Craft Brewing’s ‘Painful Period of Rationalization’ Is Here. Finally.

Well folks, it finally happened. In 2024, the number of craft breweries that closed was bigger than the number of those that opened.

With respect to all the breweries that went out of business last year: This is fine. This had to happen. Frankly, it should’ve happened already. The bubble hasn’t burst, craft beer isn’t dead. The American craft brewing industry’s closure rate was an ahistorical monkey on its back, and now it’s gone. I’d even venture so far as to say it’s probably for the best.

Earlier this week, The New York Times published a report pegged to the opening/closing flip-flop by longtime beer journalist and VinePair contributor Josh M. Bernstein titled “Has the Craft Beer Industry’s Keg Finally Kicked?” If you, like me, were repeatedly sent this article by normie friends and family wondering whether the jig was indeed up on full-flavored beer, I encourage you to take a moment to respond with a link to the Wikipedia entry for Betteridge’s law of headlines. For the uninitiated, it goes as follows: “Any headline that ends in a question mark can be answered by the word no.”

“Has the craft beer industry’s keg finally kicked?” wonders the Gray Lady above Bernstein’s otherwise solid procedural on the segment.

“No,” responds Ian Betteridge. Your humble Hop Take columnist concurs.

This isn’t to say 2024 was a good year for craft brewers. Far from it. Once the dust settles and the data are tabulated, the segment will likely finish out 2024 with production volumes down 2–3 percent, according to a mid-December projection from the Brewers Association (BA). Distributors and retailers shifted focus to imports, flavored malt beverages, and non-alcoholic offerings. Draft, the channel in which craft brewers have overindexed for decades, still struggled. Big honkin’ juice bombs in the Voodoo Ranger mode are not the panacea they once seemed to be, and the craft brewers that tried to find “their take” on hard seltzer mostly got taken for a ride. The mergers-and-acquisitions bonanza of last decade reached its logical conclusion in 2024, with every major macrobrewer in the country shedding some or all of their craft brewing portfolios. Barely anybody was buying craft breweries besides Tilray Brands or other craft breweries, and while the former’s chief executive claims to have a strategy to restore the segment writ large, the latter are mostly hunkering down to weather the “second shakeout.”

They’re the lucky ones. The BA’s 2024 Year in Beer recap, published Dec. 10, cited 399 breweries closed last year, compared to just 335 openings. “Craft has been going through a painful period of rationalization,” incoming president and chief executive Bart Watson said in a statement. In comments in a webinar on the year-end materials reported by Brewbound, he noted that the segment’s closure rate, while now in the red for the first time since 2005, is “still low” compared to the hospitality sector at large. But it will likely get more painful from here: Watson anticipates the trend to continue into 2025.

I feel for the brewers that went bust last year. Some of them did everything right and still went wrong. Others didn’t do everything right, but would’ve enjoyed plenty of breathing room to figure it out if they’d only opened last decade, when the tailwinds were strong and the BA was envisioning craft beer making up 20 percent of the overall share of U.S. beer sales by 2020. “We had a plan and a backup plan and another backup plan,” the owner of Steam Bell Brewery in Chesterfield, Va., told the Richmond Times-Dispatch in August, describing why the brewery was closing after eight years in business. “They all slowly fell through.” How many versions of that story did you encounter last year in heartfelt social media posts or over farewell pints in too-empty taprooms? I lost count, reader. It’s a bummer, no two ways about it.

Here’s the thing to remember as you zoom out on the individual brewery closures and try to decipher what it means for the industry that remains. The craft brewing boom that started in the late aughts and continued through most of last decade was never going to last. The country went from around 1,500 breweries in 2010 to around 9,500 in 2020, an astonishing uptick well north of 500 percent. You know how sometimes when I’m writing about a hot new product posting astronomical year-over-year sales growth, I note that those gains should be taken with a grain of salt because they’re coming on a small base? The same basic caveat applies when pondering the trajectory of the craft brewing segment. Yes, the number of craft breweries grew like gangbusters for a decade, stoked on by genuine drinker interest and low-interest loans. Then it flattened out, because there were fewer and fewer places in the country that might be able to sustain breweries that didn’t already have one (or several). In 2024, it has ever so slightly decreased, and it probably will in 2025, too. So it goes in once-hot industries: they eventually cool off.

This is cold comfort for the owners and workers whose breweries went bust, and the drinkers who spent time (and hopefully money, albeit not enough in the aggregate) establishing their taprooms as community hubs, tabletop gaming destinations, and so forth. But there are three silver linings to this contraction for the craft breweries that are still in business.

