In the wake of Sierra Nevada announcing it will open an East Coast brewery, Beeronomics discusses the question: When is the right time for a craft brewer to open a second facility?
...As breweries expand there is always a tension between growing big an one site and capturing the considerable economies of scale and getting close to customers thereby reducing transportation costs. In international economics this is known as the proximity-concentration trade off and some interesting empirical work has been done to understand where the tipping points are. It is interesting, then, to see where that tension resolves itself in craft beer. Sierra Nevada is up to an annual production of around 800,000 barrels, New Belgium is up to about 600,000 barrels annually, but Deschutes is still less than 250,000. ...
But this gives us some idea of where the tipping point is 600,000 to 800,000 barrels a year. ...
Thanks to Win Bassett for the heads up on this post.Read the full article