A Frightening Trend?

The United States may have a frightening trend on its' hands with the closure of more and more breweries around the country. THEbreweryauthority makes it a priority to follow along with every brewery we have visited on social media and lately, especially starting towards the end of 2023, we have noticed an increase in the amount of breweries announcing closures. Sure breweries come and go, but it's always been more coming than going. In fact, there are STILL more breweries opening in the United States than closing. However, this scary downward trend may just be beginning.

Why are are so many more breweries closing up shop now even more so than just a year ago? Well like every complicated economic issue there are multiple reasons why the industry is seeing this down turn. We are no economists so all we can do is base our theory off our experiences and what we see going in the world around us.

Lasting Effects of Global Shutdowns

This one is perhaps the most obvious and most direct cause of all the closures. We all did our best as consumers to help keep our little local breweries afloat during the pandemic by getting beer to go and frequenting their establishment as much as possible. But I'm sure many breweries took out loans to make ends meet or made unnecessary expenditures trying to get into the canning and beer shipping game.

So many negative effects of the pandemic are still visible and some, especially those in competitive markets, simply couldn't keep their head above water long enough. This goes for all businesses, just not the brewing industry. However, when so much of your income is dependent upon in-person sales, there comes a time when simply breaking even can't work any more.

As we all know the shutdowns lead to global delays in all sorts of products necessary to the brewing industry. To make matters worse those products shot up in price if you were lucky enough to get your hands on them. Grain, yeast, cleaning products, and so much more became harder to acquire and more expensive. Just another gut punch to brewers in the United States and around the world. One may say the global shutdowns caused EVERY problem on this list, either directly or indirectly.

Non Beer and Non Alcoholic Options

We have seen a substantial increase in both alternatives to beer and non alcoholic beers in recent years. One heavy hitter is the seltzer market, which many breweries seemed to catch onto initially, but have given up hope with big seltzer companies like White Claw and Truly dominating the market. Cider and Mead have also seen an increase. It seems every area we travel to has at least one cidery or meadery neighboring their brewery counterparts.

Non alcoholic beer has also seen an increase. Many breweries we visit offer at least one non alcoholic beer and all seem to offer SOMETHING non alcoholic like their own root beer. However, many people are simply not drinking as much any more, whether it's for health reasons or whatever. That is perhaps the most bewildering question....where have all the craft beer drinkers gone? Ok well they haven't disappeared, not by a long shot, but you do see a decrease! Unrelated, but Other Half Brewing makes the best NA!

Market Competition

Even though we have an astounding number of breweries closing, like stated earlier, the overall number is still increasing. The majority of brewery closings seem to be in highly competitive markets. Take a city like Denver for example. You better make damn good beer, have a great location, built an amazing looking taproom, or all of the above if you want to succeed in that market! You may be better off being the only brewery in a small town, which seems to be the less risky option any more.

Minneapolis/ Saint Paul is another great example. THEbreweryauthority was there about a month ago (at the time of writing this article) and already 2 of the breweries we visited have announced their closure! We won't name names, but those two breweries definitely DIDN'T standout so it's no surprise.

It seems as through we will soon reach a point where one brewery opens and another closes. Hopefully the better brewery is the one opening, and a low quality brewery closes.

Over Expansion

One major issue we have seen up close is breweries over expanding their operations too quickly. This can mean a few different things. Firstly, hastily opening several locations too quickly. A brewery in our home state of Pennsylvania, Tattered Flag Brewing, is a perfect example. The original brewery opened less than 10 years ago and made some great beer. They were one of those highly rated breweries you travel for. With that success came aggressive expansion with locations in Gettysburg, Hershey, Lancaster, and even inside a casino. The quality dropped quickly with old cans and boring recipes which lead to unsold beer and empty taprooms. Well now Tattered Flag is just a memory, closing every location including the original.

Another Pennsylvania brewery with over expansion problems was Liquid Art Brewing aka Roy Pitz Brewing. Like Tattered Flag, Liquid Art opened up several locations across the state including a brand new one in Gettysburg, only to close months later. They even tried an aggressive rebranding with the new name, but clearly did not succeed. Seeing a trend?

Another issue with over expansion is breweries getting into the distribution business too early. Distribution is great for getting your name out there, but with distribution comes added cost and less profit, so you better sell a lot of beer! These breweries either had to buy a canning line or pay a contractor to come in and can for them. Some may do contract brewing as well. All these eat into those profits and that doesn't even count the distributor taking their cut or wholesale price. Don't get me wrong, this can be a great way to build your brand but it must be done correctly, taking every aspect into consideration.

Bad Beer, Bad Brewing Practices, Bad Marketing

This reason may fall under the competitive market umbrella, I feel it's worth mentioning for the brewing industry. Beer is great, but sometimes brewers get lazy or a little too imaginative. I hate going into a brewery and seeing 4 beers on tap - a cream ale, a red ale, a basic IPA, and a porter. YAWN. At the same time you get brewers getting crazy with styles like a barrel aged glitter orange banana IPA. As Jeff Goldbloom said, "Your scientists were so preoccupied with whether or not they could, they didn't stop to think if they should." In both these situations you turn off certain customers. Just make unique, high quality beer! Oh and clean your draft lines!

You will get bad quality beer when brewers use bad brewing practices like not cleaning equipment properly, using lackluster ingredients, or something small like not filling their cans all the way or getting flat beer in a can. All this adds up to a negative experience for the consumer. You're not the only brewery in town any more so you can't get away with those lazy practices!

Social media is important and some breweries just don't get that. You don't need a viral or trendy post every day, but regular reminders to your customers that you exist is very important. Tell them about the new beer this week or the trivia night coming up next month. Take a fancy picture of a beer or a quick video of the brewer mashing in. ANYTHING to get your customers excited about drinking your beer. So many breweries go dark for too long.

Countless Reasons

These are just some of the reasons why we have seen such a downturn in the craft brewing industry and clearly there are many more factors going into all this. Hopefully 2023 was a minor hiccup and 2024 will see breweries steady the ship. Alcohol in general is a recession proof industry, however, the pendulum can swing from craft beer to wine to seltzers over the years. One thing is for certain. Beer will never go away completely, but WILL change over and over again.

Have you noticed this trend? Can you think of or have you seen other reasons for these brewery closures? Let us know!

Cheers!