Craft beer has been making headlines over the past few months, and not necessarily in the way consumers have been accustomed to.
A flurry of activity within Wisconsin’s craft beer scene, ranging from closures to acquisitions, has beer lovers questioning the state of the industry.
Well-known Milwaukee businesses, including
MobCraft and
Enlightened Brewing, have shuttered their doors while others, like
Explorium Brewpub and
Gathering Place Brewing are expanding their operations through acquisition.
Large craft beer brands are not immune from the industry’s changing landscape. Last November,
Molson Coors announced the closure of the historic
Jacob Leinenkugel Brewing Co. brewery in Chippewa Falls, along with its craft beer brewery in downtown Milwaukee.
This isn't just a local or Wisconsin trend. Preliminary national data from the
Brewers Association shows that for the first time in years, 2024 recorded more independent breweries closing than opening. The organization tracked 335 openings versus 399 closings.
Despite several well-established local breweries shutting down within months of each other,
Matt Gacioch, staff economist at the Brewers Association, said by no means proves craft beer is dying, rather that the industry is stabilizing after an unsustainable period of rapid growth.
"We're seeing signs of a maturing market, and that the sort of explosive growth that happened in the mid-2010s is certainly not the case now," said Gacioch.
There are numerous headwinds facing craft brewers in 2025, including the rising costs of simply doing business. Input costs continue to outpace the price craft brewers feel they can charge for their products, which means margins are always tightening, according to Gacioch.
This, coupled with what the Brewers Association estimates is a 33% increase in labor costs, had made it difficult for craft breweries to stay in business.
These costs are only made trickier by the fact that countless breweries took on sizable amounts of debt during the craft beer boom of the 2010s to invest in additional equipment and expansions.
"There were some big investments that happened in the mid to late, 2010s and, after the pandemic, production never ramped up," said Gacioch.
The changing brewery model
For
Dan Katt, co-founder of
Good City Brewing, the recent decision to
sell the brewery’s operations to The Explorium Brewpub stemmed from a fundamental change in how Good City conducted business and where its revenue came from.
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Dan Katt[/caption]
The Explorium Brewpub officially took over operations of all four Good City locations earlier this year.
The years following the COVID-19 pandemic were when Katt and his team noticed drastic changes in consumer habits. Good City began focusing more on suburban markets like Mequon and Wauwatosa and began the process of “right-sizing” its footprint in Milwaukee.
"In 2019, we had these two really big locations in (Milwaukee), and we would pack them to the brim. That's just not the world anymore," said Katt. "This year, we felt like from our footprint, our overhead, and our business we were really in a position where we could either reinvest now or work towards what the Good City brand of the future would be.”
In recent years, between 80% and 90% of Good City’s revenue stemmed from leaning into the taproom/brewpub format. This is a complete turnaround from the company’s early years, when distribution was more of a focus.
"We had to think, are we the best restaurant operators to move this forward, or would we benefit from bringing in an operating partner, or selling the whole thing to someone who is fully entrenched as a restaurant and brewpub operator," said Katt.
Good City selling to The Explorium Brewpub is just one example of the growing popularity of the brewpub concept.
Milwaukee’s
Lakefront Brewery, which has a restaurant component, expanded last summer with
the acquisition of
Public Craft Brewing in Kenosha. Public Craft Brewing also has a large restaurant/hospitality area, complete with a stage.
[caption id="attachment_605019" align="alignleft" width="300"]
Russ Klisch[/caption]
Low margins have led to increased popularity in the brewpub and taproom models, said
Russ Klisch, owner of Lakefront Brewery. Taprooms allow consumers to spend a few extra dollars on a bite to eat and business owners don’t need to rely as much on distribution.
The one caveat to this format is for breweries with packaging operations, said Klisch. For them, distribution is as important as ever.
Klisch is speaking with several Wisconsin-based distributors who are interested in selling Public Craft Brewing products. The distribution process is anticipated to begin this spring.
