Beer Money

More than 80% of craft breweries received funding through the Paycheck Protection Program and many of them are more confident about the future.

80% of Craft Breweries Have Received Paycheck Protection Program Loans

This article originally appeared here.

Share This Article

More than 80% of craft breweries said they have received funding through the Paycheck Protection Program, and those loans are making many of them more confident about the future, according to the Brewers Association’ (BA) latest survey of how the COVID-19 pandemic is affecting those businesses.

According to the BA’s survey of 869 craft breweries released on Friday, 84.9% of breweries applied for a PPP loan, 50.4% applied for emergency Economic Injury Disaster Loan (EIDL) grants and 38.7% applied for EIDL loans.

“Of breweries that applied for a PPP loan, 95.7% indicated they had received their funds, meaning that 81.2% of breweries who responded to this survey have received PPP loan funds,” BA chief economist Bart Watson wrote in his analysis of results.

Nevertheless, more breweries said they’re more optimistic about the future of their businesses, with 32.2% of the respondents responding that they were somewhat more optimistic and 10.2% were much more optimistic about the future compared to a month ago, when the BA conducted its second impact survey, which found that 46% of breweries wouldn’t last more than three months under the business climate caused by the shutdown of on-premise sales in an effort to stop the spread of the novel coronavirus.

Still, 33.6% of respondents said their outlook hadn’t changed, and 24% were either somewhat more pessimistic or much more pessimistic.

Why were those companies more hopeful? Receiving PPP loans was the top response, followed by the re-opening of states, better than expected sales, new sales channels and a reduction in costs.

On the flip side, declining sales was the top reason for pessimism, followed by the challenges of capacity restrictions, the inability to reopen, increased costs, the inability to rehire workers, wholesalers dropping SKUs and not receiving PPP funding.

The BA also polled craft brewery owners on their confidence in still being in business by the end of 2020. The majority were either “very confident” (54.9%) or “somewhat confident” (27.8%) their businesses would last through the end of the year, while 11.6% were either “somewhat pessimistic” (3.4%) or “ very pessimistic” (2.3%).

“The flip is that 17% are unsure if not actively pessimistic,” Watson wrote. “Given the number of active craft brewers, if this sample is representative, that’s 1,400 breweries, with more than 450 somewhat or very pessimistic.”

The 869 craft brewing companies that responded are responsible for 3.4 million of the 26.3 million barrels of craft production in 2019. Watson noted that the survey appears to be “broadly representative,” with responses from 49 states and Washington, D.C., and no region over- or under-represented. However, the survey does skew more toward taproom breweries and less so toward brewpubs.

Watson acknowledged that there has yet to be “a massive surge” in the number of brewery closures, which may have been staved off by government assistance or new selling avenues. Still, craft brewer volume sales continued to lag behind overall beer sales, “due to different business models, with revenue weaker than volume sales,” Watson wrote, with the weighted estimate of total brewery sales down 30.5% (and down 50% for the median brewery respondent).

“Note that while we had representative participation, the volume above 100,000 was far less than it is as a percentage of the full data set, so accounting for that would likely improve the total number, and I think it’s likely that if we use this survey to build a broader estimate, total craft is likely down more like 20-25%,” Watson wrote.

The majority of craft brewery owners said they are reopening in states where allowed, the survey found. In re-opening states, 55.7% of breweries eligible to re-open said they would partially reopen their businesses, while 23.5% said they would re-open within the next few weeks, 16.2% said they are taking a wait-and-see posture, and 18.3% saying their businesses operate in cities or counties that have not re-opened or their license type was not eligible to reopen yet.

The BA also looked at how craft breweries are selling beer differently during the COVID-19 times. The biggest change? More breweries are offering delivery. In the pre-COVID-19 time, just 5.8% of breweries said they were offering delivery. Now, 37.5% said they were offering delivery either via brewery staff or a third-party service.

The number of companies selling beer through distribution declined 11.5%, to 65.6%, the survey found. Watson said this likely is reflective of the number of breweries that distribute draft beer only that lost sales opportunities in bars and restaurants during the shutdown, as well as via SKU rationalization.

The percentage of breweries offering beer-to-go sales increased 8.2%, to 94.4%. Direct-to-consumer shipping, which many breweries are advocating for, increased 4.8%, to 12.4%, the survey found.

Leave a Reply

Your email address will not be published. Required fields are marked *

News

Latest Craft Beer News

Beer Lab HI Releases “Chai Yo” Belgian-style Blond Ale

The latest limited release from Beer Lab HI, the “Chai Yo, Thai Tea & Milk Sugar Ale”, a Belgian-style Blond Ale, is now available from the Honolulu-based brewery. Read More

Bell’s Brewery to Auction Two Hearted Ale Hockey Jerseys to Benefit Local Organizations

Bell’s Brewery, Inc. and Kalamazoo Wings have teamed up to support two local organizations with a special, limited edition Two Hearted hockey jersey auction. Read More

Upper Hand Brewery Expands Distribution to Michigan’s Mitten

Upper Hand Brewery will end its drought of availability below the Mackinac Bridge with the distribution of its beer to Michigan’s Lower Peninsula this Fall. Read More