Is the Beer boom over in America? Craft breweries struggle with rising costs & inflation
The U.S. craft beer industry is facing a major downturn, with more breweries closing for the first time. Rising production costs, shifting consumer habits, and economic challenges have hit independent brewers hard, leading to declining sales and widespread closures.
The craft beer industry, once a booming sector in the U.S., is now facing an unprecedented decline. For the first time, more craft breweries are shutting down than opening, signaling a shift in consumer preferences and economic challenges. Rising costs for raw materials, increased shipping expenses, and changing drinking habits have all contributed to this downturn.
Colorado, a state known for its strong craft beer culture, has been among the hardest hit. Despite having the fourth-highest number of breweries in the country, behind Pennsylvania, New York, and California, the state has seen an alarming rate of closures. Industry experts point to the lingering effects of the COVID-19 pandemic, which disrupted supply chains and shifted consumer behavior toward more takeout and delivery options.
Craft breweries struggle with inflations across the U.S.
For the first time, more craft breweries are closing than new ones are opening. Rising operational costs and a decline in beer demand have put pressure on the industry, according to the Brewers Association.
Bart Watson, the president and CEO of the Brewers Association, noted that the COVID-19 pandemic exacerbated challenges for many craft breweries. "The pandemic had lasting effects on the economy, supply chains, and consumer habits. While people are still spending money at bars and restaurants, they are doing so differently—opting more for takeout and delivery," Watson explained.
Companies struggles with inflation in America. Photo: iStock
Colorado, the state who suffers the inflation of beer in America
Beer sales declined by 2% nationwide last year, with Colorado experiencing an even steeper drop of over 3%, according to the Colorado Liquor Enforcement Division. Despite having the fourth-highest number of breweries in the U.S., behind Pennsylvania, New York, and California, Colorado saw a significant number of closures. Watson added that the most impacted areas are those with well-established craft beer markets, such as Colorado, the Pacific Northwest, and the West Coast.
Patrick Toland, manager at Cabin Creek Brewing in Georgetown, Colorado, shared how his brewery, which opened in May 2020, has struggled with increasing costs. "The price of raw materials, especially grain, has gone up. Shipping costs have skyrocketed," he said. Cabin Creek is now the only brewery in Georgetown after another local establishment shut down. To stay afloat, Toland has raised prices, expanded the menu, and adapted to changing trends, including offering non-alcoholic and alternative beverages in response to shifting consumer preferences.