Nicole Smith isn’t eager to picture a world without craft beer—and not just because her livelihood as the co-owner and operator of South Lake Brewing Company would evaporate. “Oh, geez,” she says. “I don’t want to imagine it. We wouldn’t have anything to bring our friends together.”
She makes a good point. But as part of a new (ab)normal, in which people around the world are being asked not to bring their friends together, her thought also raises two timely questions: How do we bring our friends together in the COVID-19 era? And more importantly, how can our favorite craft beer operations, many of them small and family-run like hers, survive to see the other side of the coronavirus outbreak?
The first one is a little easier to answer: Virtual happy hours are one of a number of increasingly popular ways to socialize safely. The second one is more complex. In the Golden State, home to more craft breweries than any other state in the country, those brewers are pivoting their business models.
Running the Numbers
Leia Bailey, the associate executive director of the California Craft Brewers Association, says craft breweries in California represent more than 1,000 small businesses, which collectively employ 50,000 people. She may in fact be lowballing the numbers, which, according to a 2018 CCBA economic impact report, totaled 61,335 jobs and $3.44 billion in labor income. Meanwhile, California artisan brewers accounted for $10 million to $15 million in charity donations, $906.1 million in state and local taxes and $9.01 billion—with a “b”—in total economic impact.
Those numbers will fall sharply in 2020. That's compounded by the trend that, as beverage industry analysis pros ISWR report, mainstream beer brands are getting more shelf space with their bulk bunker-ready packaging. But of greater concern to CCBA and its breweries is immediate relief, or as Bailey puts it, “keeping the lights on.”
In the current moment, that involves low-interest small business loans and deferring tax and insurance payments. Down the road, it incorporates supporting members on insurance claims, unemployment and mitigating commercial evictions. But the most immediate way for brewers to maintain some cash flow is more tangible: selling beer both to-go and by delivery.
Changing Business Models
While craft brewers have long been allowed to sell to-go and deliver, it was never prioritized like this, because it was never a lifeline. “The whole brewing industry had to reinvent their business model in a 12- to 24-hour period,” says Bailey. “But this [crisis] lets them do what they do best: be creative. There are so many people doing cool promotions.”
The examples span the state. The aforementioned South Lake just started doing its first mixed 16-ounce four-packs in its company history to show off four different IPA styles in one bundle. Its sales have migrated completely online and include local deliveries, pickup six days a week and shipping to California and Nevada. In terms of staffing, only the core management team remains, and one bartender does part-time deliveries.
“Temporary layoffs were the worst part for us. They’re family, and it sucks not working with them and seeing them,” says Smith. “It’s going OK, but we’re generating only 10% to 20% of our previous revenue.”
Six-month-old Other Brother Beer Company of Seaside is completing crowler deliveries to neighboring cities by bicycle, in collaboration with Green Pedal Couriers, whose owner happens to be an Other Brother regular. OBBC operations director Michael Nevares—one-third of a skeleton staff remaining after wide layoffs—concedes it’s “not really” enough to cover costs, but considerations from its bank and insurance carriers, and the temporary waiver of fees from its point-of-sale provider, help.
“It’s keeping us busy and bringing in a little bit of money to keep the essentials paid for,” says Nevares. “We planned the brewery for years, then we’re figuring out a whole new business model in days. Everything is a logistical challenge.” But, he adds, it feels good to meet a community need: “In the end, we’re trying to get beer to the people. They want it, they’re thirsty. Even if it’s not keeping the lights on 100%, it’s what we want to do, and it makes people happy.”
Learning New Roles
After five days of purely online sales, brewer Adrianna Hodapp of Three Weavers Brewing Company in Los Angeles is happy to report that, compared to typical tasting room revenue, sales are pretty good. Its staff is canning a dozen different drafts and relearning roles: Suddenly the brewers, the production team and warehouse staff are taking on new tasks like filling beer orders. “We’re doing all right,” she says.
In Sacramento, Urban Roots Brewing & Smokehouse is experiencing a similar adjustment of both business model and employee roles. What had been a staff of 50 for its restaurant and brewery is now down to a half-dozen. One-time marketing manager Troy Cooper finds himself working as a beertender and cook.
“All the more formal staff have forgotten about the office stuff and are just focused on keeping the operation going,” says Cooper. “We’re figuring out how to run a restaurant with only a few people, how to make the online menu easy to use and how to provide value while making a little money.”
As of last week, a limited menu of dishes like slow-smoked ribs and the restaurant’s popular barbecue burger are available for pickup or through UberEats. Family-style meals have been a crowd favorite, particularly a build-your-own taco kit that runs $20, serves two and includes smoked brisket or carnitas, rice, beans, limes, salsa, guacamole, cheese and a crowler of something like bestsellers Luna de Miel Mexican lager or Bigger on the Inside double IPA. “The goal is to give the community an option for food,” says Cooper, and to keep the business going.
In a vexing time, these stories of survival furnish welcome news for producers and consumers—and affirmation that beer-making is an essential service.