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How Coronavirus is Impacting the Craft Beer Industry

  • by: Maggie Mahar
  • On: 1, Apr 2020
23 min read

Beer has always been there for us. It’s the Great Mediator. It has always given us an excuse to socialize and slow down. But now, Covid-19 seems to have brought every industry to a grinding halt. The craft beer world is no exception. Fewer and fewer people are going out to drink (none, in fact, at the time of writing), and expensive craft beers are often seen as luxury purchases. All of this means that fewer and fewer people are even buying beer, which is spelling sudden disaster for the craft beer world. From event cancellations to closed taprooms, the craft beer industry is feeling the sting of the coronavirus epidemic.

The most obvious place we are seeing a slowdown of craft beer sales is on-premises, in restaurants and taprooms. The not-for-profit Brewer’s Association recently did an industry survey on the coronavirus fallout, and the results were anything but surprising. BA’s chief economist Bart Watson writes:

“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.”

According to the survey from BA, the virus has impacted 90% of breweries’ on-site sales. About 60% said that it impacted distribution orders, and almost 90% pointed to the Coronavirus for upcoming canceled events.

To pivot and help mitigate some of the impacts, many craft breweries and taprooms have begun offering pickup and delivery services. In fact, the Illinois Liquor Control Commission recently approved a temporary measure that allows craft breweries to deliver to residential customers. The commission also lifted restrictions on restaurants that previously prohibited the delivery of alcoholic beverages to residential drinkers.

According to the Brewers’ Association, canceled events bring another burden on craft breweries during the outbreak. Many breweries turn to on and off-premises events to augment the sales of their beer. With more and more states banning events and gatherings, these events have been shuttered for now.

One of the most high-profile of these cancellations was the Craft Brewers’ Conference and World Beer Cup, which was previously set for late April. The event is issuing full refunds of conference registration and booth fees, sponsor payments, and World Beer Cup competition entries, but regardless -- an event of that magnitude typically is a yearly boon for the industry.

The BA survey also found that craft beer production schedules are down significantly. Almost 25% of brewers have halted production entirely, and 64% have significantly slowed production. This is particularly remarkable, considering that now would be the time to ramp up Spring and Summer seasonal brewing.

Perhaps unsurprisingly, this means layoffs for many brewery employees. 57.7% of the companies in the BA survey said they anticipated laying off workers due to the coronavirus. About 30% were unsure of what layoffs may come. That being said, Watson was sure to clarify in the BA survey:

“This in no way implies that anywhere near half of small brewery jobs are in jeopardy…”

But, he doubled down on his words of warning:

“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.”

Watson concluded his report with a message of action and a hope for a swift response, stating:

“What are we doing with this information? Primarily, we’re doing what we try to do everyday: tell the story of small and independent brewers to lawmakers. This time it has far more urgency. We’re also sharing this data with state guilds and asking them to contact their federal legislators, and working with a broader beverage alcohol coalition to magnify our voice.”

And although the lawmakers’ response to the epidemic has left many wanting more, there is good news from the industry. Craft brewers are turning to creative and unifying methods to help one another during this dire time of need.

In addition to the massive outpouring of beer delivery, some craft brewers are taking this opportunity to work on beers with longer production schedules, rather than quick-turnaround IPAs. This will mean that when restrictions lift, craft brewers will have a bevy of even better beer ready to drink.

Elsewhere amidst the chaos, off-premise accounts like retail stores and groceries are reporting record alcohol sales numbers. Some brewers are capitalizing on this to create unique, new ‘events’ through Zoom conferencing and social media. In Iowa, the brewers’ guild has announced a “Socially Distant Beer Festival”. On March 28, ‘attendees’ will be encouraged to buy local beer and log on to the festival to drink with fellow enthusiasts.

And so, we’re going to end this one on a positive (or at least hopeful) note. The numbers seem to indicate that beer is a critical part of the American public’s Covid-19 prep plan. For Beer Association-defined craft breweries, sales jumped 3.7 percent over the previous year’s. This is especially significant considering that total craft beer sales volumes have been down 0.3 percent for the first nine weeks of 2020.

BA’s Watson says he expects more of this ‘bucking the trend’ from beer sales volumes during these times.

“The good news is, although beer on average has performed slightly worse during recessions than during periods of economic growth, the differences aren’t huge. My oft-repeated phrase on the subject is ‘beer isn’t recession-proof, but it’s recession-resistant.’”

So with all of that said, the beer industry may be grinding to a halt for now, but it looks like beer is going to be just fine.

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