Patrons at Missoula’s Dram Shop, one of the city's many outlets for locally brewed libations.
Patrons at Missoula’s Dram Shop, one of the city's many outlets for locally brewed libations. Michael Haywood

How much can craft brewing power economic development? This Montana city is trying to find out.

On a recent evening in Missoula, Montana, Nick Munoz and two friends from Logan, Utah, stood in a taproom called the Dram Shop, desperately contemplating a prodigious beer list projected onto the wall.

The trio—all college students—were pre-gaming before a tour of Missoula aboard Thirst Gear, a 12-seat, canopy-covered “bicycle” that roams this university town’s many craft breweries.

Munoz settled on a Camp Robber Coffee Porter from Big Sky Brewing, and the group passed it around, each taking a sip and commenting on the taste of the black, java-laced brew. “We definitely prefer craft beers,” Munoz said. “Although most of the time I can only afford P.B.R.”

Depending on the depth of your pockets, a night in Missoula would offer plenty of chances to sample local craft beer. This small city of around 70,000 is served by seven independent breweries providing locally made alternatives to mass-market brews. At least two additional breweries are in the offing. Good beer has joined fly-fishing and other forms of outdoor adventure as a cornerstone of the area’s tourism promotions and is increasingly central to the town’s branding as a hip Western recreational outpost. Accordingly, encouraging the growth of the local brewing industry has become a focus of the region’s economic development efforts.

Bottoming up to the bar at the Dram Shop. (Michael Haywood)

Across the country, it’s the same story: Craft beer is on a tear, and cities as diverse as Bend, Oregon and Grand Rapids, Michigan have become destinations for connoisseurs of local suds. As Curbed’s Patrick Sisson recently detailed, small breweries have been heralded as economic drivers than can breathe life into the boarded-up downtowns of rural America and inject a hipster vibe—and money—into struggling neighborhoods of larger cities.

But despite the fizzy rise of craft beer in America, there are limits on the power of the industry to drive local economies. Just where that line lies is something that Missoula may soon be discovering. If city leaders and the local drinking public are to be believed, the city is far from reaching maximum beer.

Nationally, the craft beer boom has been remarkably swift: In 2011, craft brewers sold less than 6 percent of beer purchased in the United States, according to the Brewers Association, a trade group representing independent brewers. By 2016, craft beer’s market share doubled to more than 12 percent, although the rate of growth appears to be slowing. There are more than 5,500 craft breweries in the U.S., and more than 2,700 breweries in planning, according to the Brewer’s Association.

Montana now boasts 68 craft breweries, or 9 per every 100,000 over-21 adults, second only to Vermont (and more than such beer-centric states as Colorado and Oregon). It ranks 8th in gallons of craft beer produced per capita. Those breweries have an economic impact of more than $60 million a year, according to the Montana Brewers Association.

A good portion of that economic impact is generated in Missoula County, home to the three largest breweries in the state and the epicenter of the state’s beer culture. Local beer distributors and craft brewers estimate that as much as 40 percent of the beer sold in Missoula is brewed in small breweries, far higher than the national average. About 5 percent of those suds are sold directly to consumers at brewery taprooms, where profit margins are higher because distributors take no cut.

Missoula taprooms, with their mandated three-pint limit and 8 p.m. last call, cultivate an image as the anti-bar in a town of heavy drinkers—places where you are more likely to see toddlers playing on the floor than a drunkard throw a haymaker. That image helps taprooms avoid NIMBY resistance from wary neighbors.

One big supporter of the model is Missoula’s mayor, John Engen, who touts the role of taprooms as the kinds of “third places” that can build community. “You put in a brewery and a tasting room, and soon you have a neighborhood,” says Engen.

The mayor, whose struggles with alcoholism have been well-publicized, emphasizes the idea that beer-making can be a powerful tool of redevelopment that provides critical jobs. Modern Missoula is a town with a scant manufacturing base, where former lumber mill workers drive taxi cabs or work at Wal-Mart at a fraction of their former pay. “It’s our manufacturing,” Engen says. “When we talk about manufacturing jobs in our community, these are them.”

