The craft beer industry is facing difficult times. Having weathered the COVID pandemic, breweries are now operating in a market where alcohol beverage consumption in the U.S. is declining to historic lows. On top of that, the hemp beverage market, which has been providing a lifeline and stabilizing revenues, is under threat of extinction. How are breweries dealing with these difficult economic circumstances? Hear from a panel of owners as to how they are weathering the storm and transforming their businesses to survive and thrive.
Jeffrey O’Brien is a partner at Husch Blackwell and leads the firm’s Alcohol Beverage practice. For nearly 25 years, he has worked with breweries, wineries, distilleries, and other beverage companies on everything from acquisitions and growth plans to licensing, distribution, and regulatory issues. Jeff works closely with producers across the country and regularly advises businesses on emerging issues affecting the beverage industry, including the rapidly changing hemp beverage market.
Joining Jeff are Zack Ward, Founder and COO of OMNI Brewing Company; Daniel Paul Wellendorf, Co-Owner and Head of Marketing at Modist Brewing Co.; and Kevin Hilliard, Co-Founder of Insight Brewing.
Drawing on their experiences leading some of Minnesota’s most recognized craft breweries, the panelists will discuss how breweries are responding to shifting consumer trends, competitive pressures, and economic challenges while identifying new opportunities for resilience and growth.
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What This Session Covers
This discussion explores how three Minnesota craft breweries adapted to major disruptions like the pandemic, social unrest, and evolving consumer trends. For taproom operators and brewery owners, understanding these pivots—from revenue diversification to legal frameworks and community engagement—is crucial for building resilience and sustaining growth in uncertain markets.
Key Talking Points
- Pandemic Impact and Taproom Challenges [07:45]
The shutdown of taprooms cut off a major high-margin revenue source for breweries, forcing many to pivot quickly to to-go sales and self-distribution. The loss of on-premise social experiences lowered customer willingness to try new brands, shifting demand toward established regional products. - Taproom vs. Brewpub Licensing Choices and Expansion [13:26]
Switching from production brewery with taproom to brewpub status allows a full liquor license, including cocktails and diverse beverage offerings, but sacrifices off-site distribution rights. Omni Brewery leveraged this to open multiple locations across the metro area and acquire other breweries, using event spaces and food (pizza) to meet licensing requirements and diversify income. - Leveraging THC-Infused Beverages as a Revenue Driver [19:22]
Both Insight and Modest capitalized on Minnesota’s hemp beverage laws to create THC-infused drinks, filling unused production capacity and capturing new customer segments. For these breweries, THC products made up between 20% and 63% of sales before recent market softening, underscoring the financial significance of alternative intoxicants in their portfolios. - Launching Coffee Services to Supplement Taproom Income [28:05]
Omni Brewery’s move into hand-roasted, scratch-made coffee aimed to increase weekday traffic and broaden customer appeal. While consumer habits have made adoption slower than hoped, offering coffee alongside beer and food enhances the “third space” concept and encourages longer visits. - Brewery as Community Hub During Social Upheaval [32:44]
During the George Floyd protests and subsequent ICE enforcement operations, breweries remained community anchors by providing safe spaces for gathering, organizing food drives, and supporting local activism—even when doing so risked alienating some customers. This commitment reaffirmed the brewery’s role beyond just selling beverages. - Event Spaces as Strategic Revenue and Customer Acquisition Channels [46:24]
Both Omni and Modest invested in private event spaces and larger venue centers to attract weddings, corporate events, and community gatherings. These spaces offer high-margin revenue, help mitigate market volatility, and introduce new customers to their taproom offerings, though success requires dedicated marketing and outreach efforts. - Evolving Beer Styles and Product Development [54:12]
Breweries are scaling back frequent style changes and new release cadence, focusing instead on core, proven offerings like hazy IPAs and lagers to retain regular customers in taprooms. This steady approach balances consumer demand for familiarity with occasional innovation and acknowledges the economics of small-batch specialty releases.
Action Items
- Evaluate Your Licensing Structure
Review state laws to determine if converting from a production brewery to a brewpub could open new revenue streams like full bar service or event hosting, while assessing trade-offs in distribution capabilities. - Develop Alternative Product Lines to Utilize Capacity
Explore opportunities to produce non-beer beverages such as THC-infused drinks or coffee to diversify sales channels, especially if taproom or beer distribution volumes are softening. - Invest in Flexible Event Spaces
Create or enhance private event rooms or multi-use venues to attract weddings, corporate gatherings, and community events, establishing stable income sources and expanding your brand reach beyond typical taproom business. - Strengthen Community Engagement
Position your brewery as a safe, inclusive gathering place during social challenges by hosting drives, supporting local causes, and offering space for community organizing, which can build loyalty and deepen local ties. - Focus Core Beer Production on Best Sellers
Concentrate brewing capacity on core beer offerings that your taproom regulars love rather than chasing every new trend, optimizing inventory management and reducing costs while maintaining product quality and consistency. - Plan for Strategic Marketing and Staffing for New Ventures
If adding new beverage lines (like coffee) or event services, be prepared to hire or consult with specialists familiar with those markets to effectively launch and scale these initiatives. - Monitor Regulatory Developments
Stay updated on changing state and federal laws around hemp, THC beverages, and alcohol licensing to pivot quickly and protect revenue streams from regulatory uncertainty.
This session demonstrates that thriving in today’s brewing landscape requires nimbleness, diversification, and a strong community focus more than ever before.