Quality of Life in Potential Expansion Locations is Important to Craft Brewers

Traditional rm location theory (Weber, Moses, Hotelling, etc) explains rm location decisions in terms of factor prices, relative transport costs of inputs and outputs, and strategic moves to gain spatial monopoly over markets. While these remain centrally important, a number of rms selling directly to consumers have begun to make public claims about the importance of local culture in location decisions. The craft brewery industry is one with the potential for many secondary factors to play a role in location decisions because many breweries treat the production facility as a flagship store. In addition, many recent long-distance expansions have been highly publicized with companies, economic development officials, and elected representatives identifying reasons for choosing a location. We analyze the location decision of Sierra Nevada's expansion to Mills River, North Carolina, to determine the relative importance of factors contributing to the location decision. We compiled and analyzed public statements about the expansion location decision made by brewery executives, site consultants and public officials in press releases, blogs and newspapers. We also spoke with people involved in the location decision process. We focus on the four groups of factors: traditional location factors (market size and distance, transportation, cost of inputs), agglomeration and clustering (specialized labor force & support services, mutually supportive competition, education), taxation and regulatory factors (public services, legal framework, tax incentives), and quality of life (cultural amenities, recreation). We found there was a strong focus on quality of life factors and these factors were closely tied to the characteristics that set Sierra Nevada beers apart from other regional craft beers.