Twin Cities' craft breweries could be next to face wave of closures

The mass shuttering of bars and restaurants has been well documented in the Twin Cities, but some of the state's roughly 200 breweries could be next.

State of play: Two have already closed during the pandemic: Herkimer Pub & Brewery in Minneapolis and Wayzata Brew Works.

• "A whole bunch of smaller breweries ... have opened up and their livelihood is 100%, or maybe 90% based on a taproom," Mark Stutrud, CEO of Summit Brewing Co., the state's largest brewery, told Axios.

Stutrud, who was making craft beer when most of the new wave of Minnesota brewers were still in diapers, has seen his share of ups and downs since starting Summit in 1986.

• But the past year has been worrisome because of a double whammy of pandemic fears and public safety issues that he says have ruined consumer confidence in going out.

Driving the news: Beer sales are a strong indicator of the health of bars and restaurants, and Summit's 2020 sales fell by 11%, even though the brewery's sales at liquor stores were up 38%.

• Stutrud said he had to lay off the part-time workers in Summit's taproom, but has otherwise avoided job cuts.

The big picture: Brewers Association economist Bart Watson is predicting closures nationally, suggesting that some beer makers may be surviving thanks to lenient bankers and landlords.

• "As market conditions return to normal, this may accelerate closings, both as breweries take stock of the hole COVID-19 has dug in their finances, and as other players, such as landlords, end extensions or forgiveness on rent," he wrote in a 2021 outlook.

Context: Small, taproom-dependent breweries have survived so far thanks to loyal fans who buy growlers and crowlers, Paycheck Protection Program loans and a strong summer when they were mostly open, said Lauren Bennett McGinty, executive director of the Minnesota Craft Brewers Guild.

• "I think people are just trying to ride it out as long as they can and hope that they can have more capacity in the near future," she said.

What to watch: The Craft Brewers' Guild has been pushing to allow larger breweries to also sell growlers and crowlers and let all breweries sell regular 12- and 16-oz. cans to go.

State law prevents a handful of breweries that make more than 20,000 barrels of beer annually from being able to sell the to-go jugs and small can sales are limited to liquor stores.

• But the proposals have yet to gain traction at the Legislature. A House DFL chair told the Star Tribune that "bandwidth is restricted" due to the pandemic.

This story first appeared in the Axios Twin Cities newsletter, designed to help readers get smarter, faster on the most consequential news unfolding in their own backyard.

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