Brewery Closures Are Going To Keep Happening

The Mass Brew Brothers recently posted two articles summarizing the changes in Massachusettes beer in 2019. The first covered the new additions to the beer scene, including the 28 new breweries, 9 new taprooms and 3 expansions that launched in the state this year. The second article covered the bad news, 12 breweries closed this year including some stalwarts of the local beer scene like Mystic Brewery, Lefty’s and Backlash (who just closed their taproom but are continuing as a contract brand). This is a change from many recent years, where there has been explosive growth fueled by tons of new breweries opening but relatively few closing. Unfortunately, I think this change will continue, while many new breweries will continue to open the growth in total breweries will slow as more breweries close. The twelve breweries that closed this year represents a “record” for the most closures in a year in Massachusetts, and I don’t think it will be a record for very long. Here are some reasons why I think there will continue to be an increase in breweries that close, and a few things that every brewery should do to stay relevant in an increasingly competitive marketplace.

Marshall Wharf Little Mayhem

Reasons why we are going to see more breweries close:

  1. More breweries exist. There are over 200 breweries in Massachusetts and over 7000 in the country now, each one with some potential to last for a long time as a successful business or to end up shut down for one reason or another. The growth has been incredible, but the rate has been unsustainable. We are now in the balancing stage, where we will find out how many breweries, and what volume of craft beer, the market will support. To be clear, I don’t believe this is a “bubble” where we will see a huge number of breweries start to close all at once or a decline in total number of breweries, this is more of a correction.
  2. Competition is fierce. For a long time there was a sense of camaraderie in the craft beer community as the small group of independent brewers took on the big beer corporations that dominated the market. That still exists to an extent, especially with big beer moving into the craft space with crafty brands and buyouts, but I think small brewers are realizing that they are also in competition with each other. There are only so many people willing to pay a premium price for 4-packs of NEIPA, and breweries that can’t attract those customers will struggle.
  3. Places that are stuck in their ways. Over the past few days Craft Beer Cellar in Belmont has been sharing its largest selling beer by volume for each year of the decade. The #1 beer in 2010 and 2011 was Pretty Things Jack D’Or. I absolutely love that beer and miss that brewery, but can you imagine any circumstances where a 750 mL bottle of saison was the #1 selling beer in 2019 or 2020? What is popular changes, and breweries that are slow to change with the times will get left behind. Breweries need to find the right balance between doing what they do well and what the market demands. For what it’s worth, the owners of Pretty Things have started a new brewery in the UK and still brew Jack D’Or, but they package it in 16 oz cans.
  4. Too much focus on chasing trends. While I think it is important to adapt with the times, it is also important for a brewery to maintain their identity. No one is interested in a brewery that is completely changing their lineup every single year to chase sales, and in the long run it hurts the brand if people have no idea what a brewery’s identity is.
  5. Running a taproom is necessary, but challenging and expensive. I believe the taproom model is here to stay, the beer is fresh, customer experience is king, and the margins are much better when the breweries sell directly to consumers. Running a successful taproom requires a whole range of skills beyond brewing great beer, and even a place selling an excellent product can fail if the location, atmosphere or staff make it so customers don’t want to return. Location is especially important in Eastern Massachusetts, where it is clearly a struggle to balance accessibility (especially being near public transit) against the incredibly high cost to rent or buy property anywhere within shouting distance of Boston.
  6. Mediocre or inconsistent beer. It wasn’t that long ago that any brewery could set up shop and immediately attract customers, almost regardless of the quality of their beer. Some of my favorite breweries started off making some hit-or-miss batches before they found their footing. That isn’t going to fly anymore, there is so much stellar beer available that even some breweries making excellent product are struggling to get by, and places that don’t make good beer are going to struggle
  7. It is tough for a small brewery to turn a consistent profit. Many of the smallest breweries are run by people still working full-time jobs while running the brewery on the side. While beer is a passion for many of these brewers, it is tough to keep pouring time, effort and money into a business if you are barely breaking even. This story fits a number of the smaller breweries that closed this year, and will continue to be the story for a percentage of small places each year going forward.

Allagash River Trip

Things breweries need to do in order to stay competitive:

  1. Every beer you sell should be great. Great breweries have extremely high standards for their beer and aren’t afraid to dump out a batch that doesn’t meet those standards. It sucks to lose the potential sales of a dumped batch, but not nearly as much as it will hurt to lose prospective repeat customers who give your beer one shot and try that mediocre (or worse) batch, then decide to go somewhere else next time.
  2. Smart growth models. Many of the breweries that have run into financial issues recently have overextended themselves, taking on massive debt to grow quickly and open expansive taprooms only to have sales fall far short of projections. It is hard to project growth in a rapidly changing market, but it seems like a slow and careful model for brewery growth makes a lot of sense in an uncertain and volatile industry.
  3. Develop an exciting and identifiable brand. I really don’t understand the breweries that have beautiful artwork on their packaging but make it almost impossible to identify who brewed the beer and what style of beer it is. The strength in building a great brand is that customers will enjoy one of your beers and want to try others. Using a mixture of eye-catching artwork and an easily identifiable logo is key for building a successful beer brand.
  4. Marketing, digital presence, and social media. Have a website that includes your location, hours, and which beers are currently available on draft and to-go including styles and brief descriptions. Have active accounts on Facebook, Twitter, and Instagram where you share regular updates of new releases and events. Take pictures that make people want to buy your beer, with good lighting and clean glassware. I am not the most tech-savvy person and I figured out how to do all of this for Hoppy Boston (which is just a hobby for me), any brewer who is serious about running a successful business should be able to do the same, or find someone to do it for them.
  5. Reach out to customers other than hardcore beer geeks. Everyone wants to own the brewery that has pictures all over beer geek Instagram, high scores on Untappd and people out of state asking for their beer in trading circles, and it is hard for any brewery to succeed without getting some love from the beer geeks. It is also important to realize that these people represent a small portion of the potential market, and a successful brewery should be doing everything possible to develop a wider customer base. Getting involved in the community can turn locals into regular customers, and making an effort to reach people who wouldn’t consider themselves craft beer drinkers could pay off big time in the long run.

There is a reason I put an Allagash picture at the top of this section, I think they are a model that other breweries should follow. They have stuck to their strengths (interesting and creative takes on classic Belgian styles) while adapting with the times (canning beers, adding some offerings with more hoppy flavors). They make consistently excellent beer, have grown without overextending themselves and have an active and well-thought-out online presence. Every brewery needs to be themselves, but I think it is important to learn lessons from others, both the breweries that are successful and those that ultimately fail.

What do you think about the current state of the industry? Will we see lots of breweries closing in the next few years? Is it a bubble or just a correction? What are the key factors that make a brewery successful, or the key reasons breweries fail? Let me know your thoughts below or on social media! It should be an interesting 2020 in local beer.

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