Shifts in drinking culture, economy leave sour taste for Boulder Valley brewers

BROOMFIELD — As the price of real estate, labor and ingredients increase — with no sign of coming back to Earth anytime soon — Boulder Valley-area craft brewers are also grappling with a younger demographic of drinker who might not be as interested in their product as their parents were. 

The combination of headwinds led to a skunky mood among the participants in BizWest’s CEO Roundtable on Brewing held Tuesday in the Broomfield offices of Plante Moran.  

Changes in the “culture of people going out — what inflation has done it, what covid has done to it” — are making it more difficult for craft breweries to grow and post similar sales growth rates as in years past, Very Nice Brewing Co. owner Jeff Green said. “People are staying in and making their own food, and in some cases making their own beer.”

Members of Generation Z appear to be drinking less than older generations, and when they do drink, it’s often not craft beer, roundtable participants said. 

Evolving preferences and economic environments are “inevitable,” Left Hand Brewing Co. CEO Eric Wallace. “You can’t do what we were doing forever.” Still, the pace of change has left some brewers a bit shell-shocked.

The consolidation of distribution companies has led to smaller and local producers taking a back seat to macro-brewhouses, Wallace said. “When you’re down a priority list, you sometimes can’t even get a phone call back.”

In Boulder, brewers often have difficulty expanding because so much industrial square footage is being snatched up and redeveloped into biotechnology-centric flex space, Sanitas Brewing Co. owner Michael Memsic said.

“I have a short window of time left in Boulder,” he said, because city officials have “made decisions that are prohibitive to being a craft brewer. …When you greenlight and encourage that much tech to come, this is what happens.”

On a national level, craft brewers are struggling to secure capital to expand because the “cost of money is terrible,” Rails End Beer Co. founder Dale Reeder said.

Strong leadership on a regional and state level is necessary to support not just advanced industries such as biotechnology and aerospace, Boulder Economic Council executive director Scott Sternberg said. “What are we doing to preserve and grow our lifestyle industries?”

Brewers are “trying not to charge $10 for a pint of beer when a lot of the math suggests doing so,” but some level of price increase is often necessary for a business’ survival, Cellar West Artisan Ales owner Zach Nichols said.

Breweries, especially those with taprooms or restaurants, are left between a rock and hard place trying to balance the need to attract customers with the need to increase prices, Green said. “People are tired of getting ripped off.”

While the headwinds facing the industry might be easy to track, solutions are often elusive. 

“It’s difficult to figure out what to do,” Liquid Mechanics Brewing Co. owner Davin Helden said. 

The result of this industrywide head scratching can be disheartening for some brewers.

“I’m not super excited about the industry right now, and I don’t know what to do about it,” Reeder said. 

Sponsors in attendance at the BizWest CEO Roundtable Sean Nohavec, Drew Mattox and Jeremy Wilson of Plante Moran, and Aaron Spear of Bank of Colorado. Boulder-based law firm Berg Hill Greenleaf Ruscitti LLP also sponsors the roundtable program.