In ordinary times, breweries of all sizes support more than 2.1 million jobs and pump more than $328 billion into the American economy, according to the Beer Institute. But it’s the industry’s smaller players that form its soul.
Those smaller players, craft- and microbreweries, were already struggling when the pandemic took hold in the U.S. in March 2020, with restaurant, taproom, bar and brewery closures soon following. Craft breweries had been grappling with growth challenges and tapering sales, and the pandemic-related closures further crushed the industry. Many of the smallest producers sell their beer in their taprooms only, and even if they do self-distribute, it’s largely within their local communities. Most don’t have canning or bottling operations and lack the internal infrastructure and legal licenses to transform their business models.
Without these taprooms filled with thirsty congregants, brewers now depend on hard-core craft-beer fanatics who order beer to-go (frequently in cans, when the breweries could get them, or in crowlers, which require minimal equipment to fill and seal) for their income. Early on in the pandemic, however, brewers filling crowlers, and even brewers that had a nascent canning line, had to contend with an aluminum can shortage.
By the end of 2020, the number of breweries shuttered from the effects of the pandemic was staggering. Twenty-one breweries in Oregon closed, more than 20 in Colorado shut their doors, and more than 25 in Pennsylvania shut down partially or completely. The other 47 states haven’t fared much differently. Broadly speaking, about 651,000 jobs were lost because of the pandemic, and retail beer sales plummeted by more than $22 billion, according to a report jointly issued in September 2020 by the Beer Institute, the Brewers Association, the National Beer Wholesalers Association and the American Beverage Licensees.
All told, small breweries saw their numbers decline between 7% and 8% in 2020, with the smallest of the small down closer to 30%, according to the Brewers Association in Boulder, Colorado. And while the impact on sales, staffing and openings is tangible, something more impalpable, but absolutely perceptible, is at work, says Bart Watson, the association’s chief economist.
“How and where we’re drinking has changed completely,” says Watson. “We went from consuming most of our craft beer from draft lines in pint glasses on bar stools together to drinking, more often solo, from cans on the couch. We’re consuming differently, and we’re ordering our beers differently. Instead of at bars and taprooms, we’re ordering them to-go or online or picking them up in retail stores.”
While craft beer sales and culture have been flattened by the pandemic, there are plenty of reasons to hope that brewers will bounce back stronger and smarter. Just before Christmas, Congress gifted the industry with a $2.3 trillion COVID-19 relief bill that enacted permanent excise tax relief, an additional $900 billion for Payment Protection Program (PPP) funding for small businesses, expansion of PPP eligibility and loan forgiveness on PPP loans of $150,000 or less, giving brewers some breathing room and allowing them to keep staffers and invest in new and maintain current equipment.
Several brewers across the country spoke about how the pandemic has affected their businesses and how they’re finding ways to bounce back.
Sales and Staff Suffering
A large small brewery, Jack’s Abby Craft Lagers in Framingham, Massachusetts, which was founded in 2011, went from employing 147 people before the pandemic to just over 60 as of January 2021. Most of the job losses are hopefully temporary, says Sam Hendler, the co-owner of Jack’s Abby and president of the Massachusetts Brewers Guild.
“Most of our job losses are in our hospitality division because we had to close our two restaurant spaces,” says Hendler. “All told, about 40 people were employed in both restaurants. We could open at 25% capacity legally, but it wouldn’t make economic sense, and our staff didn’t feel comfortable going back.”
The volume—but more to the point, the revenue—at Jack’s Abby has taken a hit too. The 50,000-barrel brewer was down about 10% in volume, with the most of beer now ending up in cans rather than in the kegs that had been the norm. The brewery’s draft sales were negative for much of the summer due to the pandemic-related shutdowns of restaurants and bars. Revenue plummeted between 20% and 25% overall, estimates Hendler. But the hardest hit might be the emotional and psychological impact he sees his staff suffering.
“We’ve been able to squeak by in hand-to-mouth mode,” says Hendler. “Instead of running our canning line for 10 hours four days a week, we’ve been running it seven days a week for extended shifts. The staff has been stretched; the equipment is stretched. And it has not been easy to shift from growth mode, which we were in for years, to protecting-cash-flow mode. But we did it, we made it, and we feel cautiously optimistic about 2021.”
Circumstances forced other smaller producers, such as Perfect Plain Brewing in Pensacola, Florida, to grow even as their business contracts. The 552-barrel producer with 13 employees saw its taproom shuttered on March 17, 2020. Without any distributors or a canning line, its co-founder and director of brewer operations, Reed Odeneal, says the company shifted its focus to selling crowlers to-go.
“It was our only revenue stream,” says Odeneal. “We went from selling five to 10 crowlers here and there to having lines of people waiting for crowlers to-go in the first few weeks.”
When the aluminum shortage prevented Odeneal from reordering crowlers, he teamed up with a few other brewers and drove to Michigan to pick up pallets of crowlers. Then as the pandemic went on and revenue continued to dry up, he spent about $5,000 retrofitting the space, getting a food license and creating a menu so that Perfect Plain could reopen as a restaurant-brewery. By the end of 2020, the business was no longer in freefall and was down perhaps 10% in profits.
Odeneal has become a mascot of sorts for the brewing community at large during the crisis and has made it his mission to inform and help his peers. Odeneal also serves on the Board of Directors for the Florida Brewers Guild and has initiated Zoom calls to check in with its 380 members weekly to share updates on new legislation and licensing procedures. He also created a collection point in Florida for brewers who needed crowler cans, purchasing truckloads through the guild so that brewers would be able to continue sales.
Innovation and Hope
Ron Abbott, the owner of Denver’s 500-barrelSeedstock, has also seen crowler sales skyrocket from 250 a month to 400 a week. But unlike Perfect Plain, which has benefited from having sunny 70-degree winter weather and a sprawling patio that seats dozens outside, Seedstock can only welcome people inside at 25% capacity.
“We have a 50-person capacity, so having 12 people inside doesn’t make sense for us economically,” says Abbott. And while he has seen about 15 breweries close locally, Seedstock has been able to hold on, with revenues down about 15% year-over-year. He credits that to its hard-core base of fans, one of whom gifted four “mug club” memberships to friends and family over the holidays.
“I have been blown away by the support from our community,” says Abbott. “Those four mug-club memberships cost $1,000. It certainly made our Christmas better.”
The year 2020 was bad, and the first half of 2021 may not be much better, says Watson of the Brewers Association. “But with widespread vaccine distribution and stopgaps like crowlers, DTC sales, to-go and delivery, we’re confident that breweries will be able to pull through,” he says. “The resilience of the brewers and craft community has been amazing.”