How Craft Brewers Found Themselves on the Wrong End of Gentrification

“If you see this in your neighborhood, the rent is going up.” The joke has bounced around the internet for years, batted back and forth by an American precariat beleaguered by the Great Recession, the Covid pandemic, and the housing crisis. “This” is usually some culturally relevant affectation of urbane white wealth: a blonde wood-paneled Pilates studio, a deliberately low-brow haircut, a start-up’s slick electric scooters. You get it.

“This” has long included craft breweries, which were practically a byword for a city on the make throughout the first two decades of the 21st century. They opened by the thousands in shabby warehouses and redeveloped schoolhouses and hideous 5-over-1s with overwrought names like “The Foundry” and “maple&MAIN” to serve droves of millennial knowledge workers thirsty for the definitive beverage of their era. But their era is over. The rent has gone up, beer sales have started going down, and across the country, craft breweries have found themselves on the wrong side of the process of gentrification that they once symbolized — if not accelerated.

It’s an awkward reversal. “Sometimes I joke that I don’t know which side of capitalism I fall on,” Sean Lilly Wilson, founder and “chief executive optimist” at Fullsteam Brewing, tells Hop Take. Presently, his brewery is on the wrong side of capitalism, or at least the real estate market: It will soon vacate the warehouse in Durham, N.C., it has called home since 2009 in the face of a colossal proposed rent increase. The neighborhood, once a light-industrial district with auto-body shops, tobacco warehouses, and bottling plants, is now a desirable place for “creative class” types to live. Having helped transition the area from one chapter to the next, Wilson adds, Fullsteam just “doesn’t fit anymore.”

The scope of this table-turning trend isn’t easy to quantify, but we do know that breweries are now closing at a higher rate than opening. How many of the 399 firms that closed last year did so due to massive rent increases? The Brewers Association (BA) doesn’t track that sort of thing, and I’m not aware of an organization that does. But the trade group’s veteran data whiz-turned-president and chief executive, Bart Watson, tells Hop Take via email that it’s probably a bunch. “While we don’t have definitive data on the subject, lease issues continue to appear to be one of the major contributing factors to brewery closures,” he says.

In the absence of data, there’s plenty of empirical evidence to go around. I don’t log into Facebook much these days, but it feels like every time I do, I see a sad post from a craft brewery announcing an impending closure because its landlord is demanding an enormous rent increase, or has sold the building to an owner who’s doing likewise — or knocking the whole thing down to build condos. It’s happening in Denver, and Austin, and outside of Philadelphia, and everywhere in between.

You’re reading this column, so you probably already know that craft breweries are not selling as much beer as they once did. This poses a problem even when real-estate costs are fixed. But there are also structural issues dictating this rash of rent-hike closures. Many breweries operate on 10-year leases, meaning that they signed agreements in the early 2010s, which turned out to be the top of the craft beer market. This was not the top of the commercial real-estate market (to the extent that such a thing exists.) Crucially, it was also on the leading edge of massive, generational shifts away from population-dense coastal cities toward places like the Mountain West and the Southeast. This trend hit overdrive during Covid. Sharpening the double-edged sword for brewers, locations that “won” this reshuffling of the American demographic map (in terms of net increase of potential beer drinkers, at least) were small and midsized cities, like Greenville, S.C., Burlington, Vt., and Boise, Idaho. Places that aspiring brewery owners, scouting for affordable locations to open places of their own, might have once considered “up and coming.”

This flywheel worked in craft breweries’ favor, right up until it didn’t. “The neighborhood grows, the area grows, it attracts more businesses and so forth,” Rick Benfield, vice-president of the North Carolina Brewers Guild, told the Charlotte Business Journal this past August. The Queen City’s population, as it happens, grew 8.1 percent between 2020 and 2024 alone, outpacing national growth by almost six points, and absolutely blowing past first-tier metropolises like New York City, which is just now returning to pre-pandemic levels. “You’re kind of a victim of your own success because what you’ve done is made your property more valuable,” Benfield said.

There is some data on this transformative effect breweries have on real estate. In fact, scholars have examined it in Charlotte specifically, finding in a 2020 study that “single-family homes increased 9.3 percent as a result of a brewery opening nearby, while the value of condominiums increased by 3.2 percent.” Sure, this uptick may bring potential customers with more discretionary income to a brewery, but it also drives up a brewery’s labor costs, as workers’ costs of living, and/or commutes increase apace. The study didn’t see a noticeable effect on commercial rents at the time, but they’ve gone up almost everywhere ever since, so the outcome for craft breweries has largely been the same. Couple that paradox with the tremendous uptick in new craft breweries — the national total increased more than 100 percent between 2015 and 2024, per BA data — and the downward pressures on demand for beer-flavored beer, and it’s a wonder many firms have held onto their locations as long as they have.

