The not-for-profit trade group, which represents the interests of small and independent craft breweries, shared the survey results this morning, and the results show what many expected and living: The industry is facing economic hardships like never before.
More than 600 breweries responded to the survey as of Tuesday night, and the effects of shutdowns and closures of on-premise establishments in an effort to stop the spread of the novel coronavirus disease and “flatten the curve” are going to touch just about every company.
“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,” BA chief economist Bart Watson wrote.
According to the survey, 90% of breweries said COVID-19 had already impacted on-site sales at their businesses, 58.8% said it had affected distribution orders and 89% said it had manifested in canceled events. Just 1% of beer companies said they had seen no impact.
Watson noted that canceled at-the-brewery events would be “just as painful as the loss of beer sales for some brewers,” as many brewers had turned to at-the-brewery events to help offset lost revenue from slowing beer sales.
“Now both streams have been slashed,” he wrote.
Several breweries are scrambling for solutions, offering online sales, to-go beer, curbside pickup, deliveries and more.
Melissa Romano, co-owner of Reston, Virginia-based Lake Anne Brewhouse and the BA’s board of directors taproom class representative, said her brewery is adapting by pivoting to to-go sales, using their 16-oz. crowler machine to can draft offerings and shifting their community gatherings, such as next Saturday’s book club, to video conference platform Zoom.
“No matter how hard everyones trying right now, the impact is going to be significant,” she said.
In the next month, 95.2% of breweries said they expect their sales to decline, while 2.6% anticipate being flat. Just 1% said they anticipate sales to increase (1.3% didn’t respond).
The BA also asked brewers how their production schedules have changed in response to COVID-19. Nearly a quarter of brewers (24.7%) said they had stopped production, 64.1% said they had slowed production and 9.9% said they had not made any changes.
As Brewbound reported Tuesday night, craft breweries have already begun furloughing and laying off workers, including Russian River and McMenamins. Night Shift Brewing announced that it would not lay off employees but did institute a furlough program for every department to reduce “workload/pay for many, but enables our staff to file for unemployment.” Night Shift’s founders also said they would forgo pay during the crisis.
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Easily the hardest week in company history. To better protect the health and safety of our community and give Night Shift the best shot at coming out of this intact, we made some incredibly tough decisions yesterday. We are sharing those decisions here to increase transparency, and in the hopes that other small businesses might benefit from hearing our approach. Effective immediately: – Founders will be forfeiting 100% of our salaries. – Zero layoffs, every staff stays on company benefits, but we did enact a furlough program that touches every department. This reduces workload/pay for many, but enables our staff to file for unemployment. We hope every employee is back at full capacity once this is over. – We are working with our bank, landlords, and business partners to better navigate this pandemic. – We are continuing to evolve and update our health and safety protocols. This decision to impact staff livelihood is the hardest we’ve ever had to make and one that comes as a last resort. We are making these calls now in the hopes that the company can better withstand the impact of this global pandemic. As a unified team, we will bear hardship together and hopefully ensure a stronger future for the entire Night Shift family. Please support us, other local breweries, and other small businesses so we can preserve the amazing community we’ve built together. When this finally passes (and it will), we will raise a glass in celebration with all of you. Ways to help: delivery via Drizly and Insta-cart, liquor/grocery stores, e-commerce (gift cards, coffee, merch!), and taproom retail pick-up. Links to all in our bio. Thanks for your continued support, and we truly hope to see you soon. -Rob, Mike, and Michael
More than half of the companies surveyed by the BA (57.7%) said they anticipate laying off workers due to COVID-19, while 31.3% were unsure. Only 9.5% of the companies that responded said they do not anticipate cutting jobs.
Watson clarified that the survey wasn’t weighted by the size of breweries or number of employees, and the BA didn’t ask how big the loss of jobs would be.
“[S]o this in no way implies that anywhere near half of small brewery jobs are in jeopardy,” Watson clarified. “That said, like other small businesses, every day being shutdown increases the pressure, and it is clear that this unexpected shock will lead to layoffs at a broad scale. Every day without relief will likely increase the cost in jobs.”
Nevertheless, U.S. Treasury Secretary Steven Mnuchin has warned Senators that without the passage of rescue packages, the overall U.S. unemployment rate could reach 20%.
The survey also asked breweries which policy measures would be most helpful over the next month. Helping workers who are losing their jobs remained top of mind for breweries, who said their No. 1 policy priority would be to “make unemployment insurance available for all temporarily laid off or furloughed employees, with no long term negative impact on employers’ insurance premiums.”
Brewers’ second priority would be for the government to create a compensation fund for businesses affected by the coronavirus pandemic.
Other priorities, in order of importance, include:
- The suspension of payroll taxes;
- Paid quarantine leave for employees of businesses shut down due to the quarantine;
- A waiver of penalties on late excise tax payments and for the Alcohol and Tobacco, Tax and Trade Bureau to treat this National Emergency similar to a natural disaster;
- Loan deferments for up to two months with no interest accruals from commercial lenders;
- Paid sick leave for people who don’t have benefits through their employer;
- Increased funding for Small Business Administration (SBA) for low/no interest loans;
- Immediate loan payment deferment on SBA loans with no interest accruals;
- Cash transfers to individual Americans.
BA president and CEO Bob Pease told Brewbound last week that the organization was already lobbying in favor of many of those efforts with congressional members.
Our quick survey of breweries shows how tough this will be for their businesses and workers.
Nearly all are seeing effects. 95% expect their business to be down over the next month (average down almost 60%) and toughest of all, 60% expect layoffs.https://t.co/3yAgvX6RFW
— Bart Watson (@BrewersStats) March 18, 2020
Watson concluded that the BA is using the information to show lawmakers how the COVID-19 outbreak is affecting small breweries.
“Primarily, we’re doing what we try to do everyday: tell the story of small and independent brewers to lawmakers,” he wrote. “This time it has far more urgency.”