A Challenging Year for Craft Beer and Breweries

In 2024, Louisiana’s nearly 50 craft brewers are contending with slowed growth and increased competition.

Drive down Tchoupitoulas Street these days and you’ll find the city’s unofficial “brewery row.”

Starting Uptown and heading downriver, you’ll pass Port Orleans Brewing Co., NOLA Brewing Co., Miel Brewery & Tap Room, and Urban South Brewery. The Courtyard Brewery is only a couple of blocks away on Camp Street.

That’s a lot of string lights, cornhole boards and picnic tables filling up what used to be unused or underused industrial property.

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Spread throughout the city are nearly 20 breweries of various sizes and styles that all have one thing in common: None of them existed in pre-Katrina New Orleans.
What’s happened here, of course, is a reflection of what’s been going on around the state and the country for the last decade and a half.

There are just under 50 breweries in Louisiana today and nearly 10,000 nationwide — both numbers are record highs by a long shot. In the late 1970s, by comparison, there were fewer than 100 American brewers in operation in all 50 states. Blame it all on former President Jimmy Carter, who legalized homebrewing in 1978 and set the stage for the explosion of the craft beer industry over the last half century, especially in the last decade.

Left: Charles Hall, head brewer at Brieux Carré Brewing Company. | Right: A Brieux Carré patron shows off a pair of pints.

For beer fans, it’s a mouthwatering scenario. But all that industry growth, combined with the post-pandemic economy and evolving consumer tastes, has created challenges that are making the industry’s future cloudy — and not in a hazy IPA kind of way. Just ask the owners of Faubourg Brewing Co., which shut down most brewing operations, at least temporarily, at its New Orleans East facility late last year.

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“We’ve never hit this number of craft breweries in the United States,” said one New Orleans brewer. “So, I do think that we might expect a commensurate response from the market, a natural pulling back.”

The Brewers Association, a national trade group representing the industry, sees one sure sign of a slowdown already in effect. Its data suggests 2023 was likely the first year in the history of craft beer (not counting an anomalous 2020) that there was a dip in overall production.

The trade group said the primary causes of this are “slowing demand growth, competition from other types of alcohol and a changing retail environment.”

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For these reasons, the association believes Louisiana breweries, like their counterparts elsewhere, need new strategies to reach new customers in the face of increased competition, rising costs and a downward trend in beer sales nationwide.

Profits on Tap?
In light of industry challenges, at least four high-profile Louisiana brewers have landed on the same strategy, which seems counterintuitive at first glance: They’re getting out of the beer distribution business altogether.

In late 2023, NOLA Brewing Co. and Port Orleans Brewing Co. announced they would no longer be distributing their products to bars and stores in Louisiana. Earlier in the year, Bayou Teche Brewing near Lafayette made the same move, and Crying Eagle Brewing in Lake Charles set the trend a few years earlier.

These brewers decided to turn away from distribution, with its rising costs and low margins, in order to focus on their higher-margin retail businesses.

“It’s become so much more of a hospitality industry,” said Cary Koch, executive director of the Louisiana Craft Brewers Guild, which represents most of the state’s breweries. “The taprooms have to be the main source of revenue for a brewery in Louisiana.”

Port Orleans Brewing Co.

Specifically, the four brewers swapped their state manufacturing licenses for microbrewery licenses. The change allows them to sell other types of alcohol in their taprooms, which all view as an essential ingredient of their special event business.

“Adding wine and spirits allows us to open up our event and live music business to a broader set of people,” said Doug Walner, NOLA Brewing’s CEO and chairman. “And, on top of that, wine and spirits have great margins. I mean, that’s why people open bars.”

Last year, NOLA decommissioned its 20,000-square-foot brewing setup, which had the capacity to produce 15,000 barrels of beer annually for sale in bars and stores around the region. The 16-year-old brewery replaced that with equipment a fraction of its size to serve customers in its onsite taproom, a 12,000-square-foot space that features multiple rooms and a stage for live music.

The company is rebranding as NOLA Brewing & Pizza Co. and is banking its bottom line on regular customers and an increase in special event business.

