Why Are So Many Craft Breweries Closing?

The craft beer industry is facing a complex set of challenges. Declining sales, rising costs, and the ATO’s inflexibility on COVID-era deferred excise debts are creating a perfect storm for many breweries. Some may have overextended themselves, inspired by the post-COVID boom. I’ve heard of mid-level players investing millions in equipment far beyond their current needs – a risky bet in retrospect.

While many cite cost-of-living pressures for the sales slump, I suspect there’s more to the story. For years, craft breweries have targeted an increasingly niche audience. The ubiquitous “three mates brewing in their backyard” origin story and the fixation on hop-heavy, high-ABV IPAs speak to a narrow demographic – one that combines hipster aesthetics with a laid-back surfer vibe. It’s clear I’m not the target audience, but that’s precisely my point!

We know alcohol consumption is declining, especially among younger generations. Gen Z and younger millennials seek novel experiences and value diverse social settings. Regular alcohol consumers are becoming the minority. However, there’s an intriguing twist: women over 45 are drinking more and actively seeking social opportunities. They’re often the primary social organisers, and newsflash – women drink beer too.

Perhaps it’s time for craft breweries to look beyond their current niche. What if they invested more effort in understanding potential audiences outside their comfort zone? This doesn’t mean abandoning their roots or compromising on quality. Rather, it’s about broadening horizons and thinking beyond the stereotypical craft beer enthusiast.

The craft beer industry has always prided itself on brewing innovation. Now, it might be time to apply that innovative spirit to audience engagement. Great beer deserves a diverse audience, and there’s a world of potential beer lovers waiting to be invited to the party.

If you’re a craft brewery owner or marketer grappling with these challenges, you’re not alone. I’ve recently conducted workshops with craft breweries to address these very issues. Reach out to learn how we can work together to tap into new markets and revitalise your brand’s appeal.