GRIN AND BEER IT: Craft Breweries Combat Covid-19

GRIN AND BEER IT: Craft Breweries Combat Covid-19

The United States has over 8,000 craft breweries in operation – and they’re all trying desperately to negotiate the current pandemic. For many breweries, approximately 60 percent of revenue is derived from taprooms. Since the enforced closing regulations, that means a heavy hit on businesses that are often small, and most likely already stretched for resources. According to a recent survey of 1,000 breweries, 99 percent have reported negative impacts and over 60 percent are dealing with decreased production and looming layoffs. One must also consider how breweries are affected on multiple levels as many have closed their on-site facilities, canceled promotional events, and suffered greatly reduced, in larger part, draught orders. All of this results in harrowing statistics such as a 70 percent drop in on-premise sales among the majority of breweries.

Due to significant losses to taproom sales, breweries have been forced to allocate all of their resources towards retail sales—which, luckily, has picked up. For some, sales of craft offerings increased to over 20 percent around mid-March, which could have been attributed to craft beer fans topping off supplies for the longer haul. Naturally, bigger competition with larger package sizes made off with the lion’s share of the bump, leaving smaller breweries with a sales increase of less than 10 percent. While any increase is welcome, it's not a lot to rely on when roughly 80 percent of a brewery’s sales depends on wholesale distribution to bars and restaurants which are all closed for an indefinite stretch of time. Off-premise sales may even increase by as much as 40 percent, but it barely makes up for on-premise sales dropping to 0.

For breweries with an even larger range of distribution, the increased off-premise income is quite welcome, even as operational costs elevate in kind. For a brewery that ships craft products across 30 states, for example, that’s a lot of new orders to maintain and monitor. Making it more difficult are the additional stay-at-home mandates that require furloughs and layoffs. Every increase in business is met with a decrease in brew crew – not exactly a recipe for smooth suds. Cost is also measured in the heart and soul of these establishments, that now have to keep the doors open and tanks running while carrying the burden of letting staff—often, friends and colleagues—go.

Some breweries without established distribution networks are forced to be extra creative in order to get their beers into the hands of their customers. Curbside and delivery sales are on a sharp rise, and can extend beyond their normal on-premise base. A downside is that putting beer in cans costs more than putting it in kegs, but a big upside has been the ability to hire those who may otherwise have been laid off. Other breweries have managed to keep product moving by transitioning to take-out cans, bottles, and growlers. For creative thinking that’s way out of the box—and into a pot—at least one brewery adds an option to include a houseplant from a local garden supplier. Another is offering a line of limited edition t-shirts by local clothing brands, with sales benefitting affected bar and restaurant workers.

However, even with a variety of sales channels to help breweries stay afloat, the struggle continues to be all too real. Despite the dramatic shift in revenue, the cost structure of maintaining a brewery continues in the form of loan payments, rent, and insurance. Even with the CARES Act, a recent survey reveals that almost 50 percent of breweries feel they can survive for only one to three months. The uncertainty leaves the deepest mark. Being unable to determine when and how much to brew completely dismantles brewery schedules. To make the most of the holes, some breweries are making an effort to aid the cause.  Several crafters have repurposed their brewing equipment to produce hand sanitizer for government and healthcare professionals, as distilled alcohol is a central ingredient of sanitizer products, making the transition fairly easy.

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