Craft Breweries Are Returning to Their Roots After Going Big

Over the last decade, Nathan Kelischek has ridden the dizzying roller coaster that is modern American craft brewing. In 2013, Kelischek and cousin Chris Zieber opened Appalachian Mountain in Boone, North Carolina. The college town’s first brewery became a regional dynamo selling Long Leaf IPA and Boone Creek Blonde across the Carolinas. Maybe with a larger company’s sales, production, and distribution support, Appalachian Mountain could reach new heights?

Craft Brew Alliance, which also owned Widmer Brothers and Kona, bought Appalachian Mountain in 2018 for around $8 million. Anheuser-Busch InBev (AB InBev) then acquired Craft Brew Alliance in 2020. Within seven years, the scrappy start-up became a cog in a global conglomerate driven by a fundamental directive: growth. By then, though, craft brewing had become highly localized. Crowded shelves and taplines left little room for interlopers’ IPAs. “We could read the tea leaves,” Kelischek says. “The expectations of what we were expected to grow into didn’t really align with our intentions.”

Last December, Appalachian Mountain approached AB InBev about buying itself back, finalizing the purchase in May. Appalachian Mountain assumed ownership of its brand, the Boone facility, and an under-construction taproom in Mills River, North Carolina, which it finished in June. The twisting trip led Appalachian Mountain back to its starting line, greeted by cheers. “We didn’t expect the overwhelming positive response that we’ve had from our local community,” says Kelischek, the brewery’s president.

Craft breweries of the mid-2010s existed in an exuberant era where the potential for double-digit growth seemed infinite. Brewing conglomerates regarded craft breweries like winning lottery tickets, no price too high. AB InBev started the buying spree, in 2011, by purchasing Goose Island for around $39 million. This pivotal purchase splintered the storyline that little breweries were battling multinational behemoths with bitter IPAs. AB InBev later bought Elysian, 10 Barrel, and Blue Point, among other breweries, while Constellation Brands—known for importing the Mexican lagers Modelo and Corona—snapped up Dallas-based Four Corners and Florida’s Funky Buddha, plus Ballast Point in San Diego for an astronomical $1 billion. That 2015 purchase proved to be the high-dollar mark; by 2019, underperforming sales led Constellation to offload Ballast Point. Corporate capital wasn’t a cheat code for moving mountains of craft beer nationwide.

Once-sold breweries are now reversing course and repurchasing autonomy, returning to their hometown roots. In 2021, Three Weavers of Inglewood, California, pulled out of the CANarchy Craft Brewing Collective, now owned by Monster Energy. This past May, Constellation sold Four Corners and Funky Buddha back to their founders. Independent breweries are also reining in distribution, focusing on selling beer in fewer states, and reviving bygone beers that resonate with local communities. In Washington, D.C., that means toasting with Right Proper Brewing’s Senate Beer, a historic corn lager first created in the 1890s. “We want to be a brand for the people who call the District of Columbia their home,” says co-founder Thor Cheston.

Brewing colossi like AB InBev, Constellation, and Molson Coors Beverage Company saturate America with scores of beverages, the same lagers sold cold from coast to coast. The independent-brewery spike of the 2010s, both in sales and brewery count, led to some fanciful C-suite thinking: Somewhere out there, a rising-star brewery could conceivably sell its IPAs and other fantastical ferments in 50 states.

The idea “was that there still could be another Dogfish Head or Sam Adams—someone that could be national,” says Ryan Sentz, a co-founder of Funky Buddha in Oakland Park, Florida, just north of Fort Lauderdale. The brewery opened in 2013, and Sentz’s prolific stream of culinary beers like Maple Bacon Coffee Porter earned the brewery a buzz that echoed far beyond its strip mall home. Constellation bought Funky Buddha in 2017 and soon prioritized a handful of brands like the Floridian hefeweizen. Constellation also moved at a more deliberate pace, hamstringing Funky Buddha’s breakneck pace of beverage innovation. “Sometimes that’s a good thing,” Sentz says. But with craft breweries debuting new beers daily, “you have to be faster.”

Constellation’s attention on its craft division wavered as Modelo grew into a juggernaut, supplanting Bud Light as America’s best-selling beer earlier this year. In late May, Constellation announced a “strategic decision to bring our dedicated craft and specialty efforts to a close.” Funky Buddha repurchased its independence and purchased a distillery, a canning line, and is on the hunt for a pizza oven for its taproom, where guests can order a Coconut Cream Pie IPA and watermelon cocktail made with feta-washed gin. “We’re trying to do all the things that have been cooking in our brain for six years,” Sentz says.