The first is that there are bargains aplenty for those operators in position to take advantage. When Orpheus Brewing closed in Atlanta in 2023, Good Beer Hunting (now itself defunct, sadly) reported the brewery sold its canning line and depalletizer for less than than a tenth of what it’d paid for them new. “You’re going to end up with a lot [of equipment] that doesn’t sell and just gets scrapped, because there’s just so much excess capacity,” predicted founder and brewmaster Jason Pellet in June of that year. Some 18 months later, Bernstein tells the other side of this story, reporting how Tennessee’s TailGate Brewing, with a whip hand at the right time, has scooped up an $80,000 grain silo for $500 and a $750,000 centrifuge for $50,000. “It’s a buyer’s market,” another brewer told the Times. Indeed.

The second is that the craft beer market has been a chaotic, confusing hodgepodge for a while now. A lot of craft breweries were taking up space on shelves and tap towers with mediocre beer, turning off consumers, overwhelming retailers, and annoying the shit out of distributors. In August 2024, Left Hand Brewing’s co-founder Eric Wallace outlined his plan to build a craft-brewing platform to produce beer and other beverages more efficiently than existing firms could do solo. He was careful to emphasize to Brewbound that Left Hand wanted to partner with brands “assuming that [they have] a reason to be in the market.” Wallace knows from what he speaks, having weathered craft brewing’s first shakeout in the late ‘90s and early aughts. Some of the breweries that closed this year didn’t have a reason to be in the market, and simply weren’t built for it.

The final reason I think the BA’s latest closure numbers are no death knell for the American craft brewing industry is more abstract. Follow me here. In 2018, right as the segment’s exceptional heater was starting to peter out, The Atlantic published a story calling craft beer “the strangest, happiest economic story in America.” It codified for a mainstream readership much of the self-mythologizing that first- and second-wave craft brewers had done about the business: that theirs was a David-and-Goliath battle against Big Beer; that the three-tier system, odious as it may be to some of its participants, had created an extraordinary opportunity for small, independent breweries to thrive; that the Great Recession created a cohort of “necessity entrepreneurs” who could unlock value that bigger firms couldn’t. All of these claims — and more quippy insider slogans like “a rising tide lifts all boats,” and “craft beer is 99 percent asshole-free” — had kernels of truth to them, of course. But together, they evoke an industry that has traded on exceptionalism with its customers, and itself.

Craft beer is wonderful, but it’s not exceptional. It is subject to the same forces that shape the rest of our economy, like corporate union busting, sexual harassment, and natural disasters. For much of last decade, it seemed like the segment had exempted itself from the downward pressure of commodity and the capriciousness of consumer tastes. If you wanted to be convinced that craft brewing would always keep growing — that brewery openings would always outpace closures, until such time that there was a brewery on every corner of the country — there were plenty of people out there ready to convince you, often right before asking you to sign a lease or cut a check. But the line couldn’t go up forever, and it hasn’t.

I don’t expect the craft brewing industry to magically rebound this year just because the closure rate finally flip-flopped. I do expect the brewers that remain to be that much more serious to stay on the right side of it, and best of luck to them. The mirage of an exceptional craft brewing industry is dead, and craft brewing is still alive. That silver lining shines pretty darn bright to me.

🤯 Hop-ocalypse Now

For decades, Boston Beer Company’s co-founder and chairman Jim Koch liked to tell people that his succession plan was “don’t die.” The morbid humor hits different now that the elder statesman of American craft brewing is 75 years old. Lo: On Christmas Day, The Wall Street Journal published a little Samuel Adams scoop noting that in the event of his death, Koch now plans to pass off his Class B shares — and with them, de facto control of the publicly traded firm — to his wife, health care entrepreneur Cynthia Fisher. (She’s 63, and a board member at BBC.) Times, they are a-changin’.

📈 Ups…

Beer, not Champagne, is the drink Americans planned to purchase most for New Year’s Eve, according to a late December survey from Numerator… Mass Bay Brewing Co. and Finestkind Brewing have merged into the Barrel One Collective, a 14-brand New England craft roll-up..

📉 …and downs

The National Beer Wholesalers Association’s final Beer Purchasers’ Index of the year was an improvement over the prior three months, but still below its 10-year average… Private control of the U.S. hop crop ticked upward to 63 percent in 2024, per the just-dropped USDA Hop Report…

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