It’s a bustling Thursday evening at the collaboration taproom of Sager and Stoneyard brewing companies as guests settle in for the weekly trivia night. Jeffrey Osborne, the head brewer and co-owner of Stoneyard, is rushing back and forth between the front of house and the metallic jungle of brewing equipment occupying the rear of the building, each time bearing a keg filled with fresh beer or returning it drained.
Sager-Stoneyard, which opened in 2023, is a first-of-its-kind taproom in Rochester. Stoneyard struggled for years to keep a taproom open, its canal side Brockport location being the most recent to shutter. Sager, led by brewer Paul Guarracini, specialized since its opening in 2018 in traditional European beers. The contrast with Osborne’s more adventurous brewing style made for a good symbiosis.
But this collaboration is also an indicator of the status of the local brewing industry—the golden age is dead, the market has stabilized and many breweries have to get creative to keep afloat.
“I think craft beer is going backwards a bit, at least (compared) to when it was blowing up,” Osborne said. “Back then, everyone wanted craft beer, but now it’s back to a pub atmosphere and you want to have a strong sense of community.”
Between 2013 and 2023, the number of craft breweries across New York has more than tripled, from 165 to 539, according to data from the Brewers’ Association. Most of that explosive growth took place in the latter half of the 2010s, with 131 breweries opening statewide between 2017 and 2020.
But those figures have since slowed. In the three years that followed, 79 breweries opened across the state. Craft breweries that were once early adopters in the industry have been closed, sold or merged. And the odds of a new can making it to a Wegmans shelf are slimmer than ever, with distributors looking to shed brands more often than add them.
The year of 2022 to 2023 also saw the number of craft breweries drop nationally, with regional craft breweries and microbreweries falling by 1.9% and 1.5%, respectively, although taproom numbers increased by about 3.7%.
It’s a tight industry, and a tough one to survive in.
“It’s not dying, it’s not dead, it’s a business,” said Paul Leone, executive director of the New York State Brewers’ Association. “It’s not new anymore.”
The big and small
At a time when many craft breweries are treading water, K2 Brothers stands as an outlier. Since it opened in Penfield in 2017, the brewery has worked at an incessant upward march, expanding its distribution network and opening satellite locations in Buffalo and, most recently, the former Freewill Elementary School in Walworth.
In that growth, the brewery has also absorbed parts of the craft beer ecosystem. When ROC Brewing, an elder fixture in the craft beer scene, closed last year, K2 hired brewer Nick Mesrobian as their new head brewer.
Likewise, when Canandaigua’s Young Lion, once one of the largest craft breweries in the region, closed in February, K2 bought the brand. The brewery structure on the shores of Canandaigua Lake was purchased by Other Half Brewing Company.
Similar incidents of brand merging can be seen in other regional breweries. For example, in September, Captain Lawrence and Bronx Brewing, two legacy craft breweries in the New York City area, announced they would be combining their operations.
On a Tuesday in mid-October, owners Brad and Kyle Kennedy sat at a long table in what was once the school cafeteria. The school is an ambitious project, and the end-run of a nearly five-year search for another K2 space.
“Really, I think the reason it’s working for us is that we’ve tried to make an experience,” said Brad Kennedy.
The K2 purchase of the Young Lion brand made sense for the Kennedys. K2 had previously contract-brewed beers at Young Lion’s facility, and both breweries were already housed under the same distributor, Wright Beverage. The latter is a major motivator for acquiring a beer brand.
New York works under a three-tier system for beer sales: producers, wholesalers, or distributors, and retail. A brewer is required to go through a distributor in order to sell at, for example, Wegmans.
At the height of the craft beer boom, distributors were quick to scoop up brands, as consumers were eager to get their hands on a wide berth of products. Now, if a new brewery wanted to enter distribution, it’s next to impossible.
“That era where wholesalers are really trying to get a good craft beer portfolio is over,” Leone said. “So, (for) a brewer that’s thinking, ‘I really want to get into retail,’ the wholesalers will tell them, we don’t have any space for you. We’re good.”
In all, craft beer sales are down nationally, dropping 1% in 2023, according to data from the Brewers Association.
The beer industry has notable new competition in ready-to-drink cocktails, an industry that has seen explosive growth in recent years and is projected to hit $40 billion market value by 2027, according to data from BevSource. Comparably, the craft beer industry was valued at $28.9 billion in 2023.
“It’s High Noons, White Claw vodka,” said Sean Smith, sales manager at K2. “They’re stealing a lot of the market share. Back when I started, I don’t think we had any of those.”
At Sager, head brewer and co-owner Guarracini has no interest in getting into distribution beyond what little he delivers to local pubs. But it’s also not exactly an option. His partner in Stoneyard has distribution through TJ Sheehan; the demand for those beers is limited to begin with, let alone adding more.
“He (Osborne) was one of the first local craft brands that they picked up, but now it’s like he’s in the doghouse, because he doesn’t have the cachet, in their minds, of (Auburn’s) Prison City or whoever else they’re carrying,” Guarracini said.
When the COVID-19 pandemic hit, a wave of fear that mass closures were coming hit the craft brewing industry, and the proverbial bubble, growing larger with each new brewery and taproom, would finally burst.
But for Leone, there is, and was, no bubble. Beer isn’t going anywhere, but it’s an industry that would eventually hit a saturation point of what a local market can support. New York, he said, is at that point. For every brewery that closes, another opens. The sales figures remain largely flat. Competition creeps in at every corner.
With the golden age of growth in the rearview, the craft beer industry is stripped of pretense to become what it always has been: hard work.
“It’s not in peril,” Leone said. “Sure, some are closing, and it sucks. These are really good people that gave their hearts and souls to these things, and it just didn’t work.”