Campfire Dance Brewing - Market Research

Summary

The goal of this project was to answer business questions on the potential expansion of a fictitious craft brewing company—Campfire Dance Brewing. To do this, I conducted market research and data analysis that I turned into a report for C-Suite decision makers.

Report Navigation

Is now a good time to expand?

Where should the company build the next brewery?

What style of beer should the company be offering?

Conclusion

Is Now a Good Time to Expand?

BLUF Despite the potential that the craft beer market is taking a down turn, there are still opportunities for expansion

Figure 1

Cumulative Tax Revenue Growth for All States

Figure 2

Year-over-Year Tax Revenue Growth for All States

Though tax revenue is increasing (Figure 1), average tax revenue growth year-over-year shows a sharp decrease after 2015 (Figure 2).
This may indicate that the craft beer ‘bubble’ has burst and the market is correcting itself.
For tax years 2007-2015, California led all other states in terms of pure tax revenue (Figure 3 below).

Figure 3

Tax Revenue by State from 2007-2015

For the same time period, Montana showed the most significant year-over-year tax revenue growth—well above 100% (Figure 4 below).

Figure 4

Highest ranked states by Year-over-Year Tax Revenue Growth 2007-2015

For tax years 2015-2018, some states still showed solid year over year growth despite market corrections (Figure 5 below).

Figure 5

Highest ranked states by Year-over-Year Tax Revenue Growth 2015-2018

Where Should the Next Brewery Be Built?

BLUF Market saturation definitely exists in certain areas. However, there are more than ample opportunities for expansion in the midwest.

Having a large drinking-age population is a significant consideration in choosing a location (Figure 6 below).

Figure 6

Top States by Drinking Age Population

Locating a market that is not oversaturated, yet with a healthy craft beer market is also key (Figure 7 below).

Figure 7

Top States by Number of Craft Breweries

What Style of Beer Should the Company Be Offering?

BLUF Research shows that we shouldn't hop on the IPA bandwagon but should instead focus on crowd pleasers with slightly higher than average ABV

The number of reviews a beer style receives does not correlate to a top-rated beer. American IPA, the most reviewed style, doesn’t make the top-20 best rated beer styles.

Figure 9

Highest Rated Beer Styles

Figure 10

Top Beers by Number of Reviews on Beeradvocate.com

Knowing the highest rated beer styles, I endeavored to determine if alcohol by volume (ABV) played any role on a beer’s review score. The below chart shows no statistically significant correlation between ABV and final beer review score (figure 11 below).

Figure 11

Correlation Between Beer Rating and ABV

Despite the above, further data analysis does reveal a trend between beer style review score and ABV
The highest rated beer styles tend to have higher than average ABV and the lowest rated beer styles have a lower than average ABV (figures 11 and 12 below).
Based on this, the Company should not focus solely on making the strongest beer possible but it should remain a consideration.

Figure 12

ABV of Top Rated Beer Styles

Figure 13

ABV of Bottom Rated Beer Styles

Conclusion

Based on EDA and data visualization, I can recommend that now is a good time for expansion if year-over-year growth, market demographics, and market saturation are taken into account. One of the best states for expansion, based on my analysis, is Texas.

Regarding beer styles, diversifying with some of the higher-rated beer styles on a rotational basis might keep customers coming back for more. A focus on slightly higher than average ABV stouts and Belgians is ideal.