Are Craft Breweries Seeing a Decline?

Brewers weigh in on beer sales, economic pressures, and consumer habits

By Victor Skinner | March 9, 2024

In 2022, Americans spent more on spirits than on beer for the first time.

Then beer consumption hit the lowest level in decades in 2023, dipping below 200 million barrels for the first time since 1999.

It’s a trend that’s fueled by a wide variety of factors, including fewer younger drinkers than five years ago, exploding growth in craft breweries in the 2010s, competition from other alcoholic beverages like seltzers and ciders, inflation slowing consumer spending, and more consumers selecting non-alcoholic options, among others.

While the declining trend hasn’t gone unnoticed in northern Michigan, it’s manifesting in different ways for area breweries, and they’re taking different approaches to avoid the fate of more than 385 small, independent American craft brewers that went under last year.

Beards Brewery: Focusing on Core Products

“The craft beer category nationally was down about 2 percent last year and that number is … negative 3 percent so far going into this year,” says Emily Hengstebeck, the “harbinger of beer” at Petoskey’s Beards Brewery. “We’ve definitely noticed that in our numbers.”

The decline has hit both Beards’ distribution and taproom, prompting a number of changes aimed at boosting customer experience and revenues at a time when folks have less to spend than in the past.

“We’ve definitely seen a decrease in people generally going out. The economy the way it is, they have less dollars to spend on their night out,” Hengstebeck says. “The growing trend is doing less with more … whittling down to core products.”

Beards has brewing facilities in both Petoskey and Charlevoix, which allows the company to shut one down during part of the year to cut energy and labor costs. Beards has also reduced its flagship beer offerings from six to four, while adding cider and wine options to cater to the non-beer crowd.

Other cost savings have come from stocking up on larger quantities of brewing supplies and a complete overhaul of the company’s dining experience that will significantly reduce labor costs while increasing efficiency.

With a focus on offering “quality beer at a community price,” Beards has turned to $10 chef dinner features on weekdays, which along with a “well served beer” is designed to “package value while staying true” to Beards’ mission of providing creative, handmade selections.

Beards is also transitioning from traditional table service to a cafeteria style service to offer “more of a casual community beer garden-type place,” Hengstebeck says, adding that the move was inspired in part by customer preference changes during the pandemic and a tight labor market.

“Instead of bending under the weight of finding enough staff, we’re going to make sure our experience remains top-notch by tweaking our operation,” she says. “It’s actually happening right now. We’re really excited to be able to open our doors to an updated Beards experience.”

Right Brain Brewery: Investing in Diversification

At Right Brain Brewery in Traverse City, owner Russell Springsteen says he began developing new products when he noticed the national decline during the pandemic, using the brewery’s downtown tap room as a testing ground.

“Right Brain actually had 10 percent distribution growth last year over the previous year, so our trends aren’t the same as the whole industry,” Springsteen says. Taproom sales were also up 2 percent, he says, though “we just didn’t have the audience we typically have” last year. “I expect that to be back this summer.”

To counter, Right Brain created Right Pop, a soda brand, as well as a seltzer water for those who prefer non-alcoholic options.

“We started making soda pop and we plan to can and package that this year,” Springsteen says. “There’s … the non-alcoholic trend, so we’re trying to capture some of those folks.”

The brewery also has a pending distiller’s license application in with the state for a ready-to-drink cherry vodka, providing yet another option other than beer. “Hopefully, that’s approved by the state this summer,” Springsteen says. “Basically, we’ve tried to diversify.”

With a decade on store shelves, Right Brain has an advantage of “proven brands and a following” that help to keep sales strong, he says. Regardless, the company continues to forge ahead with new packaging and products to keep customers engaged.

“We’re trying to make it fresh and interesting for the consumer,” Springsteen says.

Stormcloud Brewing Company: Taking the Wait and See Approach

At Frankfort’s Stormcloud Brewing Company, co-owner Brian Confer says the national declining trend in craft brews didn’t set in until late last year, and he’s now assessing next steps.

“We were doing good all year long, bucking the trend, then November hit … sales took a little bit of a slump,” Confer says. “Sales are soft, our numbers have declined a little bit, but not significantly.

“It’s not enough to worry about excessively,” he adds.

Confer believes the situation comes from a confluence of factors, from those driving the national decline, to fewer summer visitors last year, to economic changes that are forcing folks to watch their spending more closely.

“The numbers are softer at the pub, as well. We’re hearing the same thing in general in the whole town,” Confer says. “No one I’ve talked to can really point to why. I think the list of things all have a small factor each, and add up to a bigger picture.”

The warning signs have convinced Confer to cut some hours at Stormcloud’s production facility, with one person volunteering to work a little less, but otherwise “not much has changed for us,” he says.

“We’re at a little bit of a wait and see pattern. It’s always hard to pin down the right course of action,” Confer says. “We’re still opening markets, so in that sense it hasn’t affected our growth.”

All three breweries noted how weather trends in northern Michigan also create additional factors that can have a significant impact, with Hengstebeck pointing to poor winters in recent years that have taken a toll on the off-season.

“When we don’t have the right kind of snow at the right time, it impacts our travelers, for sure,” she says, noting Beards is within 25 minutes of three different ski resorts. “That … has affected our operations every winter for the last few years.”

At Right Brain, Springsteen expects changes in the environment will eventually change what they do, as well. “Climate change affects our harvest and our yields,” he says. “You just adapt and move forward.”