Economics, Economic Development Driving Breweries To Suburban Downtowns

Alpharetta's first brewery is heading downtown, one of many local breweries that are a key part of small-town revitalization as Georgia's craft beer industry foams over the rim.

Jekyll Brewing is opening a second, customer-focused location in Downtown Alpharetta, an affluent suburban city 25 miles north of Downtown Atlanta. The craft brewery — one of the state's largest — is occupying a historic building in the city's redeveloped downtown district, where there will be a rooftop bar as well as plenty of space for beer drinkers.

It will continue to produce beers for distribution from its original facility in a warehouse nearby.

“We wanted to have a location with high foot traffic and we wanted to stay in Alpharetta, so it was just the right spot for us,” Jekyll Brewing CEO Michael Lundmark told Bisnow.

As Georgia's craft brewing industry explodes both in popularity and purveyors, many Georgia cities are becoming ground zero for the new homes of these beer factories. And for small town America, breweries are rapidly becoming a centerpiece in revitalization and economic development success.

“It's a sign that there's a culture of risk, a culture of innovation, and frankly, there's something to do other than going to the store and buying beer,” Fayette County Chamber of Commerce CEO Colin Martin said. "So it's an important piece [to economic development], too."

The rise of the craft brewing industry has been more like a rocket launch this decade. Across the nation, there were more than 2,800 craft breweries in operation in 2013. By 2016, that number jumped to more than 5,400, according to the Brewers Association.

At the start of the Great Recession, Georgia had 20 craft breweries. By the end of 2018, that number reached 121, according to data compiled by the Beer Institute.

For new breweries, suburban downtowns may offer a panacea to steep startup costs, which can rise to more than a half-million dollars before a brewery makes a batch. The suburbs offer lower-priced real estate than can be found in prime areas of Atlanta, while giving breweries a chance to connect to one community.

Chattabrewchee Southern Brewhouse co-owner Michael Denehy saw that when his brewpub opened in 2017 in West Point, Georgia, a city of nearly 4,000 people at the border of Alabama, more than 80 miles south of Atlanta.

Denehy and his wife — active duty U.S. Army Maj. Kathy Denehy — chose a former furniture store in the heart of West Point's downtown both because the area was underserved from a craft beer standpoint and because it is Kathy Denehy's hometown.

It helped as well that Kia Motors Corp. opened a billion-dollar factory there in 2010, which today employs 14,000 workers. Chattabrewchee Southern Brewhouse was the only brewery in town when it opened its doors.

“It was an expanding town, so we were kind of getting in on the bottom floor,” Denehy said.

The catalyst in the brewpub movement came in 2017, when Georgia lawmakers approved a change to state law, allowing microbreweries to sell direct to consumers on-site rather than solely selling through distribution networks.

The profit margins of selling direct to a consumer are much more alluring than selling in a cooler case at, say, Kroger, Gate City Brewing co-founder Pat Rains said. By hosting crowds in its 3,700 SF tap room, the Downtown Roswell brewery can cut down on the additional expenses it takes to sell in bars and restaurants, which have deals with distributors.

“We can make four times more [by selling beer in the taproom] than we can make sending out to distribution,” Rains said, although Gate City also distributes its beer to restaurants and retail stores.

That change in law has been a lightning rod for cities to lure craft breweries to downtowns. For small breweries, small downtowns provide a setting for the critical flow of foot traffic that boosts direct sales. For communities, it gives people a reason to come to the downtown as municipalities strive to revive them.

“We are absolutely in a revitalization mode," West Point Mayor Steve Tramell said. "And Chattabrewchee just fell along with what's going on in that revitalization.” 

When Kia gave West Point an economic shot in the arm with its assembly plant, that gave the city an opportunity to revive its downtown as well.

“It's taking an old textile town that was really on the outs and turned us around,” Tramell said. "It's been amazing to see."

Gate City took one of the last vestiges of formerly decaying Downtown Roswell, a former automotive shop, and turned it into its brewery.

“Breweries here in Georgia are starting to be viewed as economic drivers,” Rains said. “It really provides a sense of community.”

In Troup County, the home county to West Point, where once Chattabrewchee was the only game in town, there are now two other breweries. Now, Chattabrewchee is readying a second location. Denehy declined to identify it, but said it is a South Georgia city where the West Point brewery saw many customers come from.

“I've only been approached for [a new brewpub] about 28 or 29 times,” Denehy said, laughing.

Fayette's Martin said breweries are part of a new model of economic development for small cities, one that now relies on luring and keeping talent in their borders to attract businesses. The University of Georgia estimated in 2017 that the craft brewing industry had a $1B annual economic impact to the state.

“Our challenge is, OK, how do we get those folks here and invest themselves in the community?” Martin said.

Breweries also are a magnet to that most coveted of generations that all cities want to lure: millennials. Small breweries are part of their social networking.

“Millennials are not going to move where there's not broadband connectivity,” Denehy said. "They're not going to move where there's not a brewery. Period, plain and simple."