As closures or consolidations mount heading into the new year, there are still bright spots across the country for craft breweries. The industry has shown upheaval but it doesn’t dim the light of the entire segment and breweries from all over have shared with Brewer the importance of forward thinking coupled with adaptability heading into 2025.
Altering Distribution Strategies
With craft beer now a more mature market, large growth is tough to find for many so distribution strategies have become a critical aspect. For many, finding the right balance between internal, taproom-driven sales and external distribution has become a strategic see-saw. A varying amount of needs based on brewery and market size, along with local regulations and distributor relationships, each company needs to tailor distribution plans to reach the right audience while maintaining profitability.
In an industry where margins on distro product tend to be lower than taproom sales, many share with Brewer that they are seeking to maximize both distribution reach and taproom traffic.
Prost Brewing’s approach shows that leveraging taproom sales can be a complement to broader distribution goals.
“Internal sales have always been a large part of our business model, and we are doubling down on that approach,” said David Deline, president of the Denver-based brewery, “Internal sales also drive external sales, creating a great ecosystem for growth.”
Many said they emphasize the importance of maintaining a strong presence in their taprooms, which can act as a reliable revenue stream while also boosting brand loyalty.
“For every taproom we open, we see at least 20% growth in distribution in the immediate area surrounding it,” said Wesley Keegan, founder of TailGate Brewery in Nashville. “We want to see TailGate Orange on draft at every bar, every restaurant, or wherever taps are pouring.”
Taprooms not only provide higher margins than distributed beer but also offer a way to introduce consumers to the brand before they encounter it in a retail or bar setting.
“The taprooms help grow distribution,” Keegan said. “But directly, we want to see TailGate on draft all around our home state.”
With the competitive landscape for distribution tightening, breweries are weighing their options carefully. Some breweries are expanding into new markets, while others are pulling back, focusing on existing territories or experimenting with different distribution methods to increase visibility.
Tyler March, co-founder and head of operations at Wild East Brewing in Brooklyn, said that expanding distribution has led to increased production but there is a tradeoff:
“While that’s a good thing in terms of increasing our production, it’s still an increase in volume of beer sold at the lowest margin possible,” he said.
To offset this, Wild East is working on increasing taproom sales, but taproom sales are tough to plan for without a catalyst driving that increase.
Minnesota’s Castle Danger Brewery recently expanded its distribution territory into Wisconsin, which meant adding in a neighboring state with different regulations, consumer habits, and distribution landscapes.
“Selling beer in Wisconsin is very different from selling in Minnesota,” the Castle Danger team — comprised of Andrea Arabanos, Director of Sales & Marketing; Max Pittman, Director of Operations; and Tina Hegg Raway, Controller — wrote to Brewer in an email. “From regulations to distribution to consumer purchasing habits and preferences, there has been a lot to learn and enjoy about expanding to a neighboring state.”
One of the most complex aspects of beer distribution is the relationship between breweries and its distributors. After years of frustration with a distributor that “held [the brand] hostage,” Keegan said TailGate finally moved to a distributor that aligned with the planned growth ambitions.
“It’s refreshing to work with a distributor that wants to work with you,” Keegan said.
With a new distributor on board, TailGate’s distribution plan is back in motion.
“We’re seeing real growth now that we’re just being placed on the shelves again,” he said.
Castle Danger said that a strong relationship with distributors has given the brewery a “voice” in a crowded market.
“Castle Cream Ale is currently the No. 1 craft tap handle in the state of Minnesota,” they said. “Becoming excellent partners with our distributors allows us to have strong placements. When beer lovers want a high-quality, flavorful beer, they can find Castle Danger Brewery wherever they are within our territory.”
Altering The Portfolio
As breweries work to strengthen these relationships, they’re also contending with the changing dynamics of distribution networks.
Many wholesalers are feeling the strain of an evolving industry and facing increasing pressure from the rise of hard seltzers, ready-to-drink cocktails, and other beverages.