Ever the optimist, Wilson is taking Fullsteam’s own moment in the real-estate barrel as an opportunity to chart a more sustainable option for the award-winning brewery. After fruitlessly negotiating with a new landlord over what he says wound up being a 300 percent rent increase on the brewery’s (admittedly favorable) current rate, Wilson decided to vacate its existing spot in Durham to focus on opening an already-in-the-works Fullsteam brewpub inside Durham’s historic American Tobacco Campus. Rather than build or buy another brewery, Fullsteam will brew most of its volume with capacity contracted from Charlotte’s NoDa Brewery and Rocky Mount’s Brewmill. “It’s a lot more sustainable and energy reducing if we don’t go through this effort of trying to build out something that is already solved for us,” he says, emphasizing that he considers Fullsteam lucky to have landed on this outcome given what other breweries are facing in other markets.

If you’re meme-literate, you understand why it’s tempting to sneer at the squeeze brewers are now in. For one thing, the line was never going to go up forever, but during the salad days, a lot of brewery owners kinda-sorta convinced themselves it might. For another, there’s a sense of symmetry to it that verges on schadenfreude for anybody who’s been forced to move apartments because their formerly seedy neighborhood got trendy. The joke is on the displaced for getting priced out, but it’s also on the interloper for being cliché. What a thrill to see the basics take down their bistro lights and go bust.

The “causes” of gentrification are hotly contested, but the third-wave cafés, newly built townhouses, and dog-treat bakeries that are often blamed for triggering the process are probably better understood as symptoms of it. Still, craft breweries, already avatars of an effete, mostly white consumer class, have occasionally done things to warrant some sneering. In one high-profile example during the racially fraught months of the early pandemic, the Florida Brewers Guild petitioned the state to let its constituents reopen their taprooms because craft breweries were “the #1 tool utilized by municipalities to gentrify areas in dying neighborhoods.” That particular stoked national outrage, but its underlying tension has been a fairly common feature of relationships between breweries and residents before and since. Even consummately neighborly craft breweries changed their neighborhoods. It’s unavoidable. Residents who disagreed with those changes, or were displaced by them, may be short on pity for the perceived perpetrators; even disinterested observers can relish the irony.

In Durham, Fullsteam’s Wilson is well aware of this dynamic, and introspective about his place in it. “I mean, it is what happened,” he says, grasping for a way to square the fact that Fullsteam’s success in its original location also authored its displacement from it. “We set a tone, and we helped shape a neighborhood, and I think it’s important to gracefully say goodbye.” One of the last beers the Fullsteam team brewed at its old home was a saison named To Everything There Is A Season, he added. “That was our season in this neighborhood.”

Hop-ocalypse Now

Workers have traditionally had decent success organizing American macrobreweries; less so, the country’s thousands of craft breweries, for reasons we’ve discussed at length. But no matter the size of the brewery at which workers are trying to bargain collectively, so-called “persuaders” — anti-union consultants, hired by management to swing union elections in their favor — make it harder. It’s nasty work, and it pays handsomely. Earlier this month, one such operator filed a long-overdue disclosure with the Office of Labor-Management Standards indicating that Boston Beer Company paid as much as $385 per hour for “voluntary meetings on the subject of unionization and rights” with workers then trying to organize a drive with Teamsters Local 773 in summer 2023. And wouldn’t you know it: that fall, the drive fizzled out.

Ups…

JuneShine partnered with Willie Nelson on a new THC-infused “social tonic”… Congrats to 2 Towns Cider on 15 years in business… Athletic Brewing Co. did over $130 million in sales in 2024, putting its valuation at $800 million… Craft’s share of New England’s beer sales is over 32 percent, the highest regional share in the country…

…and downs

San Francisco Pride says four major sponsors, including Anheuser-Busch InBev, have pulled out, leaving it in a $300,000 hole… California rolled forward Gov. Gavin “The PlumpJack Podcaster” Newsom’s emergency ban on THC-derived hemp products from last fall another three months… A beer-teared goodbye to Katie Marisic, the BA’s longtime lobbyist, who just took a job at Diageo…

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