A pair of recent surveys of craft brewery owners in South Carolina and California have revealed the financial pressures the novel coronavirus disease COVID-19 have placed on small beer companies.
The South Carolina Survey
A survey released by the South Carolina Brewers Guild on April 14th showed that 80% of the state’s breweries may be forced to close within the next three months if the current shutdown of on-premise and at-the-brewery sales remain in place. Just 15% of brewery owners said they’d be able to keep their doors open for between one and four weeks, while 65% of respondents said they could last between up to three months.
The South Carolina survey found that sales from breweries had declined an average of 70%, while 45% of the respondents said sales had declined more than 80%.
Meanwhile, 35% of South Carolina’s breweries had ceased production altogether, while 60% said they had slowed production.
All of those declines have forced about 70% of South Carolina’s breweries to lay off or furlough workers.
South Carolina Brewers Guild executive director Brook Bristow told Brewound that the state’s 92 breweries and brewpubs rely heavily on sales from their brewery taprooms, as most have opened within the last five years (according to the Brewers Association, just 36 breweries operated in South Carolina in 2015).
Pre-COVID-19, South Carolina breweries supported 5,000 jobs and generated $796 million in annual economic impact.
So far, Bristow said he hasn’t heard of any permanent closures.
So far, curbside and drive-thru to-go sales has been the only relief granted to South Carolina’s breweries. The guild is asking the state’s Department of Revenue to temporarily allow craft brewers to deliver and ship beer as other ways of generating revenue. Bristow pointed to 25 other states, and Washington, D.C., which have enacted temporary emergency relief for breweries and brewpubs.
South Carolina, along with Georgia, Tennessee and Ohio, are in the process of relaxing restrictions in the coming weeks that were aimed at stopping the spread of COVID-19.
South Carolina Gov. Henry McMaster declared Monday that stores and other retailers that were previously considered nonessential would be allowed to reopen today, although those businesses must continue to abide by social distancing guidelines, The New York Times reported.
McMaster’s order allows retailers of furniture, clothing, jewelry, sporting goods, books, crafts, music and flowers to reopen, while maintaining the closure of businesses previously closed by executive order, including on-premise sales at breweries, bars and restaurants, “until further notice.”
So, when breweries and taprooms could potentially reopen remains unclear. Bristow said it’s also unclear what restrictions would be placed upon those businesses, such as square footage and occupancy restrictions.
“I can’t imagine off the rip that’s going to go back to the way it was before,” he said. “So that’s something that we’re gonna have to work closely with the governor’s office to do everyone the most good.”
The California Survey
Meanwhile, the California Craft Brewers Association (CCBA), a nonprofit trade group that represents the interests of the state’s craft brewers, released the results of its own survey on April 14. The responses to the survey, taken by 230 brewery owners, were equally dire, with virtually everyone (99%) saying their companies had been negatively impacted by COVID-19 and the measures issued by local and state governments to keep the disease in check.
Those California brewery owners said they were on average seeing a 43% decline in sales, which had forced them either to lay off 29% or furlough 31% of their workforces. Those cuts likely won’t be the last, as half of the respondents said they were considering or planning additional job cuts in the coming weeks.
The majority of those respondents to the California survey said they sold an average of half of their beer through their tasting rooms, and an additional 20% through on-premise sales at bars and restaurants. So 70% of sales have been affected by the shutdown.
California is home to the most breweries in operation in the U.S., with 1,040 craft breweries in operation in 2019. In 2018, the state’s craft breweries supported 61,335 jobs and generated more than $9 billion in economic impact.
The South Carolina and California surveys come on the heels of an early April survey conducted by the Brewers Association, a not-for-profit trade group that represents small and independent U.S. breweries.
A Reflection of the National Outlook
According to the BA’s survey, 46.4% of respondents said their breweries would likely only stay in business for up to three months. According to the BA’s survey, 12.7% of respondents said they could stay afloat for just another one to four weeks, while 2.5% of respondents said they were planning to close. A quarter of respondents said their businesses could survive between three and six months, while 8.3% said they could hang on between six months and a year. Just 5.1% said they would be able to stay in business a year.
Those results foretell potentially thousands of closures, as the BA reported last week that 8,275 craft breweries were in operation in 2019.
Although off-premise sales of beer have spiked as consumers pantry loaded and replenished their stocks, making up for the loss of on-premise sales is especially difficult for craft brewers.
Market research firm Nielsen said more than 1,900 fewer beer category (beer/FMB/cider) products — a majority of which were made by independent and longtail craft producers — were sold in off-premise retailers during the first six weeks of the COVID-19 crisis compared to the same period in 2019.
Although the top craft breweries ranked by dollar sales in off-premise channels were largely unfazed by the declines — selling just 28 fewer items compared to 2019 — independent and longtail craft sold 1,621 fewer UPCs, a decline of nearly 125 compared to the time last year, Nielsen reported.
“Independent, or BA-defined craft is a similar story, with a decline by -11.3% in the number of items selling in off-premise channels,” Nielsen said. “This of course places even more pressure on small to medium-sized brewers that are already facing enormous challenges with the shuttering of taprooms, bars, and restaurants across the country.”
According to BA chief economist Bart Watson, 40% of craft breweries’ volume flows through the on-premise channel, while roughly one out of every three beers sold on-premise is a craft offering. Additionally, Watson has estimated that small and independent craft breweries sold 3.6 million barrels of beer directly to consumers at their taprooms and tasting rooms in 2019.
The Texas Craft Brewers Guild conducted its own survey in early April and found that in-state breweries’ revenue has declined an average of 71% and 63% of the state’s breweries have laid off or furloughed workers.
On average, Texas breweries cut 65% of their staff, while 14% of Texas breweries had temporarily closed their doors and 27% had temporarily stopped production.