“Wholesalers seem fatigued, disoriented, and unsure of their roadmap for the next five years,” said Andrew Fabry of Badger State Brewing. “It’s up to us to focus on us in order to grow.”
So with that, many are finding ways to expand without losing sight of their roots. Through broader portfolios, targeted marketing, and selective innovation, breweries are capturing the attention of health-conscious and experience-driven consumers while staying true to the essence of craft beer. By doing so, they’re not only responding to current trends but building a model for sustainable growth in an evolving industry.
“Growing a base wider than before is now more important during this part of the cycle,” Fabry noted.
As younger generations gradually shape the future of craft beer, breweries are looking to be poised to meet them, not only with new products but with the community and tradition that have defined the industry over the years.
Contending with shifting consumer drinking habits, breweries across the United States are evolving to keep pace with younger, health-conscious audiences.
“Craft beer isn’t for everyone,” said Jerry Siote, co-owner of Lone Tree Brewing. “We should embrace acceptance of current circumstances, but we should also try to remember what we set out to accomplish with the supporters who have been with us from the beginning.”
Lone Tree introduced a hop- and hemp-based seltzer, Ufloric, that blends non-alcoholic trends with the hoppy flavors found in traditional IPAs. Meanwhile, The Phoenix Brewing Co. has also broadened its approach, adding hard tea cocktails and frozen cocktails to its lineup.
“We took our existing cocktail & sangria menu and adjusted and refreshed the offerings to create a curated menu for our guests,” said co-owner Carmone Macfarlane. The Mansfield, Ohio taproom now offers a range of choices beyond beer, allowing visitors to explore seasonal and signature cocktails alongside their beer selection.
Other breweries have introduced low-alcohol or zero-alcohol beer options, responding directly to consumer demand.
“We’ve always made drier, lower ABV beer,” March said about Wild East. “We think it’s a happy medium between NA and boozy beers.”
This approach can allow Wild East to appeal to both traditional beer drinkers and those seeking lighter options, ensuring that all visitors can find something to enjoy.
Bobby Harl from Back Pew says the challenges — which can be opportunities — of diversifying a brewery’s product offerings is a look into marketing and branding as well. As health-conscious trends and declining alcohol consumption rise, the Texas brewery is exploring THC-infused beverages, such as Delta-9 THC sodas or cocktails.
The company is in its early development stages, experimenting with flavors and formats that would appeal to health-conscious consumers, like low-sugar or soda-style options.
“We’ve done a few on a contract brewing basis, where they come to us with their recipe and we make it for their set, and that’s fine, but, developing our own .. which way do you go,” he thought out loud. “We were looking at sodas, like a cola, Dr Pepper-like product, or root beer, that would still taste really good, would that be attractive? But then you go, Okay, well, I want to be healthy. Because everybody says sugar is the devil. I mean, I don’t think so, but is that going to be a problem?
“Maybe a mixed cocktail kind of thing. Margarita or something like that, to help balance out against that weedy flavor. We’re in early development, but I think that’s the direction and that would have a very different kind of marketing approach. Would it be under the Back Pew umbrella?”
Harl also added that competing with established players in categories like canned water or NA beer is difficult, but the THC beverage space is still young and promising.
“We don’t really know what the sales volumes are, but it’s increasing,” Harl said. “If you can get in early enough before things really get going, could that be a really great place to be? I’m currently assessing that it will be.
“It doesn’t necessarily all have to be beer.”
Adjusting marketing strategies to appeal to these younger generations can mean prioritizing experience, individualization, and trends. By focusing on digital engagement and crafting social-media-savvy content, many are working to remain relevant to Gen Z and Millennial drinkers.
“Younger Millennials and Gen Z are who we cater content to,” said Rich Magrath, president of Sycamore Brewing. “I tell the team, our job is to make Sycamore trendy and capture vibes.” The Charlotte brewery has found that a vibrant, trend-focused approach not only attracts younger drinkers but also resonates with their loyal, older customers. This strategy, Magrath points out, enables Sycamore to build a fanbase that spans generations, bridging traditional craft culture with contemporary, social-media-driven marketing.
