Craft Brewery Industry Faces Turmoil as Iconic Beer Brands Falter

 

Craft Brewery Industry Faces Turmoil as Iconic Beer Brands Falter

Amidst a challenging time for beer enthusiasts, the beer industry is witnessing the struggles of several well-known brewers. Surprisingly, the setbacks faced by Bud Light, partly due to its marketing association with transgender social media influencer Dylan Mulvaney, haven't necessarily benefited smaller brewers. Once a dominant force in the United States, Bud Light has experienced a significant sales decline of over 25%, leaving many to wonder where those customers have turned for their beer fix.

Curiously, the hurdles faced by Anheuser-Busch In-Bev's brand seem to be contributing to the growth of other mass-market beer producers. Brands like Modelo, which now holds the title of the world's best-selling beer, along with Coors Light and Miller Lite, have seen an increase in their market shares.

While craft brewers have been grappling with challenges since the COVID-19 pandemic, it appears that the craft beer boom may have reached its zenith. The consequences of this shift are already evident, with the closure of historic establishments like Anchor Brewing Company, a San Francisco institution that had been in operation since 1896.

The decline of Anchor Brewing is not an isolated case. A simple Google search for "craft brewery closing" reveals numerous headlines about local craft breweries shutting down. An Oregon Public Radio story titled "Is peak craft beer over?" highlights the local impact, mirroring a nationwide trend.

Within the last month, seven breweries and taprooms in Portland have either closed or announced their impending closure. Rising operational costs, shifting consumer drinking habits, and the lingering effects of the pandemic have all played a role in this market evolution.

The trend of struggling breweries has now claimed another name.

Craft Brewery Files for Chapter 11 Bankruptcy Protection

Partly attributing their struggles to the COVID-19 pandemic, regional breweries have found themselves in a tough spot. These breweries often rely on taprooms to supplement their revenue from regional retail sales. When they lost the income from in-house sales, their wholesale operations couldn't cover their rent expenses.

Metropolitan Brewing, one of Chicago's oldest craft breweries, founded in 2008-2009, has resorted to filing for Chapter 11 bankruptcy, primarily due to an inability to pay accumulated back rent.

The brewery, which boasts around a dozen unique beers on its website, has openly discussed its filing on its Facebook page.

"Yes, it's true. Earlier this week, we filed for Chapter 11 bankruptcy protection. This is the 'reorganization' type of bankruptcy, meant to help us right our ship. The details are super boring. Importantly... We are still open, and we have no current plans to change that status," the company's owners shared.

The company's Chapter 11 filing points to their rent as a significant source of trouble. In 2017, the brewery moved to a new and more expensive location.

"The bankruptcy is being filed because while (Metropolitan) can pay market rent for the brewery space going forward... there is no way the (brewery) can ever repay the amount of back rent the landlord is seeking," as reported by the Chicago Tribune.

Brewers Face Broader Challenges

Even though Metropolitan's owners maintain a positive public image, their filing makes it clear that the company requires either new ownership or a comprehensive restructuring to secure its survival.

"We still have plenty of fight in us. And we still believe in the beer we brew. We'll get through this. It will just be easier — and way more fun — if you join us," the company expressed in a post, emphasizing that they remain open year-round.

However, the problem may extend beyond rent for Metropolitan. Larry Clouser, a brewery owner with multiple establishments in Oregon, shed light on the challenges confronting the industry in an interview with KGW8.

"Honestly, it's not just Portland; brewery sales are down nationwide," Clouser stated.

Brewers are grappling with shifting trends that are impacting their businesses.

"Wine is hot, spirits are hot, beer is hot, craft beer is hot, craft beer is cooling down, craft beer is hot again," said Alan Taylor, co-owner of Zoiglhaus Brewing Company.