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How is COVID-19 Affecting Craft Beer?

As the world deals with COVID-19, every brewery is impacted in some way. We checked in with some brewers to find out how they have been affected, and what the future holds with a two question interview. The responses to these two questions have been combined below:

Q1: How has the pandemic affected your brewery?

Q2: How do you foresee the pandemic affecting craft beer over the next 12 months?

Sam Calagione, Dogfish Head

Sam Calagione, Dogfish Head Brewing

Q1: We have temporarily closed our three restaurants and hotel. We have kept all of our full time CO workers employed and insured. We have begun making hand sanitizer in our distillery and selling it to the state of DE , hospitals and other critical health agencies. We are donating the profits from the sales of sanitizer to the state to a fund we established with the Delaware Restaurant Association to provide financial relief for hospitality working in our state who have lost their job as a result of this crises.

Q2: I think there will be breweries and restaurants that will have a hard time staying in business. Especially smaller mom and pop restaurants. But I am confident in America’s entrepreneurial spirit and resolve and it might take a few years but we will come back stronger than ever in time.

Jeffrey Stuffings, Jester King

Jeffrey Stuffings, Jester King

Q1 [excerpt from Jeffrey’s blog post]: First off, the epidemic has hit at perhaps the worst possible time from a business perspective. Early Q1 is typically our slowest period of the year, although rivaled by July / August due to the intensity of the Texas summer. Early March through Memorial Day is typically our busiest season when our business roars to life with the beautiful spring weather. At this point, we’d be thrilled to reemerge and get back to full operations by the summer. But even by then, we will have missed our busiest season of the year.

Most critically, the mechanism of controlling the virus (isolation / social distancing) unfortunately takes dead aim at the heart of our business model at Jester King. Rather than trying to grow our business by increasing our beer production volume year over year, we’ve chosen to grow the onsite experience by purchasing land and adding a restaurant, farm, inn, and private event hall. What was designed to diversify our business and make it more immune from the intense competition of offsite retail and distribution, is for now at least, making us highly susceptible. Onsite sales account for 77% of our revenue — ordinarily a good thing, but for now, a severe detriment. It’s unclear what we will be able to recoup through “to go only” sales in the near future, but we anticipate it only being a small fraction of what we’ve lost.

As an aside, I wholeheartedly support and am proud to have Jester King play a small part in helping stem the spread of the virus. Technically, we don’t have to close right now, as we’re not in Travis County. But given the large crowds we routinely see on the weekends, it’s the right thing to do in order to support our healthcare system in this time of crisis.

What further compounds the situation is that there is no immediate end in sight from my perspective. While acknowledging that no one knows how this will play out, it seems to me we are faced with adjusting to a new normal – a new normal where social distancing and isolation are the way of life until a vaccine can be developed, hopefully by 2021. Thus, whatever emerges (if anything) as a route to business survival, must keep us afloat for possibly over a year. Again, I have no special knowledge or insight, but I am operating under the assumption that we must try to make a go of it in this reduced state for the long haul, not just two weeks or two months.

This is just a sharing of my perspective as a small business owner. I know I’m not the one hurting the worst out there. Nearly 10,000 people have lost their lives and nearly 200,000 have gotten sick. And this is apparently just the beginning. Then there are the healthcare workers like my wife Amber who selflessly risk exposure while showing up to help others. My sincere appreciation goes out to them.

Q2: I see the pandemic causing a major cash hit to breweries and brewpubs over the next 3 months or so, as major pieces of their operations have been eliminated. The loss of draft beer in particular hurts, as draft is a cost effective format, and packaging materials aren’t cheap. If tasting room / restaurant bans are lifted or relaxed, there will be some recovery, but from what I’ve read, there may be future periods of social distancing (closure) in the fall or winter, which will continue to hurt. Once the all clear truly arrives (my guess would be in spring/summer of 2021), breweries will return to a hampered economy. I think more breweries will survive than is being prognosticated, but it’s going to be tough sledding with small profit margins (or outright losses) for at least the next 12-18 months.

Garrett Marrero, Maui Brewing

Garrett Marrero, Maui

Q1: Draft sales have gone down approx 90%, cans sales and especially mixed packs are up at the moment. We’re in a unique place in that we’re also a distillery so we’ve pivoted to making sanitizer and loading up on whiskey to lay down later. Using this down time to train, lean up, invest in the future (whiskey) and looking at schedules daily. We’re staying positive and trying to be a resource to our community.

Q2: I’d say 500-2000 breweries will close their doors as a result of this. I haven’t adjusted those number for any stimulus that may come but suffice to say it’s going to be door closing for many, and a significant change to the landscape of craft brewers. It’ll likely be a slow ramp up once we get past covid as a disease and the economic impact will be felt significantly for several years.

