Craft beer business hits a skid—what it means for local breweries

By the end of this month, three local breweries will have closed their doors for good this summer, which is not good news in any forum, much less among those of us who love craft beer.

The recent closings are alarming, for sure, but they point to a bevy of issues within the craft beer industry, boith on a national level and a statewide level.

At the end of July, two of Huntsville’s local craft breweries closed — Salty Nut Brewing and Fractal Brewing Project — and Madison’s Bowler Hat Brewing Co. announced last week it will close August 11.

Brewery owners at Fractal cited the impact of COVID-19, the lingering supply chain issues and changes in the beer industry as reasons behind the brewery’s closure.

Really, a bevy of issues surround the industry that makes viability a little harder for craft breweries.

Craft breweries in Alabama face some obstacles that brewers in other states do not, which has contributed to the demise of some of the breweries in the state.

According to the Alabama Brewers Guild, Alabama beer distribution regulations are tipped in the wholesalers’ favor. Alabama law severely limits the ability for brewers to terminate or amend their distribution agreements, while also requiring them to enter into these exclusive agreements to place their products in bars, restaurants and stores.

Also, breweries in Alabama are prohibited from self-distributing their products and from having a financial interest in a licensed wholesaler, and current law only allows them to serve their guests alcohol that was produced on-site.

This is fine for local breweries like Green Bus Brewing or Mad Malts who do not can their beer or sell it beyond their taprooms, but for other breweries, this becomes a problem financially.

As well, the cost of licensing has nearly tripled in the last few years, and the cost of liability insurance has quadrupled. Tack on to that increased costs in hops, aluminum cans, grain and the transportation of said materials, and local breweries face an uphill battle indeed.

One issue facing the craft beer industry in general is the changing habits of consumers. Put simply, beer does not dominate the alcohol market share anymore. Spirits have become more popular and the demand for craft beer has not increased.

According to industry publication CraftBrewingBusiness.com, a wide variety of factors have led to the gradual decline in craft beer sales.

“Success is always specific to your company and regional factors are usually more important than national trends, but craft beer sales (we’re talking packaged product here vs. taproom sales) could very well continue to contract in 2023 — for a variety of factors — inflation, less beer consumption overall, fierce competition from other craft breweries, fierce competition from other beverage alcohol (spirits to ready-to-drink cocktails) and an aging out of hardcore fans (a reason the non-alcoholic segment is growing).”

For now, make sure to continue supporting your local breweries to make sure they can weather the current storm.

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