Brewers Association Survey: 46% of Craft Breweries Say They May Be Forced to Close Within 3 Months
The Brewers Association (BA) released the results of its second member survey on the effect of the coronavirus disease COVID-19 on the craft brewing industry, and the results paint a bleak picture for many small and independent craft brewers.
The survey — taken by 455 respondents from 49 states and Washington, D.C., through April 6 — revealed “a sharp drop in craft category sales, massive furloughs or layoffs, and the high likelihood of large numbers of brewery closings without a swift end to social distance measures — which looks increasingly unlikely — or rapid government support for small brewers and hospitality more broadly,” according to an analysis published today by BA chief economist Bart Watson.
Among the most jarring findings: a majority of respondents do not think their businesses can survive three months under the current conditions, which Watson said suggests thousands of potential closings.
Among those surveyed, 46.4% said their businesses will likely only last between one and three months, while 12.7% of respondents said they could stay afloat for just another one to four weeks.
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.
The survey found that 2.5% of respondents said they were planning to close. Watson noted that there are currently around 8,150 active breweries in the U.S.
“If 2.5% of those breweries close, that would mean about 200 closures, 12.7% about 1,035 closures, and 46.4% about 3,785,” he wrote. “Based on recent trends, it was likely that 4-5% of the breweries in the country would have closed in 2020 prior to this shock, so while some percentage of these closures and potential closures reflect business that were already struggling, most are brought on solely by this event.”
As those breweries attempt to stay afloat, many have furloughed or laid off staff. The survey’s respondents employed a collective 13,454 workers prior to COVID-19, with 7,485 full-time and 5,969 part-time workers. The majority of those workers have been laid off, with 65.7% of respondents saying they had laid off staff.
The survey also asked about sales trends, which found that the median respondent’s onsite sales declined 77%, with an average drop of 66% and an adjusted weighted average drop of 68%. According to the survey, most breweries’ onsite sales declined more than 70%, with a smaller number of companies seeing either smaller declines or even positive growth, and “an even smaller number seeing large gains,” which likely came from direct-to-consumer, drive-thru and delivery sales. Those alternatives, Watson cautioned, aren’t feasible for every brewery and are not a replacement for the loss of draft sales.
As Watson has previously noted, 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. Of course, distributed draft beer sales declined the most with the majority of on-premise retail establishments closed in an effort to stop the spread of COVID-19.
Nielsen CGA Projects BA-Defined Craft to Lose 17.8 Million CEs If On-Premise Closed Through April
Brewers Association-defined craft beer companies could lose nearly 18 million cases equivalents if the shutdown of nearly all U.S. on-premise outlets forced by COVID-19 lasts through April, Nielsen CGA client solutions director Matthew Crompton shared during a “Power Hour” webinar.
“That’s a big gap in the market that has now been lost,” he said.
Crompton and Nielsen CGA client solutions manager Matt Drummond shared the firm’s “COVID-19 “Impact Report,” which focuses on consumer attitudes toward takeout and delivery of food and alcoholic beverages.
The firm shared the results of a survey of 1,200 consumers in New York, California, Illinois and Florida taken March 28-29, as well as trends from its RestauranTrak dataset — which tracks more than 10,000 transaction-level point-of-sale feeds from mostly independently owned restaurant concepts and smaller unbranded groups — for the weeks ending March 21 and March 28.
The results were, as expected, grim. Overall dollar sales velocity for the week ending March 21 declined 73% compared to an average week, while dollar sales velocity declined 77% for the week ending March 28.
In the pre-COVID-19 world, takeout/delivery accounted for just 11% of total on-premise sales in the U.S. Since then, takeout/delivery sales have increased 110%.
According to Nielsen CGA’s two week survey, 66% of respondents said they had ordered takeout or delivery over the two-week period ending March 28, while 15% said they had ordered alcoholic beverages with that order. Meanwhile, one-third of the survey’s respondents said they ordered food from a venue where they have previously dined in or drank.
More than half (58%) said they ordered alcohol to avoid going to the grocery store, while 24% said they purchased alcohol bundles offered. And 61% said they expected to pay more for takeout/delivery than at retail.
Brewers Association Shares 2019 Ranking of Top 50 US Craft Breweries
The Brewers Association (BA) revealed its annual ranking of the top 50 craft brewers based on sales volume. The top nine remain unchanged from last year’s ranking, but Artisanal Brewing Ventures — the parent company of Southern Tier, Victory and Sixpoint — overtook Deschutes Brewery for the tenth spot, knocking the Bend, Oregon-based brewer into eleventh place.
“We didn’t see too many huge shifts this year, and I think that makes sense in a more mature industry where dynamic growth is more challenging,” BA chief economist Bart Watson said.
The BA defines craft breweries as those making fewer than 6 million barrels annually and not more than 25% owned by a beverage alcohol that is not a craft brewery.
The top 10 craft breweries by sales volume in 2019, ranked in order, were:
• D.G. Yuengling & Son
• Boston Beer Company (Samuel Adams, Coney Island
Brewery, Concrete Beach Brewery, Angel City Brewery)
• Sierra Nevada Brewing
• New Belgium Brewing
• Duvel Moortgat (Firestone Walker Brewing, Boulevard
Brewing, Brewery Ommegang)
• Gambrinus (Spoetzl Brewery, Trumer, Bridgeport)
• Bell’s Brewery
• CANarchy (Oskar Blues, Cigar City, Wasatch, Squatters,
Perrin, Three Weavers, Deep Ellum)
• Stone Brewing
• Artisanal Brewing Ventures (Victory, Southern Tier, Sixpoint)
Portland, Oregon-Based Cascade Brewing Sells to Local Investor Group
Portland, Oregon-based Cascade Brewing, known for its sour and barrel-aged beers, has been sold to an investor group with ties to other Oregon breweries.
Cascade founder Art Larrance will remain in an advisory role as ownership transitions to Mark Becker, Ramie Mount, Brian Kovach and Greg Laird. Financial details of the sale were not made available.
“It’s time for me to retire and pass the brewery on to a team that’s fresh and full of energy and ideas,” Larrance said in a press release “I trust this group will do Cascade Brewing proud.”
Larrance founded Cascade in 1998. Cascade operates two taprooms, a production brewery and a barrel-aging warehouse. The company’s staff will remain in place, and its locations will remain open, according to the release.