LOS ANGELES — For the first time in history, the U.S. craft beer industry is seeing more brewery closures than new openings, as mounting costs and shifting drinking trends put small brewers under financial pressure.
According to the Brewers Association, rising costs for key ingredients such as grain, raw materials, and shipping, combined with a nationwide decline in beer sales, are contributing to the industry’s struggles.
Impact of the Pandemic and Economic Shifts
The challenges facing craft breweries began during the COVID-19 pandemic and have persisted as economic conditions continue to evolve. Bart Watson, president and CEO of the Brewers Association, explained that the pandemic had far-reaching consequences on the economy and supply chains, which in turn altered consumer behaviors.
“The pandemic obviously also had secondary ripples for the economy, for supply chains, and it changed consumer patterns overall,” Watson told FOX Business.
While bars and restaurants have seen spending levels return to pre-pandemic norms, consumer habits have shifted significantly. Many now prefer to purchase beer for takeout or delivery rather than enjoying it in taprooms, contributing to a decrease in on-site consumption.
Declining Beer Sales and Regional Impact
Nationwide, beer sales dropped by 2% in the past year, with some regions, like Colorado, seeing a 3% decline, according to the Colorado Liquor Enforcement Division.
States with the highest number of breweries, including Colorado, California, Pennsylvania, and New York, have been hit hardest. In Colorado, brewery closures outnumbered new openings, despite the state being home to the fourth largest number of breweries in the country.
The Pacific Northwest and West Coast have also experienced significant closures. “Some of the most challenged regions are some of the most developed, like here in Colorado, the Pacific Northwest, and the West Coast in general,” Watson added.
As the craft beer industry navigates these pressures, the path ahead remains uncertain, with breweries across the country continuing to adjust to the new economic landscape.
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