Black Brew Movement: What The Future of Diversity in Craft Beer Means for African American Business Owners, Investors, and Students

by Courtney I. Brown, MA

This article discusses the current and future state of the craft beer industry through diversification. The purpose of this article is to provide information to black business owners, leaders and students about the opportunities within the craft beer industry. This article is built upon a series of public and private publications that give a wide range of perspectives.

ICOURTNEY I. BROWN, MA is a Research Analyst at Brightline Strategies and a CoFounder of Black Brew Movement, LLC. Her research interests include education, consumption and media. Courtney is based out of Alexandria, VA. IN RECENT YEARS, the business of craft beer has expanded far and wide. Today, more people than the bearded white guys have their hands in the tasting and making of crafted beer. As craft beer begins to acquire the interests of blacks, many are beginning to recognize that outside of general consumption, craft beer has the infrastructure to generate new streams of revenue and investment opportunities for black business owners and investors. As the brewing industry begins to infiltrate higher education, it can be suggested that this industry will also provide a wealth of opportunities for black students, specifically those who attend historically black colleges and universities (HBCUs).

From advocacy-based businesses and organizations and brewing focused college curriculum 1 to our first black female-led brewery 2 the opportunity for black enterprises to invest in this burgeoning industry starts now.

Advocacy Businesses

Community organizations have a longstanding history of advocating for an increase in cultural capital amongst blacks. 3 Small businesses and

organizations like Black Brew Movement, Black Brew Culture and Uncap Everything recognize the gap in the beer industry and are shocking the scene and preparing it for a much needed extension in clientele. These businesses and organizations are fundamental to the diversification of craft beer because they educate communities and empower blacks to be informed consumers and serve as a liaison between the black community and the existing craft beer community. Craft beer industry remains monochromatic. According to the Brewers Association, 85 percent of craft beer drinkers are white, while 15 percent are black, Latino, Asians and Native American drinkers. 4 Festivals like Fresh Fest Beer Fest, the nation’s first black craft beer festival, give black brewers and consumers a space to celebrate craft beer and learn from the best brewers at a festival that values the richness of black culture as well as quality beer.

Events such as these are building a foundation and etching the blueprint for the future of black brewers, investors, and consumers. These advocacy businesses are perfect avenues to promote entrepreneurship and mentorship.

Crowdfunding

As these businesses grow so does the need for resources. Obtaining finances is one of the most important initial steps in the entrepreneurial process. Crowdfunding serves as a simple yet effective way to begin to establish collateral. According to Dan Selis, founder, and CEO of Mission Brewery, equity crowdfunding is a valuable tool for business owners who have not mastered pitching to potential investors, or simply don’t have the time. 5 Crowdfunding is a form of disintermediated finance that allows entrepreneurs to raise funds directly from large numbers of individual contributors in an online setting. 6

This type of funding is particularly helpful for investors interested in the brewing industry because of the number of immediate capital costs (i.e. land, building, equipment, branding, etc.). As blacks begin to establish a presence in the craft beer industry, the democratic nature of crowdfunding allows more people an opportunity to contribute, even those with less capital. 7 While providing more opportunities for investment, crowdfunding also allows the receiving party to develop a community through public online communication channels. Startup investment sites like Seed Invest and WeFunder provide a public platform for startup businesses to speak directly to their funders.

Crowdfunding has provided Crowns & Hops Brewing Company founders, Beny Ashburn and Teo Hunter, the room to preserve the culture, diversify

the palate and build community through world-class beer. There was little to no influence for blacks in the beer scene and with the development of the first black-owned independent craft brewery in Inglewood, California, Ashburn and Hunter have integrated into the next realm of craft beer making with funding that grants them more independence due to the minimal influence of their seed funders and an expanded market share developed through front-facing fundraising model.

Although crowdfunding presents opportunities for small black-owned businesses, the structure of this style of fundraising does present risks that all investors should be aware of. These risks can be generalized as a high level of uncertainty in the investment with respect to achieving the final funding goal. According to Nguyen, “although investors will receive a refund in the event the campaign is unsuccessful in meeting its target, such investments still impose a degree of cost; the refund process takes time and investors may miss out on other investment opportunities as a result.” This risk highlights the need for black brewers and investors to create a branding strategy that speaks to a diverse group of investors and supporters, especially in a new market. Capital Investments Research shows that many craft breweries are aware of the lack of diversity in the industry and as they are placing their breweries in places highly populated by blacks, they recognize that just bringing the beer won’t work. Much of the suspicion around craft beer is relative to the perceived atmosphere of exclusivity, so craft brewers have become keen on the structure of their facilities and know that to generate more black consumers they must cultivate an atmosphere that includes them. This includes everything from music, art, food, and events.

As a capital-intensive industry informed investor are imperative to the transition to a more heterogeneous craft beer scene. Black executives with established vendor and community relationships and can serve as a consultant to these establishments and help them seamlessly create an environment that will be most attractive to minorities. Investment in infrastructure and general landscaping are foundational to the general atmosphere of craft brewers.

