Beerpocalypse: Another brewery files Chapter 11 bankruptcy

Before the covid pandemic, craft beer had a moment.

Beer became something more than the beverage of choice for football games and barbecues. People put down their Coors, Bud Lights, and Coronas and opted to try local craft beers.

It was a golden time when seemingly every market had multiple local breweries offering their own selection of beers. The pandemic put an abrupt halt to the craft beer craze.

While many of these breweries had regional distribution, most of their sales came from their own bars and taprooms. Covid lockdowns forced those locations to either close or operate under severe limitations.

During that period many of these local brewers took on new loans in order to stay afloat. As this was happening, consumer tastes also shifted. Hard seltzers and other beer alternatives became more popular and non-alcoholic cocktails gained a following.

For many local breweries — including San Francisco’s Anchor Brewing — it was death by a thousand paper cuts. Increased debt loads made making changes hard and lowered demand drove many regional favorites including Chicago’s Metropolitan Brewing, New Jersey’s Flying Fish, Denver’s Joyride Brewing, Tampa’s Zydeco Brew Werks, and Cleveland’s Terrestrial Brewing into bankruptcy.

It has been an endless wave, a beerpocalypse that shows no signs of slowing down and now it has claimed another victim.

It has been a rough period for regional breweries. Image source: Shutterstock

Local brewery has a unique origin story

Many local breweries start because their owners have a long-standing passion for craft beer. That’s not how Karben4 Brewery began.

“Ryan Koga found himself in Billings, Montana in 2006 working towards a Master’s Degree in Athletic Training. To help make ends meet, he got a job at a local brewpub. Ryan had never been a big beer drinker, in fact to this day he’s still a cheap date…But when he tasted a ‘real beer’ for the first time at age 25, it changed his life forever,” the company shared on its website.

Koga’s love affair with beer was a slow burn that eventually led to the founding of Karben4.

“Time passed, Ryan completed his degree and continued to explore newfound love for beer. He approached his younger brother, Zak with his new passion and convinced him to start this new venture with him. In 2012 they opened the doors to Karben4 in Madison Wisconsin, where Zak’s alma mater University of Wisconsin is,” the company shared,

The brewery became an instant success with the company eventually landing distribution deals in multiple states and even moving into hard seltzer. It was a success story that continued until covid interfered.

Another local brewery files Chapter 11 bankruptcy

Karben4 has filed for Chapter 11 bankruptcy protection and plans to keep operating with it reorganizes. The bankruptcy court has approved the company’s initial requests and will allow it to keep paying its 22 employees.

“Ever since COVID hit in 2020 we have been pivoting every few months to adjust our focus on how to rebuild our business for the future. As pandemic aid dried up and inflation ramped up, we have been running out of room to pivot. We are making progress by adding contract packaging work but unfortunately, we need to use this Ch. 11 process to reorganize and restructure our business to build a strong and sustainable company going forward,” part-owner Zak Koga said in a media statement.

The company’s taproom remains open and it continues to produce beer for its distribution partners.

Karben4 lost just under $1 million in 2023 which the company blamed on a general downturn in the craft beer market. The owners, according to a local media outlet, are in talk with an investor and remain hopeful that the company will survive and not have to be liquidated.

The company has also recently expanded its business model with “contract manufacturing, which the company explains on its website.

“Some beverage producers don’t have tank capacity or abilities to produce on a large scale, but would like to distribute their product on a large scale. Karben4 is able to assist in all aspects from recipe development all the way through to canning. During the pandemic Karben4 was able to assist breweries that were unable to sell beer in their taprooms continue to sell their product by assisting in canning and production,” the company shared.