Business is Hopping: The Effects of Deregulation on Southern Craft Beer

Utilizing a novel data set, we examine market entry of craft brewers in the southern United States given changes in alcohol regulation. Since 2010, many southern states have increased sales access of brewers to customers, allowed for greater volumes of alcohol to be sold, and raised alcoholic content limits for beer. We empirically investigate the effects of state policy changes using annual data for the number of microbreweries and brewpubs in operation by state from 2000-2018. We conclude that the deregulation of the craft beer industry in these southern states has encouraged new brewers to enter the market.