Craft breweries struggle as beer sales decline and costs rise

LOS ANGELES - The U.S. craft beer industry is seeing more closures than new openings for the first time, as rising costs and shifting drinking habits put pressure on small breweries.

According to the Brewers Association, breweries are struggling with higher costs for grain, raw materials, and shipping, while beer sales are declining across the country.

Why are breweries struggling?

The backstory:

The challenges for craft breweries began during the COVID-19 pandemic and have continued as economic conditions have shifted.

"The pandemic obviously also had secondary ripples for the economy, for supply chains, and it changed consumer patterns overall," said Bart Watson, president and CEO of the Brewers Association, speaking to FOX Business.

FILE - A full pint and a half-poured beer sit on the table of a local brewery.  (Mike Kemp/In Pictures via Getty Images)

Watson noted that while bars and restaurants are still seeing spending levels similar to pre-pandemic times, consumer behavior has shifted, with more people opting for to-go orders and delivery instead of drinking in taprooms.

Last year, beer sales dropped 2% nationwide, with Colorado experiencing a 3% decline, according to the Colorado Liquor Enforcement Division.

Where are closures happening the most?

By the numbers:

Some of the hardest-hit regions are states with the highest number of breweries, Watson said.

• Colorado, California, Pennsylvania, and New York rank among the states with the most breweries.
• In Colorado, brewery closures outpaced new openings, despite the state having the fourth most breweries in the country.
• The Pacific Northwest and West Coast have also seen significant closures.

"Some of the most challenged regions are some of the most developed, like here in Colorado, the Pacific Northwest, and the West Coast in general," Watson told FOX Business.