In 1989, Phil Bannatyne opened Cambridge Brewing Company in Cambridge, Mass., with a monumental mission “to teach people what craft beer could be,” he said.
Over the next three decades, Cambridge Brewing introduced patrons to spiced pumpkin ales and robust barley wines. Regulars filled seats from lunch to last call, sometimes visiting four times per week.
But as the brewpub grew older, its clientele dwindled and wasn’t replaced by younger drinkers. That, compounded by declining foot traffic, fewer office happy hours and growing competition, spelled the end for Cambridge Brewing. On Dec. 20, Mr. Ballantyne, 68, closed the business and retired. After a 35-year run, “we accomplished our mission,” he said.
The creativity and proliferation of craft breweries has permanently expanded America’s beer fridge, from bland lagers to bold I.P.A.s and barrel-aged stouts. Today, the majority of Americans live within 10 miles of a brewery, according to the Brewers Association trade group, with the number of producers ballooning from just 89, in 1978, to 9,906, in 2023. As a result, the craft brewing industry employs around 460,000 people nationwide.
“What better story of the American dream is there than all these breweries?” said Josh Deth, who founded Revolution Brewing in Chicago in 2010.
But after an extended period of breakneck growth, the number of breweries declined this year, with 335 craft breweries opening and 399 closing, according to the Brewers Association.
This string of closures is symptomatic of an overall decline in beer drinking as the industry has steadily lost market share to spirits, flavored malt beverages, hard seltzers and other alcoholic drinks.
The slowdown is a “painful period of rationalization,” said Bart Watson, the Brewers Association’s new president and chief executive, in a statement. He described the brewery closures as reflective of a “more normal maturing market,” one where small businesses regularly open, close and run their course. “Consumer tastes change.”
Revolution Brewing in Chicago began as a neighborhood brewpub that helped revitalize Logan Square. As demand grew for beers like Anti-Hero I.P.A., Mr. Deth decided to open a production brewery in 2012.
Over time, however, producing six-packs and kegs proved more profitable than operating a restaurant, and Revolution closed its brewpub on Dec. 14 to prioritize production.
From raw materials to batch size, brewing is a low-margin business built on economies of scale, and it’s tough for small craft breweries to can four-packs of I.P.A.s that can compete, price-wise, on store shelves. The business model “doesn’t work anymore,” said Sam Hendler, an owner of Hendler Family Brewing Company in Framingham, Mass.
To keep its fermenters full, the company produces its Jack’s Abby lagers, contract brews for other brands and, this year, purchased the Massachusetts breweries Night Shift and Wormtown. The consolidation has made Hendler Family the largest craft beer producer in Massachusetts, concentrating resources in a single brewery.
“Those three brands were brewing in three production facilities with three brewhouses, three rent payments, three heat bills and three AC bills,” Mr. Hendler said.
Throughout the 2010s, craft breweries helped revived manufacturing in New York City, where Gun Hill Brewing Company opened in the Bronx in 2014. While brewing in New York City was never cheap, the ever-climbing cost of utilities and rent, including a nearly 30 percent hike on a new lease, led Gun Hill to shutter its Bronx brewery and tasting room in May. The company then outsourced beer production to Vosburgh Brewing, in Elizaville, N.Y., where Kieran Farrell, a Gun Hill owner, is also an owner.
“That move was a lifesaver,” said Dave Lopez, a managing partner. This October, Gun Hill opened a larger taproom, in Brooklyn’s Industry City development, inviting the recently shuttered Endless Life Brewing to share the space.
Cutting overhead “gave me a way to keep Endless Life alive,” said Jeff Lyons, the owner of Endless Life. (He also brews Gun Hill’s taproom beer.)
Not every pivot and adaptation succeeds. Sara and Sam Kazmer began building Elsewhere Brewing in Atlanta in March 2020 but delays brought on by the pandemic depleted cash reserves in advance of the opening in October of that year. The Kazmers tried drawing customers with cocktails and nonalcoholic drinks, hosting drag brunches, serving smash burgers, and opening a second location for another beer-sales venue.
“We checked all the boxes and it wasn’t enough,” said Ms. Kazmer, who watched the couple’s debt load increase. In March, when Ms. Kazmer discovered she was pregnant, “we were like, ‘Why are we doing this?’” she said. The couple closed Elsewhere this October, welcoming a newborn daughter one month later.
The only bright side might be that the stream of closures is flooding the market with used brewing equipment sold at bargain prices. Wesley Keegan, the founder of TailGate Brewery in Nashville, recently bought a grain silo for $500 — an identical model cost him $80,000 in 2016. The company, which bought and opened its eighth Tennessee taproom this year, also spent $50,000 on a large centrifuge that retailed for around $750,000.
“We would never buy that new,” Mr. Keegan said.
Even amid the downturn, some brewers view the depressed market with optimism. Like a new restaurant opening in an old one, a shuttered brewery can offer a turnkey opportunity.
In November, Jacob Kemple and Alyssa Hoberer, both longtime Denver brewers, leased Jagged Mountain Craft Brewery, a downtown Denver brewery that closed in October after an 11-year run, and will convert the space into a new brewery called Full Frame Beer. The deal included the brewing system, discounted rent and even Jagged Mountain’s van.
“It’s a buyer’s market,” Mr. Kemple said.
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