What's the outlook for Minnesota's craft beer industry? Not as dire as you may think
MINNEAPOLIS — The headlines for Minnesota's craft beer industry in 2023 haven't been friendly. Several well-known spots in the Twin Cities closed their doors.
Lakes and Legends in Minneapolis closed this month. Dangerous Man Brewing shut down its taproom in September.
Six breweries closed their doors in some capacity this year in the state. At least seven total did the same in 2022 and 2021.
Because of this, WCCO wanted to look at the health of the craft beer industry in Minnesota. While it certainly has its struggles, the outlook for the future is far from gloomy.
"Every time a member closes, it's obviously a sad occasion," said Robert Galligan.
Galligan handles industry relations for the Minnesota Craft Brewers Guild. WCCO sat down with him in the taproom at Modist Brewing Company in downtown Minneapolis.
When news of brewery closings ramped up late in the year, some commented on social media that the "bubble had burst" on the craft beer industry. Galligan said that statement is inaccurate.
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"With a bubble burst, that makes it sound like the industry is dying to a degree and we're just not seeing the numbers that that's the case necessarily," he said. "(The industry is) leveling out and equalizing itself. Craft beer for a long time was on such a high trajectory of super popular and breweries opening all the time. And I think those days of expansive growth are behind us."
He would go on to describe the state of the industry as reaching a "cruising altitude."
There are more than 220 craft breweries in Minnesota. The MN Craft Brewers Guild represents 181 of them.
And although six closed in 2023, Galligan said eight breweries opened. Seven more plan to do so in 2024. Galligan said he won't be concerned unless the number of closings outweighs the number of openings, something that has yet to happen.
What are the main challenges that breweries are facing post-pandemic? Simply put, "A lot," said Galligan.
For starters, it's the cost of running a business. Ingredient suppliers and can manufacturers have raised prices.
"And then kind of depending on where the members are, their locations, rent keeps rising as well, labor costs keep rising as well," he added.
Rising costs played a role in Dangerous Man Brewing closing its taproom. Staff at Lakes and Legends said a lack of foot traffic had an impact.
What does a brewery need to do in 2024, especially a new one, to ensure that they're successful? It comes down to differentiating yourself, said Galligan. With a market jam-packed with options for a craft beer experience, brewers need to stand out. Modist co-founder John Donnelly echoed those feelings.
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"It's always differentiation. You're always trying to make your own, your taproom your destination," he said.
His brewery opened in 2016, navigating similar challenges during the pandemic and beyond that some breweries couldn't overcome.
"Since the pandemic, it's just been basically pivoting, pivoting, pivoting," Donnelly said.
That often means creating a product a brewer never initially intended. When seltzers exploded in popularity, beer makers cooked up their own version of the bubbly drink. Non-alcoholic beer has gained steam in recent years, adding another concoction to the diverse menus at crafter brewers. Offering a variety of products beyond beer brings in new customers or old ones looking to try something new.
"THC (beverages) came along. We jumped on that right away and that's been very successful for us," said Donnelly.
Modist now produces four hemp-based THC beverages with a limited-edition flavor in the works. Galligan said the drinks that deliver a high have been a shot in the arm for brewers.
"You can only make so many IPAs. They're still the best-selling style of beer but at the end of the day there's only so many things you can do with it and so many hops you can experiment with," he said.
Creativity is what they feel will keep curious customers coming in for a pint. Sales at liquor stores and bars are helpful, but taproom traffic is the lifeblood of their industry.
"This is probably one of the few winters you're gonna have to have a beer on a patio in the middle of December so go out and enjoy that," said Galligan.
So, where are the new breweries opening? Galligan said it's mainly the Twin Cities suburbs and rural Minnesota.
There's also a focus mainly on taprooms versus heavy distribution, meaning most new breweries aren't trying to become the next Surly Brewing Company or Indeed Brewing Company.