Four Corners is rekindling its founding objective. The brewery opened in 2012 with a goal of “building a craft beer culture that didn’t exist in north Texas,” says co-founder George Esquivel. The brewery hosted events like TacoCon (Cerveza), a nighttime taco-truck festival, and created colorful, lotería-inspired branding for beers like El Chingón IPA that tied into Esquivel’s Mexican American heritage. “Connectivity was really at the center,” he says. The brewery grew quickly, leading to Constellation’s acquisition in 2018 and a short-lived Southern California expansion … right before the 2020 Covid crisis. “It was game off,” Esquivel says. The brewery retrenched in Texas, a massive market home to more than 30 million people. Now-independent Four Corners is revamping its lineup and reconnecting with local drinkers, using lessons learned over the last half decade. “We’ve been to beer business school,” Esquivel says.

Brewing’s business side can be cold and clinical. In 1999, the McIlhenney family founded Alpine Beer in Alpine, California, about 30 miles northeast of San Diego. The family-run brewery produced popular IPAs like Nelson, made with Nelson Sauvin hops. To meet demand, Green Flash began contract-producing Alpine beers in 2013 before purchasing Alpine in 2014. The sale polarized fans, but Alpine wanted to ensure employee health benefits and retirement plans. “We felt like we couldn’t accomplish that if we remained independent,” says Shawn McIlhenney, then the head brewer.

The partnership never found its footing, and an investment group bought Green Flash and Alpine in 2018. Two years later, the Covid crisis caused widespread layoffs at Alpine, and Shawn lost his job. He didn’t flounder. “It became crystal clear what we needed to do when the landlord told us that the space”—Alpine’s original home—“would be available,” McIlhenney says.

The family reacquired its first home, bought back its brewing equipment at auction, and opened McIlhenney Brewing in 2021. “We welcomed people back with open arms, and they’ve done the same,” says McIlhenney, once more head brewer and co-founder. (His wife, Jamie, is general manager.) He’s brewing helles lagers, well-hopped IPAs, and whatever strikes his fancy. “It’s good to be back on the brew deck making beer and not having anybody to answer to,” he says. The brewery mostly sells its beer in its family-focused taproom, a locals-first approach that feels more sustainable. “I’m not going to force anything on the kids”—they have two young children—“but growing up in and around the brewery and tasting room will hopefully spark an interest and we can continue this family tradition,” he says.

Staying local can give a brewery staying power, a conclusion that Dan Carey came to more than two decades ago. Carey and his wife, Deb, founded New Glarus Brewing in Wisconsin in 1993, and sent Spotted Cow to states like New York, Oregon, and Illinois. “We were following the model for craft beer at that time, but it soon dawned on Deb that it was a mistake,” Carey says.

As demand for New Glarus beer in Wisconsin increased, so did the effort and time required to sell beer elsewhere. New Glarus left Illinois in 2003, and “all hell broke loose,” Carey says. Chicago wholesalers “called up Deb, yelled at her, and said, ‘If you leave now, you’re never going to sell beer in this city again,’” he recalls. So be it. Since then, New Glarus has only sold in Wisconsin, a staple at supper clubs, dive bars, grocery stores, and anywhere that beer might be bought in the Badger State. “Beer becomes part of the fabric of an area,” Carey says.

Building a beloved local brand takes years, if not decades. For breweries, resurrecting historic beers can rekindle a regional affinity. Conrad Seipp was one of Chicago’s biggest 19th-century beer barons. The German immigrant’s lager brewery survived the Great Chicago Fire and thrived, producing more than 250,000 barrels of beer at the height of its production, before closing in 1933. Several years ago, Seipp’s great-great-great-granddaughter Laurin Mack began researching her family’s heritage. How did history taste?

Mack, who works in healthcare education, collaborated with Chicago lager specialist Metropolitan to brew the beer to restart Conrad Seipp Brewing. Beer historian Liz Garibay helped the group mine archival records to create Seipp’s Extra Pale, a pre-Prohibition pilsner released in 2020. “Seipp is about connecting with the past while enjoying the present,” Mack says. She spends about six months researching each old-new Seipp beer, now including a hefeweizen and a bock from Chicago’s 1893 World’s Fair. The blend of Chicago history, quality, and provenance has led to placements at high-end restaurants and time-seasoned neighborhood taverns like the Chipp Inn that probably poured Seipp’s original lagers. “It’s a logical connection and means a lot to me,” Mack says.

A historic beer can help a brewery chart a new future. Several years ago, the Heurich House Museum in Washington, D.C., approached Right Proper about making Senate Beer, a lager produced by the capital’s Chr. Heurich Brewing until the mid-1950s. “Our brewery was set up to produce pale ale,” Cheston says of his flagship beer, Raised By Wolves. “We couldn’t risk introducing that beer and being successful. We wouldn’t be able to keep up with demand.”

Right Proper agreed to produce a single batch, the kegs earmarked for Nationals Park, home to the Washington Nationals baseball team. That was spring 2020, another Covid-scuttled plan. The brewery instead canned 400 cases of Senate to sell online. The lot lasted less than a week, leading to a lasting change. Right Proper signed a 10-year licensing deal with the museum to produce Senate and overhauled its production facility, adding fermentation tanks to produce lager. Senate is now Right Proper’s number two brand, and the brewery has since tightened its distribution around the capital. “It’s a mile deep, rather than countrywide and an inch deep,” Cheston says.

