Page 20
— Retail Properties Quarterly — August 2017
www.crej.comRetail Trends
C
raft brewing is by no means
a new trend, but one that
has gained exponential pop-
ularity over the last decade
– and Colorado has been a
leader of the movement.
It’s no secret that Americans love
beer, and as the foodie culture has
grown, so has the taste for qual-
ity, innovative brews. Today’s beer
enthusiasts are aficionados going
through beer flights like a wine con-
noisseur would do in Napa. The cur-
rent consumer culture has become
more environmentally conscious,
fostering an interest in how things
are made and where ingredients are
sourced. To that end, the premium
price craft beer enthusiasts are will-
ing to pay for quality is driving the
increased demand for production
– and small, independent brewer-
ies are opening across the U.S. at a
rapid pace.
According to the Brewers Associa-
tion, the number of craft breweries
in the U.S. has more than tripled
during the last 10 years, and Colo-
rado is right in line with this trend.
In fact, from 2011 to 2016 the num-
ber of craft breweries in the state
grew from 126 to 334, counting only
those that fall into the brewpub,
microbrewery or regional categories.
Colorado ranks third in the nation
for breweries per capita. The high-
est concentrations are in Denver
(58), Boulder (43) and Larimer Coun-
ty (34).
Microbreweries – which are cat-
egorized as selling less than 15,000
barrels per year – are growing at a
faster clip than brewpubs – which
are categorized as restaurants that
brew and sell beer
on site (with an
outside distribu-
tion of less than 75
percent). In Colora-
do, microbreweries
outnumber brew-
pubs more than
1.5 to 1. Among
the microbrewery
field there is a sub-
category of small,
local neighborhood
breweries that are
holding their own
against the larger-scale brewers.
Since it seems tough to compare
the production sizes, perhaps the
term “nano-brewery” (which has
no official definition, but typically
refers to production of 2,000 barrels
or less) needs to gain more traction,
particularly in markets like Denver.
It’s an important distinction
because these nano-brewers are
starting to take over taps in local
restaurants and bars. In the inter-
est of constantly offering something
new to their customers, bars and
restaurants often have rotating tap
handles, which in turn offers nano-
breweries, like Bruz Beer in Denver,
the chance to expand distribution
and increase recognition. Similar
to how “big beer” felt the craft beer
disruption seven or eight years ago
when the microbreweries started
taking their taps at local restaurant
and bars, the microbreweries are
feeling the disruption now from the
nanos.
As the number of brewers mul-
tiplies and distribution channels
become more congested, craft brew-
eries are able to
create their own
“shelf space” by
opening taprooms
and selling their
product one pint or
growler at a time.
There is an added
advantage to sell-
ing on site because
none of the money
is shared with dis-
tributors or third-
party retailers.
As the business
evolves, breweries
are putting a larger
emphasis on front-of-house retail
as a way to grow business. Accord-
ing to a recent study done by the
Brewers Association, data suggests
that sales for microbreweries with
tasting rooms grew faster in 2016
than those without.
Look to the larger microbrewer-
ies to start searching for places to
expand their taprooms, with and
without food. The next wave we’ll
see in Denver is the craft beer tap
house – but not brewery. In some
cases, these are expansions from
existing craft brands that want to
expand into new markets or neigh-
borhoods and, in other cases, it can
be a third-party opening a collabor-
ative taproom where beer enthusi-
asts can taste what microbreweries
and nano-breweries from a wider
geography have to offer. Developers
are looking to anchor their proper-
ties with experiential retail, and
well-known craft breweries and tap-
rooms offer that draw.
Craft breweries are starting to
define their local areas. While “cre-
ating an experience” is paramount
in retail across the board, it is even
more important in the craft brewing
space because millennials remain
the core consumer here. Brewer-
ies without an interesting atmo-
sphere, no matter how many taps
they have, will feel just like any
other bar or restaurant. Breweries
that incorporate open spaces for
various activities, like live music,
backyard-style games or even yoga
classes create a fun environment
that attracts both beer drinkers and
nondrinkers to enjoy a collective
social setting. It is not uncommon
for a craft brewery in Denver to
have as many dogs and kids playing
as adults drinking beer.
Craft brewing hits on multiple
cylinders for the local economy.
Craft breweries work as economic
engines, creating jobs and attracting
tourism. In fact, per the Travelocity. com Beer Tourism Index, Denverand Colorado Springs both fall into
the top 10 beer destinations, rank-
ing second and sixth, respectively,
among larger metros. Meanwhile
Boulder and Fort Collins land at
numbers two and three, respec-
tively, on the list among smaller
metros.
The commercial real estate
impact of the craft-brewing trend
has profoundly impacted both the
retail and industrial sectors, par-
ticularly when it comes to rede-
velopment. Breweries can make
great use of retail spaces that are
hard to backfill. Of course, there are
Craft brewingmakes big impact on retail real estateRay Rosado
Retail director,
Cushman &
Wakefield, Denver
Please see ‘Rosado’ Page 28Pamela Flora
Director of retail
research, Americas,
Cushman &
Wakefield, San
Diego