San Antonio breweries still finding success despite spate of closures
The city's two largest breweries, Alamo Beer Co. and Freetail Brewing Co., rely heavily on sales to bars, restaurants and retail stores — and both are for now up for sale or looking at restructuring to stay alive. Scrappy Black Laboratory Brewing Co. also is shopping its assets after a switch in focus from beer to hard seltzers wasn't enough to move the needle on sales.
So far this year, Second Pitch Brewing Co. closed despite national achievement on the awards circuit for its beers, media darling Weathered Souls shut down this summer after not landing a new equity partner and 11-year-old Busted Sandal Brewing Co. threw in the chancla this month.
"The headwinds are real, and it's tightening the margins for breweries," said Matt Gacioch, staff economist for the Brewers Association, which represents the nation's independent brewers.
Those headwinds include higher costs for ingredient, labor, rent and transportation.
Just the same, "We expect macroeconomic forces to swing back around," Gacioch added.
That's small comfort to entrepreneurs who had to give up on a dream or were passionate about purveying craft beer from the brewhouse to the taproom.
But San Antonio's had far more openings than closures over the past decade and a half. In late 2008, Freetail opened its original brewpub at Loop 1604 and Northwest Military Highway after years of Blue Star Brewing Co. operating as the only surviving brewery.
Now, there are 21 breweries in Bexar County, five in the Boerne area, four in New Braunfels and two around Seguin.
In that same period, there have been just five brewery closures, although three of those unfolded this year. Branchline Brewing ceased operation in 2017 and Issla St. Brewing folded as the city was emerging from the pandemic.
Breweries that depend heavily on getting their beers out of the taproom and into the broader market through self-distribution or a third-party distributor are facing greater struggles. Consequently, more are shifting to taproom-only sales or adopting brewpub-restaurant models. Some are starting out that way from the beginning.
All of the breweries that opened in San Antonio in 2023 were onsite-only models, as were 95% of all brewery openings across the U.S., Gacioch said.
Over the past decade, the number of Texas breweries grew from 96 to 445, according to the Brewers Association. Across the state, taproom and brewpub models performed better than those distributing their beer into a crowded market.
"Some breweries might not think it worth the effort to fight for tap space," Gacioch said.
Cautious path forward
Indeed, Busted Sandal lost 90% of its taps across the region after a much larger company promoting more brands bought out its local distributor, according to a social media comment on the brewery's closure announcement. The loss was quick too, happening after just three months.
"Sad to say I know of other local breweries having these tough talks and decisions!" Busted Sandal co-founder Mike Diccico told a well-wisher on Facebook. "Imagine a business where your rent and supplies and utilities and services all around your business can continue to rise, but you just hold strong in the cost of your good or service or risk [losing] your highly valued customers. That's the beer business. The ONLY people that make money in the beer business are the distributors. Glad we got away from that but not soon enough."
In its shift away from relying on outside sales, Busted Sandal expanded taproom hours at its Fredericksburg Road brewery, opened a taproom in Helotes' Old Town area and launched a third outlet for its beer with a saloon in Kerrville. Half-price pint Wednesdays and the addition of artisan pizzas in recent months weren't enough to keep the doors open.
Breweries including Gather Brewing Co. in Universal City, Southerleigh Fine Food & Brewery at The Pearl and Dos Sirenos in Southtown all started with a chef-driven food menu that enabled the businesses to draw on more than just those seeking craft beer.
Wild Barley Kitchen & Brewery was always going to be a brewery, but its owners didn't want to make the mistake of growing too fast. What started as a food truck serving up sourdough bagel sandwiches and pizzas moved to a brick-and-mortar restaurant with an expanded menu. Last year, once on solid footing, the business started serving its own beer.
"We would grow, wait a little bit and see what happens," then do it again for each step, said Wild Barley co-founder Holland Lawrence, former head brewer at Ranger Creek Brewing and Distilling. "We didn't want to overstep our means."
Lawrence thinks that cautious approach kept the brewpub from being flattened by the pandemic. Instead, it grew as people returned to old habits.
"I think people are dialing into what they like to do again," he said. "I'm seeing more people getting together for meetups outside their homes than before."
One thing Wild Barley's owners don't want to do is discount their beer when they dip their toe into self-distribution waters next year. Food costs have increased, and Lawrence said his price for brewing grain recently hit $1.10 a pound, up from 42 cents a pound in 2019.
Survivor story
From a statistical perspective, the craft beer world is becoming more like the restaurant industry. In the past decade and a half, the number of breweries ballooned from about 1,500 across the country to nearly 10,000.
While industry observers will argue about whether it was a bubble bound to burst, the ultimate test came with the COVID-19 pandemic shutdown. Although some breweries were resilient enough and had sufficient capital to pull through, others were saddled with rents in arrears and loan debt they couldn't repay.
In 2023, the number of new breweries grew by 11%, and the rate of breweries closing hit 6%, according to data gathered by the Brewers Association. Nationally, restaurants typically open and close at a rate of about 9% to 10% annually.
"Rather than a dying [brewing] industry, we're seeing a maturing industry," Gacioch said. "They are still making loans [for new breweries], because, as an industry, banks think of it as a proven business strategy."
That said, even the longest-lasting breweries are feeling the pinch. The new economic pressures come after they weathered recessions, a pandemic and early consumer resistance to craft beer and its bold flavors.
"It's like starting all over again in 1996," said Joey Villarreal, owner of Southtown's Blue Star Brewing Co., Texas' second-oldest surviving brewpub.
Blue Star Brewing struggled multiple times, sometimes relying on revenues from a bike sales and rental shop that started inside the brewpub. Blue Star beers also are sold at other outlets owned by Villarreal's Joey's Inc., which includes Joe Blues across the parking lot from the brewery, Joey's on the St. Mary's Strip and at a kiosk just below the food court at North Star Mall.
"As craft beer was starting, when you look at the headwinds today, it was nothing compared to what the pioneers were facing in the 1980 and 1990s," Gacioch said. "The industry has been here before."
Eugene Simor, founder of Alamo Beer Co., which has its own line of beers and produces several other alcoholic brands, is less convinced. He recently placed Alamo up for sale and is looking at a restructuring to survive.
"There are some bright spots, but I haven't seen them," Simor said. "There will always be a spot in people's hearts for the local pub. I just hope that there will be locally brewed beers available to drink."
