Brewery Slowdown Leads To Closures, Mergers In Massachusetts

As the next generation strays away from hoppy beverages, the once-booming craft brewery industry is feeling a hangover.

Many brewers who began passion projects in the heyday of craft beer production are now faced with the challenges of running a business as the industry continues to see softening sales and a shift in consumer taste.

A series of closures and consolidations in Massachusetts' brewery scene signal a new era for the maturing market that experts say may be oversaturated. And these moves are leaving behind real estate that can be difficult to backfill. 

"People are not filling the tap rooms like it was prepandemic," said Bob Kelley, co-founder of blog site Mass Brew Bros. "It's a mature market. The industry was in double-digit growth 10 years ago. Now it's really kind of flattened out."

Massachusetts saw 11 breweries close last year, and while another 15 opened, the net gain of four was the slowest growth since 2010, according to the Massachusetts Brewers Guild. 

Breweries that shuttered last year include Burke's Alewerks in Hanover, Zēlus Beer in Medfield and Turtle Swamp Brewing in Boston, according to Mass Brew Bros. In the years prior, seven breweries closed in 2022, 15 in 2021 and 12 in 2020.

This year, Rockland-based Article Fifteen closed its doors in January, Loophole Brewing in Springfield closed in October, and after more than 30 years in business, Cambridge Brewing Co. said it will close its doors on Dec. 20. 

Across the country, more than 380 breweries closed their doors last year, while 420 breweries opened, according to the Brewers Association's 2023 Year in Beer report. The peak growth year in 2018 saw 461 openings and 99 closings.

Some breweries are consolidating with other businesses to help maintain growth in a rapidly changing market. 

Last week, Woburn-based Lord Hobo and Maine-based Lone Pine Brewing announced a deal to merge operations. Through the merger, the two breweries will be under a new unnamed holding company but will continue to operate independently of each other.

"What we're trying to achieve over time is a platform that has maybe four or five breweries and distilleries in it, where the brands can stretch," Lord Hobo CEO Simon Thorpe told Bisnow. "They can go cross-category, so from beer to spirits, spirits to beer, beer into [canned mixed drinks] into coffee, but they can also stretch in terms of their geographic movements."

Framingham-based Jack's Abby acquired Night Shift Brewing in October and Wormtown Brewing in April. New Hampshire-based Smuttynose acquired Wachusett Brewery in January, and Dorchester Brewing and Aeronaut merged in December 2023.

"The pandemic put unimaginable pressures onto Massachusetts breweries which have been compounded by the ensuing supply chain instability, record-high inflation, employee shortages and a ton of other challenges for small to midsize brewers," Jack's Abby CEO Sam Hendler said in a release about the Wormtown acquisition, which said the combination would "solidify the company's position."

Since the pandemic, breweries have faced a slowdown as generational preferences have shifted leading to slow sales growth and preferences for other beverages like hard seltzers and liquors. 

National beer sales volume was down 5% in 2023, with craft beer seeing a 1% decrease, according to the Brewers Association. 

"Industries have to get very creative to make sure that they can keep going and keep being profitable," Kelley said. "Whether it's acquiring, whether it's diversifying."

For Lord Hobo and Lone Pine, the merger made sense as they both had recognizable brands and a loyal fanbase. Through the merger, Lone Pine Brewing said it would rely on Lord Hobo to help grow its production and focus on expanding its retail presence at its locations in Portland, Westbrook and Old Orchard Beach in Maine.

"Being able to offer that full experience with the brand and then the beers within it being the core, is really how we want to present ourselves and retail, especially in those two locations," Lone Pine Brewing co-founder Tom Madden said.

While mergers have helped keep some breweries stable and growing, others weren't able to keep their doors open.

Finding new tenants to fill those properties could be a challenge. These breweries have unusual spaces because they are located in former industrial buildings that have been repurposed to also include a retail component, said Paul Bauer, a partner at law firm Bowditch & Dewey who works with craft breweries in the region.

"The question is, can some new user go in there, or does it revert to industrial use?" Bauer said. "It's not downtown main street. It's some kind of unique former industrial space, and finding new users for that may be challenging."

For some of these brewers, closing their doors or consolidating efforts also causes them to leave behind real estate.

In July, Exhibit 'A' closed its Framingham taproom and offloaded its real estate, Worcester Business Journal reported. The brewery moved its operations to Western Massachusetts. The property was purchased by an entity linked to Belmont resident Milton Yanofsky.

Though he suspects there aren't going to be a large number of retail brewery closings, Bauer said that there aren't many retail tenants that can fit these unique spaces and that there could be more consolidation of brewing components.

"Capitalism does what capitalism does," Bauer said. "It says, 'Who's doing this best? Who might really have focused on the business?' Others might conclude that they've done what they wanted, they've accomplished what they wanted to, and it's time to move on."

It has become harder to open new breweries to fill the spaces. Thorpe said that in the last couple of years, investment in breweries has been difficult to come by, with many investors hesitant to come into the space because of the industry's slowdown.

"It's very difficult to raise money at the moment for a standalone, small craft brewery," Thorpe said. "Investors are really not interested in the sector in the way that they were five years ago."

However, developers are still drawn to breweries as a way to bring in visitors to an emerging area. 

Last year, King Street Properties announced that Clinton-based Sterling Street Brewery would open a taproom at its Pathway Devens manufacturing facility in Devens. The brewery occupies 8,300 SF in the development's amenity center.

In September, HYM Investment Group welcomed its first retailer, Danvers-based Twisted Fate Brewing, to its Amaya multifamily development at its Suffolk Downs project, the BBJ reported. The brewery is slated to open next spring.

Other well-known breweries have also started to expand in the Greater Boston area, including Waltham-based Mighty Squirrel, which expanded to The Wilder Cos.'s Arsenal Yards in Watertown and Charlton-based Tree House Brewing, which filed plans to open a new location at the Prudential Center.

"Beer isn't in some free-fall decline, where it's suddenly going to disappear," Thorpe said. "It's still a huge sector, and there's always going to be room for interesting brands, for interesting innovation, for people who are willing to invest in quality because that's what the consumer is still looking for."