North Carolina brewers navigate both tariffs and slower growth
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North Carolina craft brewers aren't navigating just tariffs right now, but also an ongoing slowdown for the beer industry.
Why it matters: After more than a decade of robust growth, the craft beer industry has slowed significantly, with the market for alcoholic drinks becoming saturated and drinking preferences changing, especially among younger people, Axios Denver's John Frank writes.
By the numbers: Craft beer production hit 23.1 million barrels in 2024 — a 4% decline from the previous year and the largest drop in industry history outside the pandemic, according to data released last week by the Brewers Association.
- Consumption of beer in North Carolina appears to be mirroring that trend — at least by some measurements.
- The amount of beer distributed in the state fell 2.4% last year, according to data from the N.C. Beer & Wine Wholesalers Association. The numbers are trending lower again this year.
- And last year, 24 breweries opened in North Carolina, while 25 closed, according to the North Carolina Craft Brewers Guild. In total, the state now has 410 breweries.
State of play: The data shows a maturing and highly competitive marketplace, says Matt Gacioch, the association's staff economist.
- On top of that, brewers are facing rising ingredient costs, increased competition, price-conscious consumers and tariffs on imported equipment like kegs, aluminum cans, hops and malts, said Lisa Parker, executive director of the N.C. Craft Brewers Guild.
- Last year, three breweries closed in downtown Raleigh — Little City, Clouds and New Anthem — and there have been several bankruptcies, including Gizmo Brew Works and Cary's Cotton House Craft Brewers and Brueprint Brewing.
What they're saying: Patrick Woodson, the owner of Raleigh's Brewery Bhavana, recently told Axios the tariffs are putting increasing stress on small businesses.
- "A lot of the folks that just run production spaces with a tap room are really feeling the pinch," he said. "There's only so much of a threshold before four-packs start getting up into the $20 range [to absorb tariff costs] and people just aren't going to be buying them anymore."
Zoom in: Les Stewart, co-owner of Raleigh's Trophy Brewing, said his brewery had enjoyed several years of strong growth before the pandemic. But since then: "We've been flat."
- "People lost their ability to connect with their local brewery, and we didn't have the opportunity to explain to them what's so special about our beer in our tap rooms," Stewart said of the pandemic.
- And during that time, preferences shifted toward drinks like seltzers or away from drinking because of inflation or lifestyle changes, he said.
- Now, he said, Trophy is struggling to make long-term decisions on orders because they don't know what the tariff environment will look like month-to-month.
Between the lines: Stewart believes that in order to counter these struggles, craft brewers have to remind people of why they matter to the local economy and make their tap rooms community spaces again.
- He said Trophy is investing in that strategy by building a third tap room in the Five Points neighborhood, adding more events and growing its sales team to reach more accounts.
It's also experimenting to meet consumers' changing preferences.
- Trophy spent eight months formulating its own THC seltzer, called Starry Eyes, to meet what it saw as an exploding demand for drinks with THC in them instead of alcohol.
- Sales of Starry Eyes "saved our February," Stewart said, noting that month has traditionally been one of the brewery's slowest.
What's next: North Carolina's craft beer scene will be on full display this week in Raleigh, when the Brewgaloo beer festival returns to downtown Raleigh on Friday and Saturday.