Capital investments in overall branding and strategy could potentially be the greatest contribution to the craft beer industry. The current market for craft beer needs brand differentiation and input from people of color. The voice and the culture and even agricultural knowledge are necessary for complete immersion into the craft beer industry. Organizations like the

Brewers Association offer research and service grants that contribute to the sustainability and profitability of small and independent breweries in the United States through hop and barley research and other agricultural developments.

HBCU Program Expansion and Funding.

Lastly, as many historically black colleges and universities (HBCUs) struggle to find resources for funding, recent developments in brewing curriculum create an opportunity for increases in STEM and hospitality degrees that help students obtain marketable job skills along with private funding for the universities. 1 Investments in brewing programs similar to Brewing Laboratory Science at University of California, Davis and Bachelors of Science in Food Science and Technology at Oregon State University would teach African American students the trade of beer making and get them acquainted with the functions of most independent breweries and other profitable sectors of the craft beer industry.

According to Peterson 1 , the need for Beer Industry Programs to prepare students for a career in brewing is at a new high since the industry has shifted to more technologically advanced systems. Investors can not only invest in the institutions that create these programs, but they can also contribute to the development of the curriculum since the disciplines are relatively new. Educators from diverse disciplines can begin to cultivate the narrative on how black students will understand the brewing industry and the opportunities available. Students can look forward to information that is created specifically for them as they are groomed in a specific brand of STEM that gives them the historical, theoretical and technical information that makes them marketable and competitive employees post-graduation.

Since 2013, Colorado State University, Metropolitan State University of Denver, Regis University, University of Northern Colorado and Front Range Community College have all brought brewing to the curriculum in an impressive way. They have outlined a model that could be duplicated by the administration at HBCUs.

Students within these academic programs gain transitionary business skills through the programs affiliated local breweries. Students learn to create their own beer from grain to glass and local independent breweries sell the students beers and the respective university shares in the profits gained from the sales. 1 This is an opportunity to gain funding for HBCUs and other predominately black organizations and institutions. Aligning closely with strategic planning initiatives of Howard University, 8 including

brewing programs and establishing local partnerships with microbreweries will enhance academic excellence, inspire new knowledge, serve the black community, improve efficiency and effectiveness, and help achieve financial sustainability through the introduction of diverse revenue streams, asset acquisition and management (e.g. capital investments in microbreweries).

Understanding that with any new business market, creativity and willingness are the cruces of growth and success. As a budding industry, the craft beer scene gives a tremendous amount of opportunity for black business owners, investors, and students to expand their social, economic and environmental capital. There was once a time where these predominately white breweries did not have space for people of color. 9 Numerous studies 10,11 have explained that diversity in the brewing industry did not come easy. Interested brewers went to speak with brewing industry [employers] in the ’50s, and they tell them, ‘There’s no place for blacks, skilled or unskilled, in our breweries.’ Today, we have the power to educate ourselves and those around us to be skilled, informed and wealthy members of the craft brew industry.

Notes:

1 – Peterson, Eric. 2019. Education on Tap: Area Schools Prep Students for Beer Careers. Colorado Biz;46(6):68-75. 2 – Gibbs, Adrienne Samuels. 2011. Beer….66(5):64. 3 – Luft, Harrison, 2016. Cultural Capital: An Investigation in Community Sustainability. Independent Study Project (ISP) Collection. https://digitalcollections.sit.edu/isp_collection/2298 4 – https://www.brewersassociation.org/insights/shifting-demographics-among-craft-drinkers/ 5 – Crescenzo, Sarah. 2017. Betting on Beer. San Diego Business Journal [Internet]. [cited 2019 Dec 3];38(48):44-45. 6 – Nguyen, Cox, and Rich. 2019. Invest or regret? An empirical investigation into funding dynamics during the final days of equity crowdfunding campaigns. Journal of Corporate Finance 58:784-803 7 – Micic, Igor. 2015. Crowdfunding: Overview of the Industry, Regulation and Role of Crowdfunding in the Venture Startup. Hamburg: Anchor.p. 14-44. 8 – Howard Forward: Envisioning the Future. https://magazine.howard.edu/categories/featureshomecoming/howard-forward-envisioning-future 9 – Herz, Julia. 2019. The Diversity Data Is In: Craft Breweries Have Room and Resources for Improvement. Communicating Craft [Internet]. Brewers Association 10 – Sugrue, Thomas. 2005. The Origins of the Urban Crisis: Race and Inequity in Postwar Detroit. Princeton University Press. 11 – Pokrivicák, Ján, Soña Chovanová Supeková, Drahoslav Lancaric, Radovan Savov, Marián Tóth, Radoslav Vašina. 2019. Development of beer industry and craft beer expansion. Journal of Food and Nutrition Research. 58(1):63-74.