The production taps are about to be turned off at the home of James Boag’s beer after more than 140 years.

Owner Lion, a subsidiary of Japanese conglomerate Kirin, has blamed declining beer sales nationwide as one reason for its shutdown of the brewery in Launceston in northern Tasmania.

The brewery opened in 1881, with Scotland’s James Boag and his son taking over two years later.

Lion said the brewery was operating at about one-fifth of its capacity and would close in November. James Boag’s production will continue on mainland Australia.

“Long-term decline in the national beer market has caused the brewery to run significantly under capacity for many years,” it said in a statement on Tuesday.

“This, combined with significant cost inflation, means the brewery is no longer viable.”

James Boag’s shifted some of its production from the brewery to mainland Australia in 2024, saying it was spending $1.5 million a year on shipping out of Tasmania.

The company said 42 jobs at the brewery would be “impacted”. Redeployment opportunities will be discussed with staff.

A recently revamped brewhouse at the site, which has a sales and hospitality team, will remain operational.

“We know this is difficult news for our Boag’s brewery team and the broader Launceston community,” Lion CEO Anubha Sahasrabuddhe said.

“I sincerely apologise for the negative impact this announcement will cause.”

The announcement was not a reflection on the capability, passion and commitment of brewery team members and all employee entitlements will be honoured, she said.

Lion will establish a $500,000 fund to re-skill workers, give $500,000 over four years to grassroots organisations in Tasmania, and repay a $1 million state government grant that went towards the brewhouse redevelopment.

Tasmanian Premier Jeremy Rockliff said Lion’s decision was deeply concerning and extremely disappointing.

“The government has been a strong supporter of the business over a number of years,” he said.

“Our immediate priority is the wellbeing of the workforce. We will engage closely with Lion, the union, workers and the hospitality industry to support those impacted.”

Labor MP Janie Finlay said the shutdown would be a “gut punch” for Launceston and workers who had kept one of Tasmania’s most iconic brands going for generations.

-AAP