Are Breweries Going Bottoms Up?

While national beer sales are trending down, local breweries are still going strong

By Todd VanSickle | March 7, 2026

Let’s face it: adults aren’t drinking like they used to. Add in rising costs, a pandemic, and a saturated market, and it becomes a real buzz kill for craft breweries.

Last year, 434 craft breweries closed and 268 opened in the United States, according to the Brewers Association. It is the second consecutive year closures have outnumbered openings nationwide. More than 250 breweries of about 10,000 closed halfway through 2025.

“If the craft beer industry is a ship, we can comfortably say we’re no longer in the safety of a harbor. The days of relative calm are behind, and brewers are getting their sea legs in this new, challenging open water,” says Brewers Association economist Matt Gacioch. “Changing consumer behaviors, retailer rationalization, cost increases due to inflation and tariffs, and more competition than ever have been compounding difficulties in 2025. And still, brewers are stepping up to meet today’s challenges head on by adjusting their offerings and, sometimes, their entire business models.”

What’s Happening in Michigan

In northern Michigan, craft breweries are well aware of the challenges that the beer industry faces and realize they are not immune to the shifting drinking culture. Many have adapted and others are expanding.

However, at least seven Michigan breweries—mostly near Grand Rapids, Detroit, and Kalamazoo—closed in 2025. In November 2024, Fresh Coast Beer Works closed in Traverse City, reportedly for various reasons.

“It’s just that we had seen so few closings for many years,” says Michigan Brewers Guild President Scott Graham. “I think part of it is the stress of COVID, increasing costs, and flatter declining sales. I couldn’t say it’s specifically in one area or another. It’s not unique to Michigan. We’re seeing it all across the nation.”

He adds that opportunities lie in leveraging hospitality, community engagement, and diversifying offerings beyond beer. “I still think the failure rate is far less than a typical restaurant, if you wanted to compare it to that. When somebody does go out of business, it feels like a personal and sad story.”

The Michigan craft beer industry has grown significantly over the past 15 years, with more than 400 breweries statewide. Michigan is consistently in the top 10 for states with breweries. The Michigan Brewers Guild has about 240 members and promotes and protects the industry through events and policy advocacy. The guild’s three beer festivals throughout the state are some of its largest events.

Drinking Less, Drinking Lighter

Some breweries have started to make lighter ABV (less than 4 percent) beers and offer more non-alcoholic (NA) options to keep the healthy-minded customer and the younger generation coming in the door.

The sober conscious generation—Gen Zs born between 1997 and 2012—drinks 20 percent less than Millennials, who drink less than older generations, according to a World Finance report. The shift is attributed to Gen Zs being more aware of the negative health effects of alcohol. Additionally, the generation grew up socializing online, rather than gathering for happy hour.

Rare Bird Brewpub in Traverse City has 42 taps year round, and 12 more outside during the summer months, but they’re not all for alcohol.

“Twelve of those are our own beers, while the other taps are filled with all sorts of other stuff from other breweries, cocktails on tap, kombucha, and cold brewed coffee,” says Rare Bird owner and brewer Tina Schuett.

All told, Rare Bird offers 16 non-alcoholic options, not including sodas.

“We see the decline in people drinking alcohol, and beer more specifically, as an opportunity to offer fun new options,” says Schuett. “We have greatly expanded our NA offerings and see this as a positive change overall. We will never be mad about people making positive changes in their lives. [We] want to grow with people.”

Schuett adds that the non-alcoholic beers, mocktails, CBD seltzers, and kombucha have all been well received by customers.

“We have had a lot of positive feedback, which is why we keep adding more,” Schuett says. “We are just here to give people what they want.”

Expanding the Experience

Aside from beer, Graham believes craft breweries have a lot to offer and need to focus on hospitality and quality. Many breweries are leaning into locally-sourced ingredients, while offering activities and experiences as incentives for customers to come visit and have a drink of their choice.

“An advantage that breweries have is that they’re a community gathering place,” the brewers guild president says. “They’re unique, they’re fun, they’re a great place to meet and gather with people. That’s a real advantage that persists.”

St. Ambrose Cellars in Beulah, known for making mead and cider, has had its beer license for the past six years. Head brewer Nathan Ely has brewed at St. Ambrose for 11 years and says he produces small batches of 100 gallons of beer at a time. He has found that offering something other than beer has helped St. Ambrose through challenging times.

During the summer, St. Ambrose, like many other breweries, is at its peak. Guests are seated outside on an expansive lawn at the foot of a barn used for live music. Guests play games, like bocce ball, and there is even an 18-hole disc golf course.

The owner, Kirk Jones, spends the winter in Florida tending to his bees, which are used to make honey for the many products that St. Ambrose has to offer.

“Kirk does want to have another beer system that’s larger, but if we ever put one in, it would probably be the biggest thing we ever put in—[we'd] probably do, like, a 10-barrel system,” Ely says.

The brewer is working on making a low ABV beer and offers non-alcoholic options, like kombucha.

