invested back into the brewery, which in turn benefits the economy.

“We can turn that savings around to make capital improvements,” he said. “Those shiny tanks in the brewery are expensive, and we can use that money for equipment purchases, education for our brewers and our bartenders, and to improve our guests overall experiences. Business is booming in Montana and it’s doing well, but we do have a shoulder season and it’s always nice to find a few extra dollars there. A reduction in excise taxes leads to more equipment, which in turn creates more jobs.”

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