“Wholesale is the lowest margin part of your business because you’re selling a beer at 50 cents to distribution,” said Walner. “It’s costing you 15 cents to produce, so you’re making 35 cents a can per 12-ounce beer. Well, what happens when I make a 12-ounce beer here and sell it here? I make six bucks because it doesn’t go through anybody. It’s a high margin.”

Over the years, as brewers have competed to capture onsite customers, taprooms have evolved from the picnic bench aesthetic to become full-featured event spaces.

“We have a big front patio and an inside taproom,” said Don Noel, Port Orleans president and managing partner. “We have a nice lounge area and not just tables and chairs. We have an 8,000-square-foot outdoor space. We have a 1,000-square-foot private room. We’re an event space and have so much more to offer.”

Unlike NOLA, Port Orleans is maintaining its high-capacity brewing setup and hopes to keep it operating by contract brewing for other brands. Notably, the brewery is also in negotiations to open a second location across the Mississippi River in downtown Gretna.

Left: NOLA Brewing Co. owner Doug Walner. Right: NOLA’s new brewing room.

Weathering the Trends and Going ‘Beyond Beer’
A brewery’s approach to industry challenges may well depend on its size and ambition.

Abita Brewing Co., for instance, has weathered many industry ups and downs during its nearly four-decade existence and is responding to current conditions by investing in equipment and infrastructure at its Abita Springs facility about 30 miles north of New Orleans.

“We’re always long-term thinkers,” said Troy Ashley, a company executive. “We’re investing in a new capital packaging line to give us greater flexibility, both in package formats and throughput. We’re not going anywhere — we’re here for the long run.”

A pioneer in the industry, Abita is the 35th biggest craft brewery in the nation according to the Brewers Association, and it reports production of more than 100,000 barrels of beer and soda annually, which is roughly half the state’s total output.

Ashley said the brewer essentially plans to “keep on keeping on” this year. That’s even though the Louisiana beer market was down about 4%, which equals about 1.6 million cases, in 2023. He cites the post-pandemic dip in Louisiana’s tourism economy as one factor, since the company sells about 20% of its beer in and around New Orleans.

“When there are fewer people coming into the city, that impacts things like beer sales,” he said. “And then there’s a shift in consumer preferences, where people aren’t drinking as much beer.”

Ashley said the industry is very cyclical.

“The younger generation isn’t drinking quite as much,” he noted, “but things always come around, both in trends and styles of products.”

After Abita, the most successful brewers in the state include Parish Brewing Co. near Lafayette, Gnarly Barley from Hammond and Urban South. Each reports annual sales in the range of 20,000 barrels.

Led by founder and president Jacob Landry, Urban South is tackling the market by expanding “beyond beer.”

In 2023, the company collaborated with New Orleans rapper Juvenile to create Juvie Juice, a canned, spiked version of an Arnold Palmer (half iced tea, half lemonade). Then, at the end of the year, Urban South released Driftee, a non-alcoholic seltzer that gets its intoxicating power from hemp-derived THC. Customers can choose from three flavors: grapefruit, lemon lavender and tangerine ginger.

Urban South Brewery

“Beer is kind of where it’s going to be,” said Landry. “It’s in slight decline nationally. And craft beer is kind of at peak saturation, so the growth is coming from cannibalization within craft, and what they call ‘beyond beer.’ It started with seltzers and moved on to hard iced teas.”

Landry said one of the benefits of the THC drinks is that they take much less time to make: Driftee spends 24 hours in a tank, versus beer, which takes two to four weeks.

“It’s just essentially mixing ingredients and carbonating it,” he said. “So from that perspective, it can be just a lot more efficient use of equipment and a lot quicker production time.”

Landry, who’s also the president of the Louisiana Craft Brewers Guild, recently attended a brewers’ conference, where he learned about some alarming demographic trends affecting the industry.

“Young people are more promiscuous about what they’re drinking,” he said. “In our father’s generation, people were either beer drinkers or liquor drinkers or wine drinkers, but that’s definitely not the case anymore. Among the younger generation, there’s also a decline in alcohol drinking in general.”

Beer Brieuxcarre 04
Brieux Carré Brewing Company taproom in action.

