My impetus for venturing deeper into Northern Virginia was to see what this locally grown and fermented wine thing is all about. As a native Washingtonian, I have of course been hearing about the growing hard grape juice industry for years. At the accelerated rate that wineries have been opening and producing wine over the past 7 years, the industry had become particularly intriguing.
In late August of last year, Governor Terry McAuliffe announced that sales of Virginia wine reached another record high during fiscal year 2016. During the previous 12 months, Virginia wine producers sold more than 556,500 cases, or over 6.6 million bottles of product. These sales represent a 6 percent increase from fiscal year 2015, when Virginia wineries sold more than 524,800 cases. Sales of Virginia wine have increased by 34 percent since fiscal year 2010.
So, you can imagine my surprise when I discovered that there is another related industry in the state that is set to overtake Virginia winery revenues by the end of the decade. That industry is the craft beer industry.
Brett Vassey, president of the Virginia Craft Brewers Guild told VirginiaBusiness.com this past January, “We just produced an economic impact report and the current state is we’re at 142 breweries. Last year, at this time, we were at 101. The year before at the same time – 77. So, it is an exponential growth each year. We’re at about 8,900 jobs and about $1 billion in economic impact.”
That is massive. To put those numbers into context, a 2015 report commissioned by the Governor’s office revealed that the wine industry was responsible for just over 8200 jobs and $1.37 billion in revenue. In other words, the craft beer industry is no longer a little stepbrother. It is a full-fledged stakeholder in the state economy.
Multiple forces fed this shift. Young drinkers have never known a world without Sierra Nevada or Sam Adams. They, as well as older drinkers, seek creative and unique beers and breweries. The trend dovetails with food awareness and an “eat local, drink local” theme. Folks can go to a small brewery, meet the brewer, tour the facility and drink the beers right there in the tasting room.
The ability to have that experience can be traced to a seminal moment in Virginia beer history. In May 2012, Governor Bob McDonnell met with a group of brewers, elected officials and industry representatives at Hardywood Park. Awaiting his signature was Senate Bill 604, which allowed retail sales of beer on brewery premises. The ceremony included combining ingredients for a celebratory brew, SB 604 Special Bitter.
“Having everybody there and collaborating, it was just a beautiful moment,” recalls Vassey. “It was the point in time where our entire industry points to and says, ‘That was the turning point.’”
A prime example of how SB 604 helped the craft beer industry in the Commonwealth is Green Flash Brewery. Founded and headquartered in San Diego, Green Flash was shipping its famous West Coast IPA and other beers to all 50 states. The cost of shipping across the country in refrigerated trucks—necessary to keep craft beer fresh—adds up, year after year. Investing in a brewery closer to its East Coast markets made financial sense.
Green Flash now has a full operating facility in Virginia Beach. However, it almost didn’t open its East Coast facility in Virginia. It began searching for a mid-Atlantic location before 2012, and before the passage of SB 604 was close to settling on a site in North Carolina.
“Virginia’s where we wanted to be,” says Green Flash’s operations manager, Bob Ross, “but a tasting room is critical for us to be able to showcase ourselves to our customers.” Not being able to operate a tasting room was a deal-breaker.
Luckily, SB 604 passed before Green Flash made a final decision, and the brewery was glad to choose Virginia Beach. “We love this community,” Ross says. “It feels like San Diego—an outdoorsy beach community with a strong military presence and a good brewing scene. It’s got the vibe of people coming and going. It feels like home.”
So, the question that I must ask is: Can craft beer’s level of growth be sustained? At the moment, I would say all the indicators point to “yes,” and these indicators are reflected in market share. For craft, that amounts to 8.2 percent of the total U.S. beer volume and 17.1 percent of sales revenue, numbers that have been steadily climbing as the overall beer industry has declined.
Another positive lies in historical context. In the late 1800s, the country had thousands of breweries. Prohibition, grain shortages during the Depression, grain rationing in World War II and consolidation among breweries caused its own cultural shift. Craft beer lovers will tell you that what’s happening now is a cultural correction as much as a shift.
With all the good vibes, and quality suds, flowing out of the Commonwealth, I have to believe that it should not long before anyone in the world hears the word ‘Virginia’ and immediately thinks of great beer.
Well, maybe ham, then beer.