America Can Brew Way More Beer Than We Drink. It’s Causing Problems.

For all his many (many, many) faults, J. Paul Getty had a pretty useful philosophy on debt service. “If you owe the bank $100, that’s your problem,” the oil magnate is widely credited with saying, “but if you owe the bank $100 million, that’s the bank’s problem.”

Craft breweries’ problem — well, one of them — is that they’re stuck in the middle. Many borrowed heavily against boom-year growth to build handsome, state-of-the-art facilities that would serve their expansionary ambitions. You know what happened next. The growth stalled. The interest accrued. And lenders came calling.

“There are a lot of guys out there that are flipping keys back to banks because they owe $20 or $30 million and they’re at 45% capacity,” Tim Schoen, a 40-year veteran of the beer industry who founded the contracting firm Brew Hub in 2012, told me in an interview in late 2018. “That just doesn’t work.” It doesn’t, and it would only get worse from there. In fact, Schoen would later get calls from his own lenders. In February 2024, Brew Hub entered into a forbearance agreement with Live Oak Bank; in April 2025, the bank filed for foreclosure, alleging it was owed $9.4 million. Brew Hub was acquired in late July by Great Southern Copackers in a terms-undisclosed deal. Brewbound reported that Schoen was “stay[ing] on as a shareholder and team member,” and that the plant was “operating near 65% capacity” — but only after the buyer brought in clients that nearly doubled its volume. It’s rough out there, man.

All over the country, small, independent breweries are closing. And not-so-small breweries, too: In 2022, Modern Times Beer, then the 48th-largest craft brewer by volume according to the Brewers Association (BA), hit the skids after defaulting on almost $13 million in debt. Many more firms in the struggling segment are hanging in there. At its annual conference earlier this year, the BA touted survey data indicating that 43 percent of respondents reported volume growth the previous year. That’s damn good in a tough market, but it also means that 57 percent did not. In the national aggregate, that’s a lot of slack capacity, and a lot of idled stainless steel. Roughly half of all the tank space in these United States is not producing beer, per the BA’s utilization estimates. In a blog post from October 2024 entitled “The Capacity Question,” the trade group’s chief economist, Matt Gacioch, charted a troubling trend, noting that craft brewing’s collective usage rate was around 61 percent in 2018, which was still below the 70 to 79 percent utilization range the overall beverage manufacturing sector has shown since 2016.

“[I]nvestments aren’t immediate, and many [breweries] were likely in process as the pandemic hit and the craft beer market changed on a dime,” Gacioch explained, arguing that the answer to “the capacity question” had less to do with the segment’s single-digit sales declines this decade than overly optimistic growth projections last decade. (Two sides of the same coin, that.) “Many investments were made on forecasts for sustained growth that never materialized, leaving the industry with more capacity than is needed.”

This surplus has manifested itself in a few different ways. The most visible is what Gacioch’s boss, BA president and CEO Bart Watson, called craft brewing’s “painful period of rationalization,” i.e., closures. A cratering used-equipment market is another. And, of course, there are lawsuits.

Often, these are bank-on-brewery, as noted above, and driven by stiffening headwinds. But when business partners fall out, capacity can be a millstone even in growth segments. For example, consider the legal dispute between Incline Cider Company and Schilling Cider that recently spilled into public view in the Pacific Northwest. It’s a complicated case that turns on the definition and ownership of recipes, but looming in the background is, you guessed it, the double-edged sword of capacity. Incline wants to move its production to Great Frontier Holdings’ Ninkasi Brewing; Schilling says the move will leave it high and dry after it upgraded its facility to accommodate the companies’ shared growth. (The sprawling plant in Auburn, Wash., is now the country’s largest fresh-pressed cidery.) On Aug. 8, a judge issued a preliminary injunction prohibiting Incline from producing its ciders elsewhere for now, finding that Schilling had “rights to ownership” over the former’s recipes stemming from a 2019 exclusivity agreement devised to protect the latter’s investment in plant improvements. Incline, for its part, contends that it doesn’t even know the recipes because Schilling always produced its liquid, and told Brewbound that it intends to keep marketing its brands as before, wherever and however the liquid is made.