Landry said the average American drinks about 2.5 gallons of alcohol a year, and that number has remained steady.

“The mix of what they’re drinking is what’s changing,” he said, “and it’s to the detriment of beer as a category more than anything else.”

In contrast to Urban South, Parish Brewing Co. is keeping its focus on beer — and, in particular, high-quality brews that sell for a high price point. The company’s very first offering, Canebrake, remains a popular wheat beer, and Parish owner Adam Godley said Ghost in the Machine, an IPA, just might be the “most expensive barrel in the South.” He said his No. 1 customer for the product is the Walt Disney World Resort.

Godley said he plans to expand his 25,000-square-foot operation. He just purchased 3 acres of land next to his existing site.

Back in New Orleans, Second Line Brewing in Mid-City is operating on a smaller scale, but the brewery still distributes throughout Southeast Louisiana.

Mark Logan, co-founder of Second Line, said the distribution model is working for the business he started with his wife in 2014. Notably, with NOLA’s exit from distribution, the brewery claims the title of New Orleans’ oldest distributing craft brewer. It produces about 2,000 barrels annually and distributes draft beer and cans throughout the southern part of the state.

“I don’t think we have any secret sauce,” he said. “We just do what we do and try to hit all the basics between quality and controlling costs and retaining key personnel and all those things that every other business does.”

Logan blames recent exits from distribution on rising freight costs and some “poorly written legislation” that continues to make limited self-distribution expensive and challenging for the state’s brewers.

“It’s a tough business,” he said. “It’s high volume and low margin, and it has retracted. So you have to watch your capital, and try to avoid the ‘if you build it they will come’ mentality because the auction market for brewery equipment is just absolutely blowing up.”

Stay Local
Most Louisiana brewers are neighborhood operations that don’t aspire to be the next Abita — or even Parish or Urban South.

Some of these operate with microbrewery licenses, which means they don’t distribute their products to bars or stores, but others still embrace distribution — at a manageable scale — as a way to build their brand and bring in some extra dollars.

Parleaux Beer Lab in Bywater and Brieux Carre Brewing Company in the Marigny are examples of two brewers that approach distribution differently. Both opened in 2018 and both used a small distributor, Pelican Craft Brands out of Baton Rouge, to deliver kegs of their beer to a few dozen accounts around town.

Pelican went out of business last year, and now Parleaux and Brieux Carre are devising different ways to get their beers into bars and restaurants.

Parleaux co-founder Eric Jensen said he’s applied to take advantage of the state’s 2022 law that allows small operations to self-distribute their beer. Rules require him to spend money on a cooler, truck and other infrastructure, but he estimates the roughly $40,000 investment will be worth it.

If the application works out, he’ll join Oak St Brewery as one of the first in the state to invest in “self distro.”
“We’re pretty small, so we don’t have giant tanks like they have at Urban South,” said Jensen. “Figuring out what’s best for us is hard because it’s also a licensing thing. Part of our identity is being able to have families in our taproom and to embrace that hospitality side of it. In order for us to have that license, one of the conditions is that we need to distribute.”

Charles Hall, Brieux Carre owner, is going a different route. He said he’s negotiating with one of the two big distributors in town to get his brews into bars, but his plan is to keep it small, especially since the maximum capacity of his brewing setup is no more than 1,000 barrels a year.

“We’re not distributing that much beer,” he said. “We’re not using distribution as a money-making part of our business. It’s really just advertising, getting our beer out there.”

Parleaux Beer Lab

Brewers Make Their Case
For decades, small and independent brewers have been pushing for changes to state laws that they say don’t reflect the realities of the current marketplace. This may be especially true in Louisiana, which ranks last in breweries per capita among all states.

The brewers’ efforts sometimes pit them against their own partners: the beer distributors, who typically are big and powerful companies that act as essential middlemen between manufacturers and retailers (bars, restaurants and stores). Louisiana distributor Crescent Crown, for instance, is owned by Bill Goldring, one of the state’s few billionaires.

Looking ahead to 2024, craft brewers have a long list of legislative wishes, but they’re also reluctant to publicly criticize the partners on whom they rely.