Colby Cox, Roadhouse Brewing

Colby Cox, Roadhouse Brewing

Q1: Every facet of our company has been effected. First and foremost we had to let go of a significant portion of our staff that was involved in food service. We’ve had to implement very strict sanitary procedures for the employees who can continue to work. Our people are only allowed to visit three places; their homes, grocery stores and other necessity-based businesses, and our Brewery. If anyone goes anywhere other than that where they may come in contact with people, they are not allowed in the brewery and must quarantine themselves for 14 days. We have switched to only packaged product and no longer fill kegs. On the positive side, everyone in our company has come together through all this. We voluntarily closed our restaurant, and we were the first business in WY to shut down. Our people have been leaders through this crisis, and I couldn’t be more proud of them. Last week we purchased thousands of protective masks to hand out to the local hospital, fire, EMS, and the police to help them stay healthy. Roadhouse will survive this pandemic and the continued changes it is making to the market for our products, and we will be better for it. There is no denying that it has been very painful, and sad on so many levels however.

Q2: I think, unfortunately, many small businesses will not make it through this crisis. It is extremely rare that a craft brewery has the resources to pay its bills without any revenue, especially if a large portion of their sales are on premise, and in their own taprooms and restaurants. It is likely we will see as much as a third of all craft breweries disappear. That is extremely unfortunate for all of us in this industry. For those that do make it, I think there will be long lasting changes to operations including the “shrinking” of their geographic footprints. I believe this will happen because many breweries are taking on loans that will add capital expenses to their balance sheet they didn’t have before this, and new investments in expansions, and other capital expenditures will not be a priority for some time. It is hard to predict the future in an environment that is changing hour by hour and day by day, but I don’t think any of us will ever be the same once we get through this. I am an optimist, however and I think the craft beer landscape will ultimately be better and stronger for it!

James Bridwell, Sockdolager Brewing

Sockdolager

Q1: The pandemic has essentially halted all revenue. As of right now we’re only open in small windows throughout the week for to-go sales, which has been going well for us so far. Abilene has really come out to support local businesses during this, and its really kept our spirits up. But our distribution has come to full stop, and our revenue is 1/4 of what it typically is. All this during an expansion, no less.

Q2: Honestly I think the biggest factor is who has the means to survive something like this. The market is already tough, and breweries are already flexing their creative muscles just to keep things moving forward in typical times. Now we’ve got to get even more creative at finding ways to get our liquid into the hands of consumers. Eventually that the well runs dry. Eventually breweries running on shoestring budgets just can’t keep going. So, in short, I think we’re about to see a bunch of breweries shut their doors…

Heidi Guerra, Abita Brewing

Abita Beer

Q1: When March hits, we are preparing for festival season in Louisiana so yes, it is definitely affecting us. We celebrate everything here: food, music and of course beer but we understand that we have to do what is best for our employees and our community which is why we closed our tap room and visitor center until further notice. We do plan on rescheduling our brewery events once this is all over.

Q2: The next few months are going to be rough for sure and then hopefully things will get back on track. We are all going to have to have a toast when this is all over!

Kevin Scheitrum, The Bronx Brewery

The Bronx Brewery

Q1: Our community’s at the center of everything we do. We believe in the power of great beer to bring people together, and we try to build community every day with what we make and what we do. So, in addition to the financial ramifications of the pandemic, the fact that we’re not able to get our Bronx Brewery family together — whether at our events or just during happy hour in our Taproom & Backyard — has been such a challenge. So while we’re working around the clock to find ways to quickly, safely and conveniently get our beer to the consumer, we’re also pushing ourselves to come up with new ways to help keep that family together while apart.

Like every brewery, while we’re seeing really significant losses, we’re also trying to constantly push ourselves to be as creative — and as valuable — as possible to our fans in this time. We’re all in it together, and we’re dedicating ourselves to being a source of good in a time of unprecedented disruption.

Q2: With changes in legislation, I think we’ll see a burst of creativity from breweries in how they get their product to their fans.

Alex Willhoit, Waganupa Brewing

Alex Willhoit, Waganupa Brewing

Q1: Since 100% of our beer sales takes place from a single taproom (in a remote vacation area), we are experiencing ZERO sales. Hoping for a quick end to this Statewide shelter-in-place!!!

Q2: If we are allowed to open our taproom back up soon, 2020 (5th anniversary) will be GOOD! As far as our industry as a whole, I believe craft beer drinkers everywhere will wholeheartedly support the folks making quality beers.

Emma Martin, British Bulldog Brewery

British Bulldog

Q1: We shut down the pub (& therefore the brewery) last week to try and do our part in helping to slow the spread of the virus, however, it is becoming incredibly apparent that this virus isn’t going anywhere anytime soon so are having to look into options to reopen for curbside & delivery for a limited number of days/hours per week.

Q2: This is going to have a massive impact on the craft beer industry. We are seriously hoping that ABC revokes their change of policy to now allow all restaurants to be able to sell growlers as that was one thing that really set us apart from regular restaurants.

About the author

Keith Adams is the founder of BeerSelfie.com and can be found on Twitter, Facebook and Instagram as @grubulub.

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