In the wave of COVID-19, breweries are making two dramatic shifts in their business.
Restaurants and bars are closed, events have been canceled and breweries have had to close their doors to visitors. Breweries are scrambling to abandon kegs and are desperately moving to package their beer in cans and bottles. Some smaller breweries who totally depend on draft sales are scrambling to find canning and bottling resources.
The move away from kegs, towards cans and bottles, has placed increased emphasis in online sales. Many of the 7,000 craft breweries in the U.S. have never had to reach customers outside of their local tap room. Tavour, an online retailer that works directly with small breweries, has seen a dramatic jump in breweries looking to sell beer on their internet platform.
“I wake up every day with a voicemail box that is full and an email back log I can’t keep up with,” says Meghan Packard, vice president at Tavour. “We’ve never seen anything like this before.”
It’s not all bad news. Consumers outside of breweries’ local areas are now getting access to the highly sought-after craft beer that they previously had to wait in line for.
“We are looking to allies like Tavour for upcoming specialty releases,” says Matt Linecum, founder/owner of Fremont Brewing. Fremont is the third largest craft brewery in Washington state and the largest producer of barrel-aged beer in there, and its increased focus on online sales channels alone could substantially shift the market landscape.
The Brewers Association, an American trade group of over 7,000 small independent breweries, disclosed from 600 survey responses that 98.9% are experiencing an impactful pull-back due to COVID-19, and it is clear that a lot of breweries expect this to last a long time. Nearly 89% have either stopped or slowed down future production schedules with uncertainty of when retail shutdowns will end. As far as layoffs go, 57.7% expect them to occur and 31.3% are still unsure if layoffs will have to occur in the near future. For a hyper local industry like craft brewing, it is not a surprise that retail shutdowns have so severely impacted businesses.
“The numbers aren’t pretty,” says Bart Watson, economist at the Brewers Association. “Because so many breweries sell a high percentage of their beer through their taproom or brewpub, and draught sales make up roughly a third of craft production, the rapid shuttering or restriction of breweries, bars and restaurants has drastically cut short-term cash flow as well as production in the medium-term.”
Washington breweries like Vancouver’s Trap Door Brewing, Sunnyside’s Varietal Beer Co., Seattle’s Reuben’s Brews and Urban Family Brewing, and others have moved 75-100% of their business from draft to package.
With archaic laws still in place, craft brewers often find they have to cross bigger hurdles to sell directly to consumers compared to their winery counterparts. The governors of New Jersey, New York and Connecticut had previously loosened restrictions on the sale of alcoholic beverages to go from on-premise accounts, which now allows craft breweries in those states to offer delivery. Some breweries Tavour works with are also taking matters into their own hands to keep their businesses running by offering to-go beer, curbside pickup and online crowler sales.
“Not sure you can recoup all the lost margin from the taproom, it’s ‘do what you can and get through,’” says Adam Robbings, co-founder and brewmaster of Reuben’s Brews.
While legal changes are coming, the changes themselves have been rather slow and severely restrict brewers’ ability to adapt to changing market conditions like the one COVID-19 has created. COVID-19 may have created a permanent shift in perspectives for breweries.
SPONSORED CONTENT PROVIDED BY TAVOUR