Goodwood Brewing Co.’s new brewpub—scheduled to open July 1 in downtown Frankfort—not only represents a foothold for the Louisville-based brewery in the state capital’s growing beer scene, it also exemplifies many of the trends and opportunities that remain available to Kentucky craft brewers, even as the category’s once-red-hot growth rate cools nationally.
John M. Wurth
Ted Mitzlaff
“We’re distributed in 15 states, but the taproom model is a good model for us,” said Goodwood CEO, Ted Mitzlaff. “The margins are much higher, and it’s a great way to brand your business. We’re really looking at growth through taprooms and mergers and acquisitions, given the current environment in the craft beer industry.”
After several years of double-digit gains, national craft beer sales increased by just 4 percent by volume in 2018, according to the Brewers Association (BA), a trade group that tracks the industry. Overall beer sales declined by 1 percent during the same time, and sales by the nation’s largest craft brewers remained static. Which is not to suggest that craft beer is losing its luster—the category continues to gain market share and currently claims about 13 percent of the American beer market by volume—but rather that the industry is maturing, competition is becoming more intense, and growth is more likely to be measured in small but significant gains rather than in the leaps and bounds of year’s past.
It’s a different story in Kentucky. A recent study conducted by C+R Research, using data compiled by the BA, found that Kentucky is tied with New Jersey as the fastest-growing state in terms of craft breweries per capita. Over the past three years, Kentucky and New Jersey both saw a 43 percent growth in breweries per capita, followed by Oklahoma with 39 percent growth, North Carolina with 37 percent, and Virginia with 36 percent. This news doesn’t come as a surprise to Derek Selznick, executive director of the Kentucky Guild of Brewers, but it does come with an asterisk.
“We’ve seen between 25 to 30 percent growth in both our employment and production numbers every year, and we really don’t see that slowing down for the next several years."— Derek Selznick, executive director Kentucky Guild of Brewers
Derek Selznick
“We’ve seen between 25 to 30 percent growth in both our employment and production numbers every year, and we really don’t see that slowing down for the next several years,” Selznick said. “The real reason for that, to be honest with you, is that—compared to much more mature beer markets like Massachusetts, Colorado, and California, which has over 1,000 breweries—we have a tremendous amount of growth still available to us, because the market has been so undersaturated for so long.” In short, Kentucky—and much of the Southeastern United States, for that matter—has a lot of catching up to do, and that spells opportunity for the state’s small brewers and breweries in planning.
“In 2009, there were five breweries in the state. As of today, there are 68 active licenses, and there should be around 72 by the end of summer,” Selznick said. Likewise, employment has also grown from about 425 people statewide in 2016—when Selznick joined the Kentucky Guild of Brewers as its first executive director—to well over 1,000 people currently, he said.
Kentucky doesn’t have any regional breweries, defined by the BA as producing at least 60,000 barrels annually. Rather the state’s growth is primarily driven by brewpubs and especially by microbreweries, most of which distribute a majority of their beers directly to consumers via taprooms. While more populated areas such as Louisville, Lexington and Northern Kentucky have seen a concentration of microbreweries in recent years, new breweries are cropping up in cities throughout the state, which helps boost overall interest in craft.
“When a place like Flywheel [Brewing] opens in Elizabethtown, we also see both package and draft sales for other local Kentucky breweries increase,” Selznick said. “We’re all in this together. We’re converting mass beer drinkers over to the craft side, and we’re converting consumers for one another.”
Seven new breweries—Fusion Brewery and Wise Bird Cider in Lexington, Sig Luscher Brewery in Frankfort, Gypsy Run Brewery in Danville, Abettor Brewing in Winchester, My Old Kentucky Foam in Georgetown, and Versailles Brewing in Versailles—have opened so far this year in Central Kentucky, bringing the total number of destinations on the Brewgrass Trail, a tourism program run by VisitLEX, to 18. Several of these locations—including Fusion, Wise Bird Cider and Ethereal Brewing in the Distillery District—are clustered within walking distance of one another, which helps create a destination unto themselves and encourages patrons to sample a variety of products and styles.
And it’s not just beer. Tim and Greta Wright recently moved to Lexington from Virginia to open Wise Bird Cider. “We’ve been coming here for years to visit, and felt like Lexington was on the brink of something really cool—there’s such an entrepreneurial spirit here,” Tim Wright said. “But the primary reason we want to be in Lexington is that Pivot and Country Boy have already shown that there’s a demand for cider here.”
Bourbon has also helped bolster craft beverages in Kentucky. As the economic impact of bourbon production and especially bourbon tourism become increasingly important, state lawmakers continue to introduce legislation that benefits all aspects of the alcohol industry. Senate Bill 11, for example, passed earlier this spring and enacted a host of updates to the state’s alcohol laws.Among them, microbreweries can now sell their products by the drink or by package directly to consumers at fairs and festival. The law also doubles the annual production limit of small wineries and microbreweries.
Tim and Greta Wright and their family moved to Kentucky from Virginia to open Wise Bird Cider.
“State officials truly get how the alcohol industry, in a responsible manner, can help support tourism and state and local economies,” Selznick said. “That’s a competitive advantage that, especially in the South, most other states don’t have.”
And then there’s the multitude of thirsty tourists —1.4 million in 2018, according to the Kentucky Distillers Association—who make at least one stop along the Kentucky Bourbon Trail.
“About 175,000 tourists come to Frankfort each year just for the Bourbon Trail, so we want to try and attract those folks as well,” Mitzlaff said of Goodwood Brewing’s new brewpub. Goodwood’s flagship location in Louisville also benefits greatly from the Bourbon Trail and from tourism in general, Mitzlaff said. Recently he’s also noticed a new breed of specialized tours and tourists arriving from surrounding states and elsewhere. “They’re coming just for the craft beer, which certainly wasn’t the case five years ago.”