Clark research on tap at conference in Austria

Economics Professor Jacqueline Geoghegan had long observed that there was something unusual about the way craft breweries operate. Brewers focused on collaboration, as well as competition.

When COVID-19 hit, she became even more intrigued by the collegial relationships between purported rivals.

Geoghegan partnered with Mary-Ellen Boyle, dean of the college and professor of management, in the early months of 2020 to study the untraditional business model of New England craft breweries. Weeks into the pandemic, they realized they could think differently about the project. Their focus became less about the highly social nature of the industry and more about how well craft beer fared in a time of global upheaval. The project draws on Geoghegan’s and Boyle’s expertise in agricultural economics and organizational sociology, respectively.

The professors presented their findings at the Environmental Protection and Sustainability Forum 2022 at the University of Graz in Austria in late September. A paper on their research is in its second round of revisions.

The highly social nature of the craft beer industry is among several factors that helped breweries navigate early pandemic uncertainties, Geoghegan and Boyle note. New England craft breweries emerged with a story of resiliency.

“There’s a norm in the industry of calling each other to collaborate or calling someone if you don’t know what to do even though they’re your competitor,” Boyle says. “As an organizational sociologist, that’s what struck me.”

The professors contacted 348 craft breweries in New England, 33 of which agreed to be interviewed for their study. They asked about brewery size and staffing, marketing, community engagement, industry collaboration, and types of capital.

Brewers shifted strategies quickly to continue operating despite pandemic shutdowns. They offered curbside pickup and delivery and became community resources by using their equipment to produce hand sanitizer. That flexibility helped craft breweries thrive and could apply to other crises. The ability to pivot strategies during the pandemic helps explain how industries must adjust their practices to respond to climate change, Geoghegan and Boyle argue in their conference paper.

Climate and COVID are both large crises but have arrived at different time scales.

“COVID hit fast, and we were aware people were dying. The world had to respond, and it didn’t matter what the financial costs were because the human costs were so obvious,” Geoghegan says.

She wonders if this example of quick adaptation could motivate leaders to take steps to reduce carbon emissions.

“COVID was a shock to the system and some people say climate change would get more attention if it were more shocking,” Boyle adds. “COVID forced us all to adapt immediately. With climate change, some think we have longer to adapt.”

While restaurants closed because of pandemic impacts, the business at craft breweries flourished. American craft beer sales were 21% higher in 2021 compared to the year prior. One hypothesis was that people were drinking more alcohol during lockdown.

Breweries also benefitted from defining themselves as David to big beer’s Goliath, Geoghegan explains.

“If you have something to resist against it helps you have a shared identity, and to be resilient,” Boyle says.

Craft breweries took on an “us vs. them” mentality, rallying against the pandemic and mass-produced beers.

“I think it was in their mutual best interest for as many craft breweries to survive as possible because it doesn’t seem to be a saturated market,” Geoghegan notes.

Geoghegan’s interest in craft beer dates back to graduate school when she learned how to brew. She made the industry a research specialty while teaching her course The Economics of Policy and Food. The research was informed by the work of Keenan Marchesi, M.A. ’16, Ph.D. ’20, a teaching assistant in the course who studied the spatial agglomerations of local breweries as part of his dissertation. From there, beer became a part of the course content. Marchesi is now an economist with the U.S. Department of Agriculture, and he and Geoghegan continue to collaborate.

Boyle and Geoghegan discovered that not a single brewery owner they interviewed started their career in craft beer. Most worked elsewhere, while brewing at home, and then made a career change. Several breweries were started by friends or life partners, and many brewers had degrees in fields not pertinent to craft beer.

“We believe that helped them survive the pandemic because they already switched careers once,” Boyle says. “They knew how to go with the flow, learn something new, and adapt.”

Lennart Vogelsang, a doctoral student in economics at the University of Graz and a professional brewer, attended the Clark researchers’ presentation at the conference.

“I was surprised to see how much I recognized about my own experiences regarding the craft beer scene in Europe. The similarities were striking,” he says.

Like in New England, breweries across Europe have transformed neighborhoods by becoming social hubs.

“Craft beer breweries often venture into neglected areas. In their wake, other businesses and real estate development follow. Those areas become places where people of diverse backgrounds, often from the same neighborhood, meet for a pint or two,” Vogelsang says. “The presentation motivated me to become more engaged in my community in my hometown of Klagenfurt, where such an identity around craft beer and local urban culture is slowly picking up.”

Other industries could take a cue from craft beer.

“Teach entrepreneurs to collaborate early on,” Boyle says. “It will likely benefit your business.”