“With a packaging operation, margins are low and you have to achieve a certain amount of sales to break even,” he said. “A lot of breweries, back when things were booming around 2017, invested a lot of money in packaging. It’s expensive equipment.”
Klisch thinks if there is a common thread between some of the local breweries shutting down, it’s that they had both small packaging operations and a taproom/brewpub concept.
“It’s kind of hard to do both (concepts) with limited resources,” he said.
Community roots
Joe Yeado, founder and president of Milwaukee-based
Gathering Place Brewing, believes emphasizing a taproom model is simply a good business strategy.
[caption id="attachment_605020" align="alignleft" width="300"]
Joe Yeado[/caption]
Yeado hopes to provide consumers with a memorable experience, whether that be a positive interaction with staff or hosting a private event. Brewing is becoming even more localized, and Yeado believes it’s the job of craft breweries to make sure they’re giving customers what they want.
“Evolving is important but so is having an understanding of what you provide consumers,” he said.
Gathering Place, founded in 2016, opened during the craft brewery boom of the 2010s. A large chunk of the company’s success, particularly in the early years, was due to distribution to bars and restaurants. The business started packaging beers into cans in 2019.
“We were already on shelves when COVID hit and honestly that’s the only reason we’re still in business,” said Yeado.
Gathering Place expanded with its Wauwatosa taproom in early 2022. Plans for a Bay View taproom fell through after plans for a food hall concept never came to fruition.
This winter, Gathering Place is expanding once again with
the acquisition of
Sahale Ale Works in Grafton. Yeado has nearly doubled his workforce to 21 people and added 2,700 square feet of taproom space, non-inclusive of Sahale’s sizable outdoor patio that can seat 100 people.
Sahale beers are still brewed in Grafton. Production of some year-round beers will be shifted to Milwaukee to increase production capacity. Having additional product on hand will allow Yeado to secure distribution deals for the Sahale brand, something that wasn’t possible before because the business went through so much beer at its Grafton taproom.
“People were willing to buy (Sahale) beer, but there just wasn’t a product to give them,” said Yeado.
What stood out to him about the opportunity to acquire Sahale Ale Works was a similar ethos within the two businesses. Both Gathering Place and Sahale have a history of supporting philanthropic causes, and both breweries are rooted in the idea of being a community gathering space.
Nurturing a community-first relationship will be key to how craft breweries survive in the coming years, according to the Brewers Association.
"Small taprooms and brewpubs are looking at other ways they could get additional foot traffic and engagement with their consumers through the hospitality experience," said Gacioch.
Doubling down
While consumers are spreading their dollars across more and more different alcoholic product categories, there are some categories of craft beer that are seeing growth.
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Lakefront Brewery, 1872 N. Commerce St. Image courtesy of Lakefront Brewery.[/caption]
Gluten-free beverages and beers with lower alcohol percentages are among Lakefront Brewery’s quickest growing categories, according to Klisch.
Lakefront’s sales are up 3% largely due to the sale of non-alcoholic beers.
Lakefront is also looking to introduce THC-infused beverages, but Klisch said he’s taking his time with that concept.
“You have to pay attention to what’s happening and roll with the changes,” he said. “It’s tough. You feel like you’re a rock band from the '60s and you have to make a hit every few months to stay relevant.”
Smaller breweries have limited resources to keep up with consumer trends, but that doesn’t mean it’s impossible. At Gathering Place, Yeado is also looking to get in on the TCH-infused beverage trend.
The breakneck speed of innovation many craft breweries have adopted may have harmed the industry in the long run, Katt said.
“Once you've given (consumers) everything and they've tried everything, then the consumer says, 'Well, what have I tried?'" he said.
Still, Katt and many others believe craft beer has certainly not seen its downfall. Depending on your business model and location, starting a craft brewery can make a lot of sense, especially in underserved counties of Wisconsin.
“There is a finite amount of (craft breweries) that Milwaukee can support, but there are also underserved areas of the metro area,” said Yeado. “It’s very possible for existing and new breweries to find support. Will everyone grow to the size of Lakefront? No, that won’t happen, nor should it.”
