As craft beer growth slows, New Mexico breweries find themselves at a crossroads

Few brewers get into the craft beer business for the money.

Rather, it’s passion that draws them in, longtime Albuquerque brewer David Facey said.

“A lot of the smaller breweries — these people aren’t making money hand over fist,” Facey, former co-owner of the recently closed Sobremesa brewery, said. “They’re doing it because they love it. They’re doing it because they have a following. They’re not really in it to hit the lottery.”

The passion that got brewers into the industry, Facey said, is the motivating factor that sustains them through its challenges and evolution. After a decade of exponential growth, the industry is experiencing a nationwide slowdown marked by a drop in craft beer sales and more breweries closing than opening.

Those challenges are now taking a toll on some local brewers — and even the big players are feeling the impact.

Bosque Brewing Co., one of New Mexico’s largest and most well-known brewers, filed for Chapter 11 protection last week, allowing it to remain open while it composes a plan to restructure its finances amid mounting debt.

Several local breweries have closed or adjusted their business model in recent weeks, including Voodoo Girl Pies & Pints and Cazuela’s Mexican Grill and Brewery.

Some brewers have elected to hand over their operations, with former Santa Fe Brewing Co. employees Bert Boyce and Jarrett Babincsak taking over Marble Brewery earlier this year, and Dan Herr and Anne O’Neill selling Sidetrack Brewing to Zendo Coffee owner Pilar Westell in April.

New Mexico’s craft beer industry isn’t the only one experiencing contraction, said George Boese, co-owner of Boese Brothers Brewing, which brews its beer at a facility in Downtown Albuquerque and operates four bars and restaurants across New Mexico.

“It’s a national trend that’s been happening for the last couple years,” Boese said. “Albuquerque and New Mexico are a snapshot of it, but it’s happening everywhere.”

U.S. craft beer barrel production and sales dropped roughly 4% from 2023 to 2024, according to the Brewers Association, a lobbying entity for small and independent brewers. Last year was also the first in two decades in which the number of breweries closing outpaced those opening nationwide, the association’s 2024 annual craft brewing industry production report said.

The report cited rising costs for ingredients, shifting consumer preferences — people drinking less or turning to nonalcoholic alternatives — tariff-related expenses and increased competition in a saturated market as factors.

Despite the hurdles, craft beer still plays a considerable role in New Mexico’s economy. The industry’s economic impact on the state in 2024 amounted to $383 million, according to the Brewers Association. There were 107 craft breweries operating across New Mexico last year, a small drop from a peak of 109 in 2023, Brewers Association data shows.

“It’s hard times right now,” said Heather Starr, co-owner of Starr Brothers Brewing Co. “I think those who got through COVID, that was hard enough as it was, and then our market got really saturated, kind of like (what) the cannabis (industry) is going through now. Those that have survived have worked really hard to make it through.”

Facey said the craft beer boom happened as a result of people discovering new types of craft beer and expanding their beer palate. Shortly after, craft breweries started incorporating food into the business, cooking up their own cuisine in-house or partnering with food trucks to keep customers coming.

“Year after year, more and more breweries opened, and they were in interesting parts of the city that no one had talked about,” Facey said. “And for a long time, it worked.”

The industry’s first major hurdle post-boom was the COVID-19 pandemic, with brewery-restaurant hybrids shutting down for months in New Mexico.

Inflation, hitting grocery store food items like beef and core craft beer ingredients such as hops and malt, has been a factor since then — putting the squeeze on breweries.

“If you’re seeing inflation at the grocery store, a bar and restaurant is seeing the same inflation on products they’re buying to make food for you,” Boese said. “I think everyone is feeling a little tighter money-wise.”

Shifting consumer preferences have also played a role. Emerging health trends have spurred more research on the adverse effects of alcohol and pushed consumers to explore nonalcoholic alternatives, which Facey said have improved in quality over the last few years.

Seltzers and cocktails in a can have also become a popular choice for the younger generation of consumers, Boese said. He said people aren’t getting out as much, making cannabis more of a contender.

“If you’re making a decision between if you’re going to have a couple beers at the local bar or a pre-rolled joint — cannabis is the cheaper option, which is kind of a bizarre situation to be in,” Boese said.

With already narrow margins, many brewers have had to absorb the increased expenses and losses.

“I think a lot of people are saying, ‘Is the juice worth the squeeze?’” Facey said. “‘Is it worth it to really scratch and claw and go through it all to make barely a comfortable living?’”

Some breweries are teaming up to alleviate the pressure. Boese Brothers Brewing partnered with Gravity Bound Brewing Co. earlier this year to share Boese’s Downtown facility for brewing, and Gravity Bound took over the bar and patio there.

Bosque Brewing Co. also recently partnered with Marble Brewery, which is handling the brewing, production and distribution of Bosque’s core beers at its Downtown facility.

“If one of us succeeds because they make great beer, then we’re all going to succeed,” Facey said. He added he doesn’t believe Albuquerque’s market is so overly saturated that there’s not room for more to grow, especially smaller brewers.

“I don’t think there’s room for any more really big breweries, but I think there’s plenty of room for great beer,” Facey said.

Starr agreed. A strong sense of camaraderie exists in Albuquerque’s craft beer scene despite the increased competition, which she said pushes everyone to innovate and differentiate.

For Starr Brothers, that means leaning into the trends.

“You can’t just stay in the place of, ‘OK, we’re just going to be a brewery.’ Do whatever the trend is. If beer’s selling lower, then boost your cocktails,” Starr said.

She added she would even consider brewing nonalcoholic craft beer in-house someday, despite the higher cost of extracting the alcohol.

Evolving with the trends has stabilized Starr Brothers’ revenue post-pandemic, but the difference is evident, she said. Facey and Boese agreed — the industry looks much different now than it did years ago — and it will look different five years from now, too.

“I see the industry definitely fighting tooth and nail to keep the standard in which we’ve set to where it needs to be,” Facey said. “I believe that we’ll bend and morph and do whatever we need to do to keep thriving and surviving. It’s going to be tough, but I think we’ll pull through.”