US – Danish world-renowned craft brewer, Mikkeller, has unprecedentedly closed its only U.S. brewing facility in San Diego, citing “two years of COVID and the difficult current rising cost environment.”
Mikkeller San Diego has been open since 2016, and according to the Brewers Association (BA), it produced 10,418 barrels of beer in 2021, down from a high of 11,750 in 2019.
The Copenhagen-based giant is seeking a buyer for the now-shuttered 30,000-hectoliter capacity San Diego brewing location and warehouse.
The brewery will, however, not leave the international limelight and will continue to sell its beer in the US through a contract brewing agreement with San Diego based AleSmith Brewing Company.
Mikkeller holds a longstanding relationship with the San Diego brewery, with collaborative brews dating back as early as 2007.
In addition, the closure does not include Mikkeller’s Little Italy taproom or its taproom in San Francisco and will still operate the three breweries in London, UK, and Copenhagen, Denmark.
The closure, according to Mikkeller, will allow it to “go back to its roots of brewing in the U.S. as a contract brewery” to continue providing its beers to U.S. consumers.
90 percent of Mikkeller’s global products are already created through contract brewing operations.
Mikkeller has been open about its recent business struggles, while announcing the departure of its CEO earlier this month the company promised a reorientation away from expansion to focus on greater profitability for its 52 breweries and restaurants, in 18 countries.
In a statement posted on the company’s website, founder and creative director Mikkel Borg Bjergsø called this “a very challenging time for production companies, and especially considering the current market situation, so it is necessary for us to look at the whole business and ensure that it is sustainable.”
While the craft beer segment overall has struggled this year in groceries, pharmacies, and big-box stores, Mikkeller’s declines have been steeper than most of its peers.
Its chain retail sales for the 52-week period ending Aug. 7, fell by 29% compared to the year prior, and overall, the craft beer’s dollar sales declined by 5.5% during that same period according to data from market research company IRI.
Given these losses and competition from companies based stateside, it appears Mikkeller can no longer justify operating its US brewery.
Mikkel Bjergsø stated that taking the hard decision that has a lot of heartache for the Mikkeller employees affected by the closing, the shareholders find it just not sustainable anymore to keep operating the San Diego brewery.
In October 2020, Mikkeller also closed its New York City brewery and taproom just two-and-a-half years after it debuted.