The Economics of Growth

Stone Hound Brewing Company, located in a former laundromat on Bunker Hill Road overlooking East Bay, celebrated its five-year anniversary in February. Owner Brent Faber says he is keeping an eye on the economy, while expanding his operation in 2026.

“We haven’t personally felt a slowdown, but we’re aware that we operate in a discretionary spending space in a competitive market that relies heavily on both locals and tourists. It’s something we’re paying attention to,” Faber says. “Whether it’s beer, food, or service, our reputation is built on consistency. As we operate our current location and add a second, protecting that quality and culture is a top priority while also allowing the space to develop its own unique identity organically.”

Stone Hound is in the process of opening a taproom on 8th Street in Traverse City in the former McLain’s Cycle and Fitness building.

“Expanding into 8th Street is something we’re really excited about, but any time you grow, there’s pressure to execute well,” says Faber. “We want to make sure the new space feels like us from day one.”

The owner says Stone Hound will take advantage of its two locations near the TART.

“With both locations situated along the TART Trail, we’re looking forward to brainstorming fun events that combine our love of bikes and beer,” says Faber. “It’s a natural fit for our community and brand.”

Faber also plans to make more in-roads with local businesses (and ingredients). For example, recently Stone Hound mug club members toured and had dinner at the Great Lakes Malting facility to celebrate Stone Hound’s anniversary.

“We’re working to use as many Michigan-grown ingredients as possible in our beer and expand that mindset into the kitchen where we can,” Faber says. “That local connection is important to us.”

The Ripple Effects of the Pandemic

John Niedermaier understands local connection. He has been making beer for more than 30 years at Brewery Terra Firma located in Traverse City. He says his beer is unique and is best paired with the brewery’s farm and atmosphere.

“We’re 10 minutes from downtown,” says Niedermaier. “You can actually get yourself a beer and go walk into the south field and look at the beehives, see the wheat growing, see our hop yards, and walk around the property. It’s just a very unique experience.”

Niedermaier says he has faced rising costs from materials to ingredients, along with a decline of wholesale distribution, which started during COVID.

“Distributers used to work a whole lot harder for the craft beer industry, but COVID just knocked all of the little guys out,” Niedermaier says. “The way people shop changed, so now it’s dominated by the big industrial brewers. It’s hard, because you’re reliant on the distributor who purchases the product, and then they mark it up and put it on a shelf and send their sales guys out there to sell it. Our margins are much more slim for wholesale. So just putting all that effort into re-establishing a market that we really can’t trust anymore doesn't really make sense.”

Niedermaier says his clientele varies in age, but he hasn’t been affected as much by the absence of Gen Zs at his brewery.

“Our clientele is not so much of the younger people, and really never has been,” he says. “Maybe it’s just a farm thing and it is not exciting enough. I don’t know. We don’t have TVs on the walls.”

In the future, he plans to upgrade some equipment and do more in-house events, like beer dinners and barbecues. He says several customers bring their pets and chill out by the fire pit or show up for euchre night on Sundays.

Currently, providing food is the biggest challenge for Terra Firma. However, Niedermaier opened up his brewery to individuals with their own commercial kitchen, who are allowed under the health department to operate on the premises. He is hopeful Garfield Township will allow food trucks at his brewery this summer.

No matter what comes next for local breweries, there is still optimism from the Brewers Association and beyond.

“The craft beer industry has always been characterized by creativity and resilience. Brewers today know that success comes through exceptional products, efficient operations, and connections with consumers,” says Gacioch. “The path ahead will not be without its bumps, but I’d never bet against the steady tenacity of the people behind the beer.”

What’s on Tap?

Rare Bird
“We don’t have any major plans, just constantly changing and evolving,” says Schuett. “We have been replacing a lot of old equipment this winter, so we are excited to have new toys and more reliability.” Customers can expect flagship beers on tap including Kushy Punch, El Guante, and Blood Orange You Witty? “We always have fun with seasonal offerings,” Schuett adds.

St. Ambrose
This spring, St. Ambrose will have a blonde ale, Czech Pilsner, and a couple of light beers on tap to name a few. “I made a beer for my girlfriend last year that’s going to be a new staple,” Ely says. “It is a lemon lavender honey wheat ale, because we have to get the honey in there.” A lacto sour mead is also in the works, the brewer says. “We’re actually in the process of making it right now,” Ely says. “That’ll probably be out in another month or two. It’s potentially going to be blood orange, guava, and strawberry.”

Stone Hound
Ursa Minor dark lager is in the pipeline, and will eventually turn into Ursa Major—the barrel-aged version. “It’s always really cool to taste them side by side if the timing works out,” says Faber. “You love the original and then you let it sit in a barrel for six months to a year and it becomes something totally different. Tasting that evolution never gets old.” Also expect a West Coast Pilsner collaboration with Elder Piper of Petoskey, with each brewery having its own version available by late March.

Terra Firma
The brewery uses local malt and hops and operates sustainably, reusing waste on its farm. Their menu emphasizes seasonal rotations along with a few staples like Manitou and Sleeping Bear Brown. Upcoming releases include the Ginger Lager, Little Italy (a honey basil beer), and Ancho Chile Dutch Double Chocolate Porter.