For the first time in over two decades, the U.S. craft beer industry saw more breweries close than open in a single year, marking a turning point for a once-booming sector. According to data from the Brewers Association, a leading trade group, craft beer production declined by nearly 4% last year, underscoring a shift in consumer demand and broader economic headwinds.
The slowdown represents a stark contrast to the industry’s trajectory in the 2010s, when new breweries were opening at a historic pace. In 2014 alone, the number of breweries surged by 850, bringing the national total to just over 4,000. Amid this growth, entrepreneurs like Avery Schwenk in Brattleboro, Vermont, left established careers to launch their own craft beer ventures. Schwenk co-founded Hermit Thrush Brewery with a focus on producing sour beers, a niche style known for its citrusy, funky, and sometimes woody flavor profiles.
At its peak, Hermit Thrush had a downtown taproom and distribution across seven states and Washington, D.C., with plans to expand further. But like many in the industry, the brewery was hit hard by the COVID-19 pandemic and ultimately shut its doors in the summer of 2023.
Industry analysts attribute the decline to a combination of rising costs, tighter credit conditions, and waning consumer interest. “The 2010s were a perfect storm for brewery openings,” said Bart Watson, president and CEO of the Brewers Association. “You had cheap capital, relatively low input costs, and increasing demand.” Now, higher interest rates, more expensive ingredients and packaging materials, and shifting drinking habits have eroded those advantages.
In particular, the industry is struggling to attract younger drinkers. While Generation X and millennials embraced craft beer during its rise, Gen Z has shown less enthusiasm. “This is seen by the newest cohort of drinkers as kind of a dad’s drink,” said Jim Watson, a beverage industry analyst at Rabobank. He noted that many in Gen Z are drinking less overall, citing cost and the growing popularity of alternatives such as hard seltzers and other low-calorie beverages.
These trends have made it increasingly difficult for breweries to grow via traditional distribution channels, where shelf and tap space are now shared with a broader range of alcoholic beverages. Still, there is one strategy that remains viable: direct-to-consumer sales through brewery-owned taprooms.
Levi and Christie Kraemer, founders of Kraemer & Kin in North Hero, Vermont, are embracing that model. After launching their brewery in a garage in 2020 and later expanding to a full-service restaurant space, the couple is now moving operations to a smaller, more intimate taproom inside a renovated farmhouse.
“It was a 100-seat restaurant, so full service, and we learned a lot,” said Christie Kraemer. “But bringing it back to a real taproom feel… where we’re really bringing it back to the beer.”
By focusing on smaller-scale, community-oriented spaces, breweries like Kraemer & Kin aim to preserve profit margins and recapture the authentic appeal that fueled the craft beer boom in the first place. It’s a back-to-basics approach that may offer a path forward in an industry that is no longer defined by rapid expansion, but by resilience in the face of maturity.
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