Next month, the last batch of beer will be brewed there and the building sold by its owners, Mitchells of Lancaster. Mitchells, a family firm that has been slaking the thirst of Lancastrians since 1880, is bowing to changing tastes and market forces.
The move, announced last Wednesday, is the latest sign of the fragility of Britain's independent brewing industry. Ten long-established regional companies have closed breweries in the past year, including Morrells of Oxford and Vaux of Sunderland.
The sector has also been convulsed by a succession of takeovers and mergers, with big regional companies vying to build up the muscle to compete with national giants such as Bass and Whitbread. In February, Marston's, based in Burton upon Trent, Staffordshire, was swallowed up by Wolverhampton & Dudley. Greene King is in negotiations to take over Morland, the Oxfordshire brewer that makes Old Speckled Hen.
The reason for the industry's consolidation can be summed up in two syllables: real ale. The public has lost its appetite for the traditional cask-conditioned beers that are the mainstay of the 50 regional companies.
Mitchells, which owns 92 pubs around Lancashire, says its brewing operation is no longer viable in a discount- driven, brand-led market. "We did everything that we could, but the market has shifted against us," said Dermot McCarthy, the managing director.
The company is still run by direct descendants of William Mitchell, who began brewing at the Black Horse Inn in Lancaster before moving to a commercial site. He acquired more pubs in the city centre and in villages located within a 15-mile radius of Lancaster - places that could be reached by horse and cart.
The wooden staircase that leads to Mr McCarthy's office is lined with black and white photographs of William Mitchell, an imposing figure in check waistcoat and walrus moustache, and the four generations that have succeeded him in the family business.
Tears were shed when the news was broken to the brewery's eight production workers on Tuesday. The foreman has worked there for 45 years; his first boss was William Mitchell's son. The city is in mourning, too; the brewery - where beer was first made by 16th-century monks - is part of the rhythm of Lancaster life. On brewing days, the smell of malt being mashed fills the cobbled streets, and the steam that rises from the building is visible for miles.
"Everyone's gutted," said Fiona Barker, a member of the latest generation of the Mitchell family. Ms Barker, 30-year-old customer services director and daughter of William Barker, the current chairman, said: "It's heart- breaking, but it's got to be done."
The figures speak for themselves. The brewery, to which the family moved in 1985, has a capacity of 20,000 barrels a year. For the past four years, it has produced only 7,000 - although Mitchells has acquired 45 new pubs in that period. Demand for the house beers - Mitchell's Mild, Mitchell's Bitter and its flagship cask ale, Lancaster Bomber - is simply not strong enough, either nationally or in its own pubs.
Although it is of little comfort to the family, the picture is replicated throughout the country. For the past five years, the consumption of real ale has been in free-fall, decreasing by 5 per cent a year. The decline follows the renaissance of the real-ale market in the Seventies and Eighties, which gave a new lease of life to the regional brewers and led to a boom in innovative "micro-breweries" as well as the creation of 3,000 real ales.
The Campaign for Real Ale (Camra) blames the five national brewers, which, it says, have poured their marketing resources into nitrokegs, the bland, pasteurised beers that are cheap to produce and easy to keep. Ian Woolverton, a Camra spokesman, acknowledged that real ale has also faced stiff competition in recent years from newly popular lagers and bottled beers.
Others believe that real ale has never fully shrugged off its image problem. Despite Camra's best efforts, real-ale drinkers are still regarded as eccentric, bearded types who delight in supping warm beers with obscure names.
Mr McDermot said: "You don't see anyone under the age of 24 drinking cask beer in our city centre pubs on a Saturday night. It's the older people who drink real ale, and they're dying out."
Ms Barker, who says she has beer in her blood, is inconsolable about losing the brewery. "My great-great-grandfather founded this business," she said. "It's the end of an era."