Twin Cities music venues change their tune as fewer drinkers mean more financial challenges

The good news: Minnesotans are living healthier and still loving live music.

The bad news: They’re buying less and less of the product that has long been music venues’ primary source of revenue.

As alcohol sales decline nationwide while Gen-Z seeks a healthier lifestyle — the same trend that has led to a string of recent closures among Twin Cities breweries and distilleries — the nightclubs and rock music hubs that heavily depend on bar sales and young adults are struggling to find alternative income to pay their employees and bills.

“It’s a trend we saw coming,” said First Avenue General Manager Nate Kranz, “but we still haven’t really found a solution.”

Local venue operators, musicians and other music industry professionals will discuss this issue among other challenges facing the Twin Cities music scene during Saturday’s Minneapolis Music Summit at the Green Room in Uptown. The daylong forum was organized as a reaction to last year’s city-run Minneapolis Music Census, which painted a bleak picture of the state of the scene — with rising costs for just about everything but rising revenue for almost no one.

At one of Minneapolis’ oldest watering holes and live music hubs, Palmer’s Bar, alcohol sales are down almost 20%, co-owner Pat Dwyer said. That downturn has nothing to do with declining attendance for shows, though.

“We aren’t singing the blues at Palmer’s, because we’re still seeing strong support for the live music scene that we love and care deeply about,” Dwyer said. “But we have to figure something out.”

Most music venues have turned to selling a lot more than booze at their bars, including nonalcoholic beers, mocktails and THC drinks, all of which have proven to be viable alternatives for Minnesota breweries. However, at concerts, these nonalcoholic options simply aren’t rocking.

After stocking more and more of these alternative drinks at the 331 Club and White Squirrel Bar without much success, venue owner Jarret Oulman said he has been forced to offer “slightly less shows” because of the stagnating bar sales — down about 10% at the 331, for instance.

Oulman also operates the 600-person Amsterdam Bar & Hall in downtown St. Paul, which attracts many up-and-coming touring concerts with artists that appeal to music fans under the age of 30. At many of those shows, Oulman said, “Sometimes most of the crowd won’t go up to the bar for anything.”

“Young people in the 20- to 30-year-old range still go to more concerts than older people, which has always been the case,” Oulman said. “They just clearly are drinking less.”

In 2024, the Distilled Spirits Council of the United States reported a rare 1% decline in U.S. alcohol sales. A 2023 survey from Gallup cited a 10% decrease over the past decade in respondents under age 35 who say they even just occasionally drink alcohol, down to 62% in 2021-2023 from 72% in 2001-2003.

That downturn coincides with an increased consumption of marijuana, which was legalized in Minnesota in 2023 and led to many local bars and music venues selling THC-infused drinks in lieu of alcohol.

At First Ave and its sister venues, including the Turf Club and Palace Theatre, sales for nonalcoholic drinks such as THC seltzers have doubled in recent years, Kranz said. Sounds promising, right?

“We’re talking they’ve only gone from 1% to 2% of our overall sales,” Kranz clarified. “They haven’t been the silver bullet.”

Both Kranz and Oulman stopped short of suggesting that one way to offset lower alcohol sales is to increase ticket prices for concerts. Ticket revenue still largely goes to the performers at most venues, and the artists’ representatives dictate ticket prices.

Said Kranz, “Touring artists are facing their own challenges with rising costs and smaller returns. We don’t want to cut into their territory.”

Oulman said he has raised “the dreaded ticket fees” (not the advertised ticket prices) by a small amount on some of the Amsterdam’s shows if they believe that particular gig will not generate much in bar sales. He said those fees help pay for staff, because “even nondrinkers still need people here helping them.”

A well-loved Minneapolis music haven that operates as a nonprofit, the Hook & Ladder, has taken maybe the boldest approach yet to finding an alternative to alcohol sales.

After Minnesota’s legalization of recreational marijuana, the Hook & Ladder opened an adjoining “cannabis lounge” last year called Zen Arcade, which also offers nonalcoholic beverages, retro video games and record bins alongside the busy live music and event calendar next door.

“The canna-bev bump has definitely proven to help,” Hook & Ladder Executive Director Chris Mozena said, but “it is too early to know if hemp-derived THC beverages alone will make up for the industry-wide trend.”

Until those alternatives to alcohol sales prove successful, Mozena said his crew will also hold more fundraisers and increase their pursuit of nonprofit support.

Nonprofit funding is what kept former venue manager Jack Kolb-Williams at the helm of two now-closed all-ages performance spaces that never served alcohol, the city-run live music mainstay the Garage in Burnsville and the short-lived Treasury in St. Paul.

With many grants and corporate arts funding dwindling at the moment, Kolb-Williams said, “Support from the nonprofit world could be one solution, but it’s getting even more difficult to find.”

Now the executive director of the Minnesota Independent Venue Alliance (MNIVA) — a local offshoot of the National Independent Venue Association (NIVA) created during the pandemic — Kolb-Williams said finding alternative revenue sources to alcohol is “a conversation happening among venues across the country.”

Pointing to Saturday’s Minneapolis Music Summit, Kolb-Williams added, “I’m glad we’re having this event to continue these talks here and hopefully create a brighter future. It’s a problem that needs solutions.”

When: 11 a.m.-5 p.m. Sat.

Where: The Green Room, 2923 Girard Av. S., Mpls.

RSVP: Free at mplsartsandculture.org.