The small brewers’ primary goals are adjustments to the “three-tier system” and the “franchise laws” that dictate the relationship between manufacturers and their distributors. The former requires manufacturers to go through a distributor to get their beer into bars or stores. The latter means, among other things, that a brewer’s relationship with a distributor has no term, which essentially means it’s a deal for life.

“The beer laws are entirely business driven,” said one brewery owner who didn’t want to go on the record, although he was echoing a sentiment expressed by many. “These were the things that spread around the country because they’re really good for distributors. And who are the wealthiest families in every state? Beer distributors.”

Brewers want to be able to serve outside alcohol in their taprooms and still be able to distribute beer. And they want the right to transport their products from a primary facility to a satellite location themselves. Perhaps most of all, they hope for carve-outs to the industry’s franchise laws, so the same rules that apply to big national brewers don’t apply to small local ones.

As they plead their case in Baton Rouge, they’ll likely be butting heads with the “big beer” lobby led by John Williams at the Beer Industry League of Louisiana, an influential lobbying group representing the state’s distributors.

Williams and other representatives of the distributors are quick to point out that the laws that evolved since the end of Prohibition are designed to maintain public safety and create revenue for state and local governments. Another talking point: Brewers and their backers knew the laws of the land when they decided to invest.

Williams said that, despite any disagreements about laws and rules, the Beer League tries to help craft brewers manage their relationships with distributors.

“We’ve worked with breweries in the states, anybody that’s wanted to go a different direction with their distribution agreements,” he said. “We’ve worked with the Louisiana Craft Brewers Guild because we want to make sure that they’re in a good place.”

Urban South’s Jacob Landry, who’s president of the Brewers Guild, said the franchise laws make sense when applied to big brewers like Anheuser-Busch InBev, because distributors must spend big to create the infrastructure needed to get products into bars and onto shelves. But those same rules are too burdensome for the small guys.

“The real problem today is that there’s so many small producers,” he said. “And the law is assuming that distributors are investing a boatload of money in marketing and logistics for the small producers. The reality is that’s not the case.”

Beer Urbansouth 03
Urban South Brewery

Landry and other industry advocates point to brewer-friendly changes made in other states, like North Carolina, which modified franchise laws so that some rules don’t apply to small producers. In Florida, a package of law changes in 2015 means brewers who distribute through wholesalers are permitted to sell other booze in their taprooms.

In Louisiana, as well, past lobbying efforts have resulted in two breakthroughs. In 2015, for instance, the law changed to allow manufacturers to sell 10% of their total beer output or 250 barrels per month out of their tasting room.

“This was a transformational change that singlehandedly quadrupled the number of breweries in the state,” said Landry. “We’re still second to last in breweries per capita, but this was a huge change that was collaborative between the Beer League and the craft brewers. Prior to this, you really couldn’t have a tasting room as a small manufacturer, and tasting rooms are where small manufacturers make nearly all of their profit.”

And, in 2022, self-distribution was introduced for manufacturers in the Pelican State. Landry said it’s a more limited version than other states and it will remain underused until it gets some updates.

Stephanie Knott, co-owner of Bayou Teche Brewing, is among those who would like to see that happen sooner than later.

“It would be so awesome to allow Louisiana microbreweries to have some distribution in our state,” she said. “Interestingly, microbreweries in a neighboring state like Texas, Mississippi or Arkansas are allowed distribution in our state. Louisiana law does not prohibit that, but it does prohibit Louisiana microbreweries from having Louisiana distribution.”

Despite all these wish lists and worries, there still is plenty of reason for optimism among the state’s brewers.

Independent brewers, in fact, are still responsible for one out of every eight beers sold in the U.S., according to association data, and consumers spend one out of four of their beer dollars on a product produced by an independent brewer.
That’s why Louisiana’s brewers will keep blending malt, hops, yeast and water in creative ways — and advocating for their industry in the process.

“We’ll be engaging with state elected members, educating them, and advocating for statutory adjustments beneficial to small business brewers,” said Cary Koch of the Brewers Guild. “Craft brewing embodies the essence of Louisiana small businesses, proudly creating, celebrating and manufacturing Louisiana-made beer.”


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