San Antonio Breweries Face Struggles as Economic Pressures Mount

San Antonio Breweries Strive to Survive Amid Strained Economy

In the vibrant city of San Antonio, the craft beer scene is facing some serious challenges. The two largest breweries, Alamo Beer Co. and Freetail Brewing Co., are feeling the pinch, as both are exploring options to either sell their businesses or undergo a significant restructuring to make ends meet. Additionally, many smaller breweries, like the resilient Black Laboratory Brewing Co., are searching for ways to pivot after a shift in focus from traditional beer production to hard seltzers fell flat on the sales front.

This year has been tough, with some notable closures already shaking the local craft beer community. Second Pitch Brewing Co. shut its doors even after receiving accolades on the national awards circuit. Then, summer saw the vibrant Weathered Souls brewery close down after failing to secure new equity partners, and this month, the beloved Busted Sandal Brewing Co. officially waved goodbye after 11 years in the business. Matt Gacioch, an economist for the Brewers Association, sheds light on the matter, stating, “The headwinds are real, and it’s tightening the margins for breweries.”

Facing Headwinds in Craft Beer

These headwinds include rising costs—from ingredients and labor to rent and transportation. Gacioch provides a glimmer of hope for the future, saying, “We expect macroeconomic forces to swing back around.” But for many entrepreneurs, the reality of losing a dream is setting in. It’s important to note that over the past 15 years, San Antonio has seen much more growth than decline in the brewery sector.

Back in late 2008, Freetail opened its first brewpub, marking a major moment in the city’s craft beer journey. Since then, the brewery landscape has exploded, with 21 breweries now operating in Bexar County, plus others in nearby areas like Boerne, New Braunfels, and Seguin. Over the same period, only five breweries have closed, though three of those closures occurred just this year.

Shifting Sales Strategies

It seems many breweries that rely heavily on getting their brews into bars and restaurants are facing the biggest struggles. As a response, many are shifting to taproom-only sales or adopting a brewpub-restaurant model. Interestingly, all of the new breweries that opened in San Antonio during 2023 followed this onsite-only model, reflecting a national trend where 95% of new breweries across the country embrace a similar approach.

Those navigating these rough waters are grappling with a significant loss of business. For instance, Busted Sandal lost a whopping 90% of its taps just within three months after a major distributor acquisition left them with no choices. Co-founder Mike Diccico shared his sorrow on social media, lamenting the struggles that many local breweries are currently facing.

Adaptation and Innovation

In response to these challenges, some breweries are doing their best to adapt. Busted Sandal, for example, attempted to widen its reach by extending taproom hours, launching a new location, and offering specials like half-price pint Wednesdays. However, even these efforts couldn’t stave off the inevitable closure.

On a brighter note, new faces like Gather Brewing Co., Southerleigh Fine Food & Brewery, and Dos Sirenos have successfully integrated food menus with their craft beers, allowing them to attract a broader assortment of patrons. Wild Barley Kitchen & Brewery, which started as a food truck, learned the importance of moderation and timing in growth, ensuring their eventual transition into a full-fledged brewpub was well-planned.

A Changing Landscape

This situation isn’t just a San Antonio story; nationally, the craft beer industry is experiencing transformative times. From approximately 1,500 breweries 15 years ago, the figure has now surged to nearly 10,000. With the pressures of rising costs and increasing competition, the situation is more akin to that of the restaurant industry, where openings and closures happen regularly.

In 2023 alone, while the number of new breweries increased by 11%, closures hit a rate of 6%. Some argue that this isn’t a dying industry but rather a maturing one. Gacioch aptly points out, “Rather than a dying [brewing] industry, we’re seeing a maturing industry… as an industry, banks think of it as a proven business strategy.”

A Hopeful Future

However, even the long-standing breweries are feeling the heat. As they maneuver through these turbulent times, many are still determined to keep the local craft beer spirit alive. Eugene Simor, founder of Alamo Beer Co., expressed his desire to see the local pub and its unique flavors continue in San Antonio. His thoughts echo the sentiments shared among many brewing enthusiasts who cherish their local craft beer culture.

The road ahead may be steep, but for the craft beer enthusiasts in San Antonio, there’s still hope. As the industry adjusts to these challenges, the resilience and adaptability of local breweries and their owners shine through, promising to keep the craft beer dream alive for all. Cheers to that!