These days, you could just about throw a pint glass anywhere in Northeast Minneapolis and hit a brewery (that doesn’t mean you should).
That neighborhood may be the epicenter of Minnesota’s brewery boom, but it’s not nearly the extent of it. Today, there are nearly a hundred breweries (not including brewpubs) across the state: you can drink local craft beer in the Twin Cities, in its suburbs, and even in Greater Minnesota towns like Luverne — according to MNBeer.com, a website that covers craft beer in Minnesota.
Since 2011, when Minnesota law was changed to allow breweries to sell directly to consumers via taprooms, the trajectory of growth in the brewing industry in Minnesota has been in one direction: up.
But that may be changing. In 2016, for the first time since the explosion in breweries started, Minnesota saw fewer of them launch than the year prior, according to MNBeer. Likewise, the growth in the number of licensed brewers in the state appears to have slowed, according to data from the Minnesota Department of Public Safety’s Alcohol and Gambling Enforcement Division. From 2014 to 2015, the number of licensed breweries in Minnesota grew by 36. From 2015 to 2016, the increase was just five.
Has Minnesotans’ thirst for craft beer been quenched?
Mirrors larger trends
Both the major boost and the slowdown in brewery growth seen in Minnesota mirror trends in other parts of the U.S., said Bart Watson, chief economist at the Colorado-based Brewers Association.
Metro areas like the Twin Cities — which wasn’t first but was quick to adapt to the brewery craze — saw rapid growth as consumers developed a taste for craft beer and, in some cases, as lawmakers made it easier to open breweries, taprooms and brewpubs, he said.
In 2011, Minnesota passed the “Surly Bill,” which made it legal for brewers that produce less than 250,000 barrels of beer annually to sell pints of beer on their premises.
“That opened the floodgates,” said Laura Mullen, a co-founder of Bent Paddle Brewing Co. in Duluth and the vice president of the Minnesota Craft Brewers Guild.
The recession, she believes, also may have had a hand in the boom.
“People who maybe lost their jobs, or saw the insecurity that happened with the recession, loved their home brewing, saw a growing market, all of this stuff, and they started little businesses — breweries: something they were passionate about,” she said.
Between 2011 and 2016, the number of licensed breweries in Minnesota more than quadrupled, according to the Department of Public Safety. In 2015, Minnesota had 2.7 breweries for every 100,000 adults over age 21 — earning it 14th place among U.S. states, according to the Brewers Association. (Vermont, in first place, had 9.4 breweries per 100,000 adults over 21, while Oregon and Colorado, in second and third, had 7.7 and 7.3, respectively.)
More breweries, of course, means more competition — for customers, for shelf space in liquor stores and for tap lines in bars. And starting a brewery is expensive: it costs a lot of money just to buy the brewing equipment. More competition also means it’s more difficult for new breweries to break into the market, which some say is making would-be brewers more cautious about getting into the business.
“It’s a much more competitive marketplace than it once was,” Watson said. “I think they’re realistic about the challenges of opening breweries and how hard it is to raise capital.”
In Minnesota, some breweries are getting a cooler reception when they launch than they might have a few years ago, when each brewery’s opening was more of a novelty, said Ryan Anderson, the founder and editor of MNBeer.
While growth may be slowing, that doesn’t mean breweries are closing down in large numbers in Minnesota: on the contrary, barely any are.
In recent years, MinnPost could only find four instances of breweries closing: Dubrue Brewing in Duluth, Staples Mill Brewing Co. in Stillwater, Leech Lake Brewing in Walker, and recently, Harriet Brewing in Minneapolis.
Harriet, an early entry on the Minneapolis craft brewery scene, announced in early November it would shut its doors after six years in business. A Facebook post on the popular brewery’s page cited development plans at Harriet’s location, but acknowledged starting up as a new brand would be too risky in an increasingly competitive market.
“Attempting to relocate and repeat would be lame,” the post reads. “Relocating would require a new brand and business plan, and, frankly, starting another brewery now seems unoriginal and risky in this saturated market.”
Nationally, openings outstrip closings by far, but, “I would say closings are higher this year than in years past,” Watson said.
In general, taproom sales continue to be pretty good, while the growth in store sales seems to be a bit slower for craft breweries than in previous years, he said, adding that Minnesota brewers have tended to be smart about expanding where they sell their beer.
“Most of the Minnesota brewers have been pretty cautious in their expansions. They’re not super widely distributed and most of their sales are coming from Minnesota,” he said.
Four closings in Minnesota isn’t a lot, considering about 50 percent of U.S. businesses fail within five years of opening, according to Gallup. But both Anderson and Mullen said 2017 could be the year we start to see more — less because of the competition, Mullen said, than that brewers are not immune to the pressures of running a small business.
In order to market themselves in an increasingly competitive field, brewers are broadening their products and innovating to differentiate themselves from competitors, Watson said.
Some are offering lighter beer styles — such as pilsners, blonde ales and kolsches — to appeal to more mainstream palates, Watson said. Others are coming up with more unique brews: barrel-aged beers, sour wild ales, and other twists on standards — a trend Watson said he expects to see more of going forward.
An uptick in brewpubs may indicate an effort by brewers to buffer their business with food sales, too, he said.
But Mullen predicts the market isn’t done growing to make space for craft breweries, especially in places where there aren’t any or many.
“People like my parents, who (had never had craft beer) and now they love it — they’re never going to go back and buy a light beer ever,” she said. “Only 12 percent of the beer market is craft, a bit of it is imports, but most of it is domestics — Bud, Miller, Coors. (But) as people change and discover the nuance that is craft beer, they don’t go backwards. To me, there’s a huge marketplace.”
In Minnesota, Anderson expects to see continued growth — though maybe at a slower clip than at the height of the boom — in Minnesota’s craft beer scene in 2017 and going forward.
There’s still fanfare surrounding new brewery openings in Minnesota, and several — from HeadFlyer Brewing in Minneapolis to Hoops Brewing in Duluth — are already on tap to open in the new year.
“I see more of a measured growth. You can’t just jump in and say ‘I want to make a brewery,’ (whereas) you might have been able to do that a number of years ago,” he said.
As for other things to expect from Minnesota’s craft beer scene in 2017, Anderson says we could see a continued increase in craft breweries in smaller cities and towns. He cited Junkyard Brewing Co., a small brewery in Moorhead, as one of his top 10 favorites in the state.
“I think it’s exciting to see them pop up in small towns and different areas,” he said, noting his hometown, Fergus Falls, now has its own brew pub. “It’s cool to see that being sustained in different areas.”