After the heady days, a sobering trend: More craft breweries close than open

Americans are drinking fewer alcoholic beverages than at any time in recorded history

The trend is driven by a decline in young people imbibing. The adjustment in consumption has taken a toll on craft breweries throughout the nation

forcing some to close and others to adapt to keep their doors open

I had no prior experience other than I enjoyed a cocktail from time to time and obviously a beer from time to time

but I was in insurance and financial services for 29 years. Jerry Scholes, along with Ryan Kolka and Mark Cotter, are partners with Gray Duck Spirits out of Minneapolis, Minnesota

Back in 2017, we had the end zone celebration on Monday Night Football, where Kyle Rudolph scored a touchdown late in the game

He got the guys in a circle to play Duck Duck, and he said Goose

The Gray Duck is part of the Minnesota identity. Kids in schools throughout the country play a game called Duck Duck Goose, but not in Minnesota

Kids there play Duck, Duck, Gray Duck. And then everybody in Minnesota lit up and said, hey, it's not Duck, Duck, Goose in Minnesota

It's Duck, Duck, Gray Duck. Knowing a goose already existed in the vodka space

I thought it might be a good idea to create our own vodka if it didn't exist. And the founders of the company filed the trademark the very next day

In the years since the launch of the vodka, they've taken on bourbon, beer, seltzers, and THC beverages

Sports has been a huge part of the brand's success, thanks to a current partnership with the Minnesota Twins and the Dinkytown Athletes Collective

the organization handling name, image, and likeness deals for the Minnesota Gophers

But while Grey Duck got through the growing pains to offer a number of options

not every brewery has had the same luck. To understand why we got to take our time machine back 10 to 15 years We were seeing growth in consumer demand and that was leading to expansion of where craft beer was sold

increasing market share, and an increase in the number of breweries. That was fueled by a bunch of stuff

Bart Watson is the president and CEO of the Brewers Association, a trade group representing 5,000 of America's small and independent craft breweries

According to his organization, in 2015, there were more than 4,800 craft breweries

Flash forward to the end of 2024 and there are more than 9,700

But concern is fermenting after more craft breweries closed than opened in 2024, causing the total number to decline for the first time in more than a decade

We're in a more mature market. Demand isn't growing the way it was

Interest rates are higher. Costs have risen. So it's a tougher demand environment. It's a tougher operating environment than it once was

And generally that means it's more challenging to be a small brewery than it was 10 or 15 years ago

There are a barrel of reasons for the industry's struggles. One reason is the decline in the number of young people drinking alcohol

According to Gallup, since the turn of the century, there are 11% fewer regular drinkers between the ages of 18 and 34

That same group is also cutting back by 1.6 drinks per week

With changes in consumption habits and the number of breweries doubling over the last 10 years

competition in the space is taking a toll. You know, where you might have been the only local brewery before

now there's almost certainly competition, no matter what business model you are

When you have a static market, right, if somebody's growing, that means they're taking share from somebody else

Meanwhile, in the decade plus since the start of the craft beer boom, the types of alcoholic beverages available on the market have exploded And now you know go to a supermarket in a store you know in a state where they sell basically everything You going to find hard seltzers hard kombuchas ready canned cocktails in some states hemp THC beverages You going to find competition

in terms of flavor and variety at a variety of ABV points that you didn't see 10 years ago

Some brew houses take an increase in choices as an if-you-can't-beat-em-join-em type of situation

I think you just need to be good listeners in any business, but especially for us

You just need to listen to, you know, what the consumers want. And the great part about Grey Duck is we've shown that we can be nimble, we can be flexible

While the beverage space has expanded with things like craft cocktails and seltzers

the craft beer space, especially in stores, has narrowed. And certainly post-COVID, I think one thing we saw is distributors and retailers chose to focus more on simplification

that they wanted fewer offerings, they wanted them to move a little bit faster

And that was a move away from more variety that we had seen

the 150 tap handle concepts that were very popular for a moment. But that doesn't mean your favorite tap room won't have a wall of oat sodas to try

And for a lot of craft brewers, selling right to customers is the most lucrative proposition

not to mention the FaceTime you get with fans. Really grow the tap room. Get back to the hyper-local, hyper-community-focused events that we do

Jeff Handajow is the co-founder of Houston Brewery 11 Below. He's no stranger to making a pivot to keep customers pouring through the doors

For example, during the height of the COVID pandemic, 11 Below upped their to-go offerings

which Jeff says wasn't a big part of the business before. We had our Taco Tuesday. That was born out of COVID

Taco Tuesday is our salt and lime margarita-style beer that literally came out of COVID

Remember it was kind of hot back in early COVID this kind of early summertime It became our number one seller that year Last year 11 Below made another major move to keep the business going

This was certainly a merger of three breweries, actually. It was ourselves

11 Below, B52 Brewing up in Conroe, and then Fortress Brewing, which is at the spring

If this merger hadn't happened, we would have closed our doors. I mean, And liquidation was really the only other viable option

The three breweries merged in an effort to maximize their strengths and reduce their costs

Not to go into financial structures or whatnot, just our bourgeois location was very expensive

The cost of real estate has been a major issue for a lot of breweries having to turn off the taps

I think the number one reason when we see closures is something related to lease costs

And that's a big consideration for breweries that kicked off in the last few years

Minnesota's Gray Duck handles the distilling of spirits on premises, but the other products are produced off-site

Gray Duck is also without a taproom location. It just never has been the right fit, and some of it comes down with, you know, cost and where you're going to put the space, what's it cost to lease it, all that fun stuff

Watson admits a lot of breweries have helped energize and revitalize areas of cities and towns throughout the country

And that can lead to being forced out due to cost. They were part of going into these areas that now cost a lot more

And we are recycling a lot of 10-year leases, which was really around the peak of the boom in terms of number of breweries opening

For Straight Arrow News, I'm Chris Francis. Maggie Gordon has an in-depth look at the situation and how it specifically affects Texas

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