Description:
This paper investigates the growth and clustering of craft breweries in New Jersey. We compiled a historical dataset from 1995 to 2020 that allows us to measure the degree of geographic clustering among craft breweries in New Jersey. The number of craft breweries in New Jersey grew 491% from 2012 to 2020 (from 22 to 130 craft breweries). An impetus for this growth was that New Jersey enacted legislation in 2012 that made opening and operating a craft brewery in the state more economically viable. Our analysis finds that craft breweries in New Jersey are clustering in specific parts of the state and that this is likely due to co-location benefits such as building a culture of craft beer that drives innovation, knowledge sharing, customer sharing, and a thicker labor market. While distinct craft beer clusters have formed in New Jersey, we find there is still significant opportunity for growth. Our analysis confirms this using data on planned craft brewery openings to measure changes in the size and density of clusters and where, in New Jersey, new clusters are likely to form.