How do new regulations affect small craft breweries?

This is actually a double-edged sword. For small breweries, there are both benefits and drawbacks. Let me break it down for you.

You can imagine this like opening a restaurant. In the past, everyone cooked in their own home kitchens, and whoever cooked best got the most business – it was very free. But now, the food safety department has arrived, saying all restaurants must have stainless steel kitchens, sterilizers, health certificates, and must record the source of ingredients purchased daily.

See, that's where the impact comes in.

First, let's talk about the difficult parts (Challenges):

Costs skyrocket, making survival harder. This is the most critical point. Small breweries typically operate on a small budget; the owner might be the head brewer, salesperson, accountant, and cleaner all rolled into one. Now, new regulations require you to upgrade equipment, conduct various tests, and apply for new licenses, each costing a significant amount of money. Just like the restaurant analogy above, converting an entire kitchen to stainless steel might cost a small, humble eatery more than a year's profit, potentially crushing them.
More paperwork, less time for brewing. Before, brewers could focus solely on how to make better-tasting beer or experiment with new flavors. Now, owners have to spend a lot of time deciphering complex regulations, filling out endless forms, and dealing with various inspections. Their energy is consumed by these trivial matters, naturally reducing their drive and time for innovation. The soul of craft brewing is "creativity," but now it might be constrained by "compliance."
Some "unconventional methods" are no longer viable. A big joy of craft beer is its unconventional nature, using various local specialty ingredients like dried tangerine peel, osmanthus flowers, or even ginger candy. However, new regulations might impose very strict rules on permissible additives. If a unique ingredient you've been using successfully isn't on the approved list, that beer might become "illegal." This is a significant blow to small breweries pursuing individuality.

Now, let's discuss the good aspects (Opportunities):

"Irregular players" are cleared out, making the market cleaner. The market used to be chaotic, with some large breweries releasing fancy-packaged beers and calling them "craft," or some small workshops having questionable hygiene and inconsistent quality. The new regulations raise the bar, essentially performing a major cleanup, eliminating those who muddy the waters or operate irregularly. This way, good breweries that are serious about their craft can be seen by consumers, no longer having to engage in price wars with inferior products. This is beneficial for the long-term development of the entire industry.
"Officially certified," making it easier to grow. Once you comply with all new regulations, it's like receiving an "official certification" as an honor student. This not only builds consumer trust but also gives you more leverage when negotiating with distributors, large supermarkets, and even overseas buyers. Before, others might have seen you as just a "small workshop"; now you are a "licensed and legitimate" player, making it easier to enter mainstream channels.
Clear rules mean everyone competes on the same playing field. Without rules, nothing can be accomplished. While it might be difficult at first, in the long run, clear rules let everyone know "how the game is played." For example, what kind of beer can be called an "IPA," or what can be labeled "barrel-aged." With unified standards, there won't be deliberate misrepresentation, and consumers can make informed choices.

A quick mention of whisky, especially Japanese whisky.

You mentioned whisky, which is an excellent example. A few years ago, Japanese whisky became incredibly popular, but the market was a mixed bag. Many distilleries imported raw spirits from Scotland or Canada, diluted them with water in Japan, bottled them, and then dared to label them "Japanese Whisky" and sell them at high prices.

Later, the Japanese government introduced new regulations (similar in logic to the "new regulations" you asked about), strictly defining what constitutes "Japanese Whisky": it must be mashed, fermented, and distilled in Japan, and aged in oak barrels for at least three years, among other requirements.

This immediately led to:

Challenges: Those manufacturers who relied on importing raw spirits for "assembly" were dumbfounded. They either had to honestly build their own distilleries or could no longer call their product "Japanese Whisky." Costs and difficulties surged.
Opportunities: Distilleries like Suntory and Nikka, which genuinely produce their whisky from start to finish in Japan, saw their brand value greatly protected and enhanced. Consumers also gained clarity in their purchases.

In summary:

For small craft breweries, new regulations are like a major examination. In the short term, growing pains are inevitable, and a number of players lacking strength or resorting to opportunism will be eliminated. However, for those breweries with ideals, quality, and a willingness to standardize their operations, enduring this most difficult "compliance period" may lead to a broader, fairer sky ahead.