Feb 21, 2024 - Business

Craft beer drinkers are getting older, forcing Minnesota breweries to adapt

Illustration of a mug of beer, with a sad face in the foam

Illustration: Sarah Grillo/Axios

Dry January has been a healthy lifestyle choice for many, but not so much for the bottom line of craft breweries.

The big picture: Minnesota winters have always been hard for breweries and other hospitality businesses, but the rise of Dry January has made things even tougher, said Bob Galligan of the Minnesota Craft Brewers Guild.

Why it matters: As a generation of craft beer drinkers ages and throttles back on their drinking, the businesses that cater to those consumers are taking a hit and being forced to adapt.

State of play: Craft beer production in Minnesota has stagnated while the number of breweries has exploded. A handful in the Twin Cities have closed in the past couple of years, and last week one of Minnesota's biggest, Fair State Brewing, filed for bankruptcy protection in hopes of reorganizing.

What they're saying: The lifestyles of the core demographic of craft beer drinkers are changing, Evan Sallee, CEO of Fair State, told Axios.

  • "Their lives are changing. They're having kids and going out a little bit less. People are also getting a lot more health conscious and thinking about how they can make alcohol consumption a more responsible part of their life."

Meanwhile, Gen Z isn't drinking alcohol as much as millennials did in their 20s, but they're more likely to use cannabis.

Zoom in: That's where Minnesota breweries have a chance to recoup some of the declines in beer demand. Since Minnesota legalized THC seltzers in 2022, local breweries rushed to the market with their products.

  • Fair State launched a Chill State THC seltzer brand that Sallee said helped the company's revenue bounce back in 2023 (it increased from $4.5 million in 2022 to $7.4 million in 2023, according to the bankruptcy filing).

The bottom line: Beer isn't dead, but the golden years of 2016-2018 are, for now, over.


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