MARYLAND HEIGHTS — O’Fallon Brewery, hampered by pandemic-era economic challenges, filed for bankruptcy protection this week, but it plans to remain open as it restructures its finances.
The Maryland Heights beermaker — best known for its smooth and citrusy Wheach beer, 5-Day IPA and slates of autumnal brews — submitted a Chapter 11 petition Monday evening in the Eastern District of Missouri.
“We hope to continue to make beer for many more years — but we have some challenges ahead of us that we’ll have to work through,†said Jim Gorczyca, president and CEO of O’Fallon Brewery.
Gorczyca said he is making every effort to keep the business going, and is hoping for support from his customers, and from beer lovers across the Midwest.
The filing is a sign that the craft beer boom hasn’t emerged entirely unscathed from the economic stressors that have frustrated businesses large and small in recent years, including rising costs, interest rate hikes and shifting consumer habits.
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Founded in 2000, the brewery was acquired by Gorczyca, a former Anheuser-Busch executive, in 2011. The brewery relocated from its namesake city to Maryland Heights in 2015, as it also moved some of its previously outsourced production back to the ºüÀêÊÓƵ area, and opened its restaurant, O’Bar.
Today it distributes in 14 states, but a large portion of its sales are in Missouri and Illinois.
Some of the brewery’s main financial troubles can be traced to COVID-19, and the economic rebalancing of the past three years. Inflation raised the cost of transporting beer, and the cost of beer-making supplies. Higher interest rates made borrowing money more expensive: The interest rates on the brewery’s Small Business Administration loans rose to nearly 11%, from about 6% in 2014, Gorczyca said.
O’Fallon Brewery has been able to make modest price increases, Gorczyca said, but not enough to keep up with inflation. Plus, located in a business area, the brewery took a hit from the shift toward remote work.
“We’ve counted on those people to come into the restaurant for lunches and happy hours and things,†Gorczyca said. “While the restaurant is rebounding, and our business is good, it isn’t quite what it was prior to COVID.â€
Chris Shepard, a senior editor at Beer Marketer’s Insights, said many in the craft beer industry are facing similar challenges. Around 2017 and 2018, people in the business began to see that craft beer’s growth was beginning to slow.
“People were looking around and saying to themselves, ‘This isn’t great,’†Shepard said. “And then the pandemic hit.â€
Relief money likely bridged some gaps, Shepard said, but now that has disappeared. The craft beer industry is always mixed — it’s always possible to find a company that’s growing. But Beer Marketer’s Insights data showed craft beer production declined in 2022, Shepard said, and the Brewer’s Association estimated that production was flat.
“In all, you can definitely say that craft isn’t growing,†Shepard said. “Brewers are sort of seeing where they are, in the new normal.â€