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While some expand offerings, others are careful to balance innovation with the original mission.
Staying true to core products and brand identity can attract loyal customers who identify with the brewery’s roots, even as new products help draw in younger demographics.
“Our strategy is to maximize what we do really well rather than risk mediocrity by overextending and following every beverage trend,” Castle Danger said. The goal, they said, is not to chase every trend but to refine offerings to the highest quality. This selective approach to innovation allows the brewery to cater to emerging tastes while solidifying its identity.
Prost has also found that “approachable, easy-to-drink trends” align well with its classic and German-style portfolio. Deline noted that lower-alcohol Lagers are an ideal fit for today’s drinkers, allowing Prost to attract health-conscious consumers without straying from its foundational style.
“Rather than forcing what used to work, you have to meet these new drinkers on their level,” he said.
Altering Location?
Real estate concerns are at the forefront for many now, with a lot of companies over this past year folding while citing difficult situations in property management. That could mean a lease needing to be re-upped, property values raising rent or landlords needing to alter agreements.
For some, ownership offers greater stability, while others can adapt by negotiating favorable leases or considering moves to less developed, more spacious, or suburban areas.
“As the craft brewing industry continues to mature, one of the key challenges we’re seeing is the need for larger spaces,” said Denver Beer Co. CEO Robert MacEachern.
In 2025 one of DBC’s biggest developments is an expansion into Phoenix with its newest brand, Formation Brewing. For the Denver-based brewery, it means a large real estate investment.
“For breweries, finding a balance between staying true to their roots and scaling their operations in the face of these pressures will be critical,” MacEachern said. “It may also push some to look at less developed areas or to consider more suburban locations where there is more room for growth and better affordability in the long run.
For breweries that initially thrived in smaller, more affordable locations, rising property values and rent in increasingly popular neighborhoods make it difficult to renegotiate leases or expand on-site, particularly when those spaces are now worth considerably more.
In an industry increasingly dominated by high rent and variable costs, property ownership is seen by some owners as a way to secure long-term stability.
Keegan said he has made a strategic decision to buy rather than lease for TailGate when he can.
“Our model going forward these past few years is that we only want to own,” he said. For Keegan, ownership is a hedge against the unpredictable nature of commercial leases, where tenants are responsible for covering all costs, from maintenance to insurance.
“Rent or buy, everything costs more,” he said. “Our insurance premiums increase every year. By over 20% That’s without any claims. The explanation is pretty much ‘reasons.
“It’s an insane premium that the consumer doesn’t see.”
Also, Keegan said Nashville incurred a huge property tax increase a few years back. One location’s taxes went from roughly $12,000/year to over $50,000
“Those are real costs. So whether we own, or we lease, we pay those too,” Keegan said.
“It’s just hard to operate in today’s pricing climate and these cost increases are literally coming at every angle.”
The pressure to own property is echoed by Fabry. He credited Badger State’s long-term lease for providing stability and enabling them to become a “cornerstone for additional development in our neighborhood.”
For Fabry, the security of a 50-year lease with a low rate has helped the brewery grow and support local revitalization efforts without facing the risks of escalating rents.
Castle Danger said the experience of the “pinch of popularity,” creeping in as well as nearby developments, including proposals for a hotel and event center, could drive up property costs. Though Castle Danger benefits from increased taproom traffic, they are also brainstorming ways to maximize capacity in their limited space, particularly outdoors during the busy season.
However, buying property outright isn’t always feasible.
“Most brewers and brewery owners we regularly talk to don’t have endless amounts of capital and subsequently can’t buy real estate,” Siote said.
For many small breweries, like Lone Tree, or those still in an early growth stage, the substantial upfront investment needed for property ownership remains out of reach.
In these cases, breweries must strike a delicate balance between affordable locations and profitable markets, while still planning for the future.
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