Before Prohibition, there were over 1300 breweries in the United States, and the popularity of ales and lagers was at an all-time high. The party ended in 1920, however, when beer was deemed an "intoxicating liquor" by the Volstead Act—the legislation passed to enforce national prohibition and the 18th Amendment—and it became illegal to make, transport, or sell suds.
Unlike underground distilleries that could whip up batches of illegal liquor with little threat of detection, breweries were often big, tax-paying businesses that couldn't just slip into the woods with their massive boil kettles and lauter tuns. How did the few breweries that survived the 13 years of Prohibition do it?
The 18th Amendment didn't pop up overnight, and some brewers had time to prepare. Prohibition was a topic of national debate since before there was even a nation, and its enforcement was centuries in the making.
In 1885, a group of German-American brewers called the Wisconsin State Anti-Prohibition Association published a pamphlet arguing against new taxes and a proposed ban on one of the state's most lucrative products:
Many thousands of people are doing business with the brewers, many thousands of laboring men, mechanics, and artisans...And the prohibition fanatic who wants to destroy the business at once by legislation will please step forward and tell us what he would give to [Milwaukee] in return for the destruction of its most extensive and important business interest.
Beer in America was popularized by German immigrants, and German-Americans owned and operated most of the breweries. During WWI, anti-German sentiment ran rife so arguments like the one above went ignored (or were used as an example of beer's inherent evil). The country was sliding towards a full alcohol ban and was already primed by temporary wartime prohibition, which was enacted in order to preserve the nation's grain supply. Breweries could only make "near beer," or beer that didn't exceed an alcohol content of 2.75%. Once the Volstead Act was put in place, that number had to drop to 0.5%.
Many breweries stuck to near beer, but others that had the means were able to get creative:
Both Anheuser-Busch and Yuengling refocused their manufacturing attentions on a more legal vice: ice cream. Anheuser-Busch owned a fleet of refrigerated trucks and used them to transport their new brand of dessert.
Yuengling became the Yuengling Dairy Products Corporation and kept making ice cream until 1985. They reopened their dairy division this year and you can buy the stuff from their website.
Coorstek ceramics via Wikimedia Commons
Adolph Coors' glass works (which had originally produced bottles for Coors beer) was converted to a porcelain and pottery company long before Prohibition was an immediate threat. During the alcohol ban, Coors expanded its pottery division and mass-produced ceramic tubes and rods for the military and dinnerware lines.
Many breweries, including the manufacturers of Schlitz, Miller, and Pabst, turned their attentions to malt extract. They advertised it as a cooking product and put the following instructions on the packaging: "For bread making use one half as many tablespoonsful of malt extract as formerly used of sugar. This will make the bread light and perfectly browned.”
The real reason people bought it, however, was to use it in making their own beer, or "home brew." Brewing beer at home was illegal under the Volstead Act (unlike wine, which one was allowed to make), and many malt extract producers ended up being raided by Prohibition agents. A court eventually ruled that the extract was legal, and people were able to make as much, um, bread as they wanted.
WWI stalled the importing of dyes to the U.S., and this "dye famine" lasted long after the war's conclusion. This coincided with Prohibition and, rather serendipitously, many brewers noticed their existing equipment could easily be converted into making dyes. F. M. Schaefer Brewing Company, Nuyens Liquers, and the Lion Brewery (renamed The Noil Company) all restructured their operations to make dyes.
Brewery owners weren't the only people who noticed the similarity between alcohol and dye production; in a tasty reversal, many dye chemical plants converted to make illegal hooch.
Read more about the process of turning a brewery into a dye plant here.
Beer makers knew Prohibition wasn't going to last forever—I mean, come on, have you tasted beer? That's why Anheuser-Busch got permission from the government to produce 55,000 barrels of real beer to have ready when the ban on alcohol ended. America was going to have to toast with something, after all.