On the grounds of Carillon Historical Park, a 65-acre open-air museum in Dayton, Ohio, Carillon Brewing is rooted not just in place but time. America’s only production brewery inside a museum re-creates Dayton circa 1850, including historical recipes produced with low-tech, high-labor methods. Visit the spacious, brick-walled taproom during a brew day, and you’ll find brewers dressed in mid-19th-century garb, chopping local ash wood, tending a fire, boiling water, and brewing cream ale, porter, squash beer, spruce ale, and other old-timey ales that are fermented in barrels.

“These misconceptions that historic beer had to be sour and gross and super-high alcohol aren’t true,”says former head brewer Dan Lauro, a professional trained historian. Each batch of beer, which takes around seven to eight hours to produce, yields just 45 gallons of finished beer. The historical ales are so limited that they’re primarily sold in the taproom, where the ambiance is another ingredient. “The environment dictates the way you view and enjoy your beer,” Lauro says. “You can smell the fire, see us splitting wood and the sweat on our brow.”

The idea of sweat equity is appealing in the abstract. Work hard for a brewery, and you, too, can earn a percentage of the company. Several breweries do offer employee stock ownership plans, including Oregon’s Deschutes and Colorado’s Odell. But most employees are unvested. When a brewery closes down or brewers move on, they might only keep recipes for future success.

Folksbier Braueri in Brooklyn shuttered in fall 2021, and brewer Joey Pepper-Mellusi retained his developing recipes for his helles lager, IPAs, and Glow Up line of fruited Berliner weisses. “That was my baby as a homebrew recipe,” he says of Glow Up. Pepper-Mellusi considered taking over Folksbier or finding another brewing location, but raising requisite funds meant relinquishing too much equity, a nonstarter. Instead he partnered with Twelve Percent Beer Project, a brewery incubator and distributor in North Haven, Connecticut, and spent a year working with a graphic designer on developing labels and a brand identity. This spring, he debuted his Schenker Beer line that references a family name, the lagers and fruited sour ales building on a proven track record. “I want everything to be a hit,” he says.

During the (sales) chart-topping era in the 2010s, craft breweries believed that homegrown smashes could potentially go viral elsewhere. Breweries expanded distribution into new states, sometimes crisscrossing the country. In 2017, 21st Amendment Brewery in San Leandro, California—known for its Hell or High Watermelon wheat beer and Brew Free! Or Die IPAs—partnered with lager-focused Brooklyn Brewery and saison specialist Funkwerks of Fort Collins, Colorado, to create a national sales platform. The impetus was to be “stronger together,” says 21st Amendment co-founder Nico Freccia, the COO.

New York state was one of 21st Amendment’s biggest markets outside California, and Brooklyn Brewery wanted to enter the West Coast. The breweries would also share brewing services on their respective coasts. The reality is that it became “much harder to sell beer farther away from home,” Freccia says. By 2020, the platform’s fissures were fractured by the pandemic; the breweries dissolved their alliance later that year. “A partnership that made sense as early as five years ago doesn’t make any sense anymore.”

Josh Landan remains a believer in a combined sales platform, though one with a tighter regional focus. Landan is the founder of Saint Archer Brewing, which he sold in 2015, and Wings & Arrow, which makes beyond-beer beverages, including Mucho Aloha Hard Lemonade and Villager Spirits canned cocktails. This spring, Wings & Arrow united with Ninkasi Brewing of Eugene, Oregon, to create Great Frontier Holdings. Ninkasi serves as Great Frontier’s central brewery, and the brands are chiefly sold on the West Coast and in the southwest. “It doesn’t make sense for me to send product that we’re making in Oregon to Florida,” says Landan, the CEO.

Craft beer is no longer the cool new kid on the block. The maturing industry experienced zero growth last year, according to the Brewers Association trade group, and conglomerates are continuing to cut their craft losses. In August, Canadian cannabis company Tilray purchased eight beer and beverage brands from AB InBev, including Blue Point, Widmer Brothers, and Breckenridge for a combined $85 million, a fraction of their original cost. “There’s a massive difference between managing massive brands versus building smaller ones,” says Esquivel of Four Corners.

Decoupling from rigid corporate ownership gives breweries hands-on control, exciting and nerve-jangling in equal measure. “I’m the one that’s accountable,” McIlhenney says. “If anything goes wrong, it’s not hard to trace back to where the problem started.” Appalachian Mountain must leave the Portsmouth, New Hampshire, brewery making its beer by the year’s end. That’s not enough time to build a production facility, so the brewery partnered with Green Man Brewing in Asheville, North Carolina, to contract-brew its packaged beer.

“We’re definitely not out of the woods,” Kelischek says. Nonetheless, he’s confident about the brewery’s sovereign advance, building a sturdy North Carolina base camp for Appalachian Mountain. “We’re getting back to the nuts and bolts of what breweries represent, and that means speaking to their local community,” he says.