While the fight plays out in court, co-founder and chief executive Colin Schilling is already thinking up new ways to keep his tanks full once Incline eventually moves on at the end of its contract in December. That’s the business he’s in: Heavy lies the head that calculates the declining usage rate. “We’re still in a totally viable position,” he tells Hop Take, regarding the facility’s utilization and the business’s overall footing. “It just won’t be as good as it is today with Incline, obviously, until we can grow back that volume.”

Of course, all this slack capacity in the system offers opportunity, too. For example, it allows craft breweries getting gentrified out of their original locations the ability to punt on owning their own production facilities entirely. “I have a lot less desire to scale manufacturing than I do to get to the core of why I’m in this business, which is to connect people,” said Sean Lilly Wilson, founder and “chief executive optimist” at Fullsteam Brewing, in a March 2025 interview, explaining why he’d decided to contract the brewery’s production to Charlotte’s NoDa Brewery and Rocky Mount’s Brewmill rather than build a new home after his landlord jacked up the rent on the brewery’s old digs in Durham, N.C. “It just made so much more sense to look at a brewery that has everything built out.”

Across the country, Prost Brewing is one of those breweries. In late 2023, it opened a 60,000-square-foot facility just north of Denver, anchored around a 30-barrel brewhouse capable of producing around 100,000 barrels of beer a year. “We did build a big production facility with a lot of, call it, ‘scary’ capacity, in a market where there is a lot of capacity available,” David Deline, Prost’s president, tells Hop Take. The process of building the plant took about three years. He declined to say how much it cost; the Denver Post reported in 2023 that Prost had secured roughly $6 million in economic development funding and tax incentives against a pledge to invest $25 million in the facility over 10 years. From its conception, the headquarters was designed to handle contract volume, which allowed Deline to capture the scale necessary to afford top-of-the-line equipment from Germany’s Kaspar Schulz, which bills itself as the world’s oldest brewing plant manufacturer.

This may sound like a recipe for disaster given the state of the market. It still could be. But like Schilling, Deline is optimistic that building for the future was worth any bumps in the present. The former is currently cooking up a new brand to replace lost volume in Washington; the latter’s plant is humming along in Colorado. “Depending on the month, we’re anywhere between a fourth to a third Prost volume, and the rest is contract,” Deline says. “To date, we’re on track to do about 75,000 barrels this year, with a lot of room to grow into 2026 and beyond.”

Capacity comes with risk, and in this market, risk comes with the territory. There’s no way around it: Somebody’s gotta own tanks. After all, unlike the stuff in the barrels that made Getty rich, beer doesn’t just spurt forth from the ground.

🤯 Hop-ocalypse Now

More details have emerged about Anheuser-Busch InBev’s distributor purge, with trade outlets clocking between six (that’s Beer Business Daily’s count) and nine (Beer Marketer’s Insights’ figure) “red weddings” currently afoot within the far-flung red network. From the sound of things, there are more on the way. I criticize beer wholesalers, and they deserve it. But available evidence suggests the country’s biggest macrobrewer is dealing death sentences to family-run outfits on thin pretexts to achieve middle-tier consolidation on its own terms. It’s nasty business along the lines of the anticompetitive practices the Biden administration had directed the Treasury Department, Federal Trade Commission, and Department of Justice to scrutinize back in 2021. But in a bit of conspicuous timing, the Trump administration just rolled back that executive order earlier this month.

📈 Ups…

Tilray Brands beat the rap on getting delisted from the NASDAQ (by maintaining a $1 minimum closing price for just 10 consecutive days, lol)… The North American Beer Writers Guild is still accepting submissions to its annual awards through Aug. 31, with thousands of dollars in prize money on the line… The Trump administration’s 50 percent tariff on aluminum is accidentally stimulating better recycling rates on aluminum cans… City Brewing has finally transferred ownership to a new investor-led holding company, stanching bankruptcy concerns…

📉 …and downs

BrewDog’s second co-founder, Martin Dickie — who still held a role at the struggling Scottish brewery after compatriot James Watt bailed in 2024 — abruptly exited last week… National Beer Wholesalers Association chief economist Lester Jones quibbled with Gallup’s booze poll but conceded it “signif[ies] a challenge for the industry”… The first draft of a House bill to regulate intoxicating hemp products leaves the door open on a very low dosage cap…

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