A drinker enjoys a few pints at KettleHouse Brewing. (Michael Albans/AP)  

For every 11,000 pints sold, a job is created, according to a 2016 study by the Bureau of Business and Economic Research at the University of Montana. But some question whether the economic impact of craft beer on Missoula, which is also home to two hospitals, a U.S. Forest Service regional headquarters, a forest fire smokejumper base, and the University of Montana, has been overstated. Tim O’Leary, who owns KettleHouse Brewing with his wife, Suzy Rizza, estimates there are perhaps 300 brewery jobs in Missoula, a figure dwarfed by those in the restaurant and bar industry.

O’Leary and Rizza opened KettleHouse in 1995 as a so-called u-brew, a space for locals to brew without storing fermenting beer in their basements. In 1999, after Montana changed its laws to allow on-premise consumption of craft beer, the couple changed their business model. Today KettleHouse, which is known for its Cold Smoke Scotch Ale and Fresh Bongwater Hemp Pale Ale, is the second-largest craft brewery in Montana, with two taprooms in Missoula and a recently opened second brewery and concert venue a few miles out of town.

In hard numbers, the impact of craft brewing on the local economy may not live up to the perception, O’Leary says, but the money it does generate stays local, which he considers the biggest benefit to the phenomenon. That, and the tourists that the beer taprooms draws. “We are pulling people off the interstate because they hear about Missoula making great beer,” he says.

Growing the industry in town further would require increasing bottling and distribution across the state and elsewhere, a model the largest local breweries have taken. The taproom side of the business is becoming more competitive, and there’s a limit to the sheer amount of beer a town can consume; that leads to shuffling drinkers around and diminished profits. Bart Watson, chief economist of the Brewers Association, predicts craft brewing will continue to grow, but he said he is starting to see towns and cities in Colorado and Oregon that are pushing the limit of what the market can take. (According to an analysis of microbrew-density by Joe Cortright at City Observatory, Portland, Denver, and Seattle top the list of major cities with the most beery infrastructure.) Watson says the best future growth potential may be in towns that haven’t yet discovered craft beer. (Try the Deep South: Mississippi, for example, has only nine craft brewers in the entire state, producing less than half a gallon annually per adult.)

In July, Montana Governor Steve Bullock signed a bill that increases production caps for craft breweries from 10,000 barrels to 60,000 barrels, which Missoula brewery owners say will help them expand and remain competitive. Bullock signed the law, which was introduced by a bipartisan duo of legislators from Missoula, at Missoula’s Bayern Brewery, and he touted its potential economic impact to state farmers and “Main Street Montana.”

Pro-craft-beer laws have faced resistance elsewhere, however. Traditional bars have long argued that taprooms cut into their business, while beer distributors take a hit when brewers sell direct to customers. Across the country, state legislators and lobbyists are squabbling over legislation that caps or encourages craft brewing. In April, the Maryland General Assembly passed a law that limits the hours of new taprooms and forces them to buy their beer from wholesalers if they plan to serve over a certain amount, kicking off a brawl with the state’s 65 craft breweries; that in turn inspired a more pro-beer response from lawmakers in neighboring Virginia. This summer in Wisconsin, brewers blamed the state tavern association and distributors for a rumored legislative proposal that would have shut down on-site sales of craft beer and wine. The proposal did not materialize.

Right now, Missoula’s thirst for the good stuff seems unquenchable, but brewers in the city say opening a new facility here is far from a sure thing. “Gone are the days when you could brew an IPA with a catchy name and make a go of it,” says Robert Rivers, who opened Imagine Nation Brewing Co. along Missoula’s Clark Fork River in 2015.

Rivers and his wife, who did humanitarian work in Syria and other conflict zones for two decades before moving to Missoula, say their operation is about far more than just making beer—it’s “a vehicle for social and cultural transformation.” As such, their brewery includes a community center that hosts a farmers market, community events, music, forums on environmental and social change topics, and even a literary magazine called Beyond Beer. Rivers says the business has given almost 65 percent of profits back to the community.

It may be a force for community good, but it’s not exactly a job- or money-making machine: The business employs eight people, mostly doing what Rivers dubs “glorified janitorial work.”

“I would be very reticent about opening a brewery in Missoula now,” he says. “That doesn’t mean the market is saturated, but people would need to come at it from a different angle.”

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