Pressing Profit

While the pandemic has forced the forest of beer, wine and spirits makers to take stock of their route to the consumer, one branch of the tree has been particularly hard hit: the cider business. Always heavily reliant on sales generated on-premise, waves of closures early this year—and a second wave of closures in some states recently—meant that cideries have had to scramble for alternative ways to get liquid on lips and generate sales to survive.

Jon Clarenbach, owner of Western Cider Co. in Missoula, Montana said that within a week of the cidery’s tasting room closing, the company started home delivery. This move was made possible by the state of Montana adopting new legislation to allow for curbside pick-up and home delivery.

“This was very helpful in mitigating our loss of tasting room income and maintaining work for our retail staff,” says Clarenbach. “It was a great opportunity to connect to our fan base who really went above and beyond in supporting us when new, unprecedented developments were happening on a weekly basis. It was heartwarming to see the community support we have fostered over the years.”

Michelle McGrath, executive director of the American Cider Association, said that many cideries across the United States resorted to curbside pick-up or home delivery.

“On-premise sales were deeply impacted, but our members were able to introduce curbside sales and delivery services to make up for some of the loss,” she says. “Many of our members saw a large increase in online sales and some of the cideries with chain placement have experienced increased retail sales.”

Clubbing

The Northwest Cider Association, a non-profit trade organization that represents nearly 100 cideries across Oregon, Washington, Montana, Idaho and British Columbia, has recently looked to online sales as well, with the launch of the Northwest Cider Club. Members receive quarterly shipments of craft ciders made in the Pacific Northwest that can be hard to find. In addition, club members will also get a view into the community of cider makers and the regions they are from. Each box of six ciders is between $50-$60.

“We saw that with so many people shopping online to stay socially distanced, we needed a new and easy way for people to buy multiple brands of cider together,” explains Emily Ritchie, executive director of the Northwest Cider Association.

“We’ve had an overwhelming response so far. In the first two days 70 people signed up to be club members,” she says. The Northwest Cider Club wasn’t launched as a short-term solution, but a long-term sales tool to bring unique ciders to consumers.

“People love that cider is young, vibrant, different,” notes Ritchie. “Cider is fresh, it is crisp, it is lower ABV than many drinks too. Cider is easy to fit into many events, meals and adventures so you can find one for any season.”

A Mixed Bag

Covid-19 initially hit the 1,000 cideries in the U.S. pretty hard, but the industry is showing resilience. According to Nielsen, 60% of cider is sold on-premise. Seventy percent of cideries saw less than expected revenue since the start of the pandemic; 10% saw an increase in revenue and the remaining 20% maintained revenue year over year, reports the American Cider Association. This is a result of the measures taken by cideries and new legislation that allowed companies to introduce online sales, curbside pickup and direct to home delivery.

“It remains to be seen if the enthusiasm for curbside, delivery and online are sustainable,” notes McGrath. “Total off-premise cider sales were up 11.6% for the first two quarters according to our partners at Nielsen. This is largely a reflection of increased chain retail purchases of cider.”

Jenn Martell, co-owner of South City Ciderworks (San Bruno, Calif.) divulged the impact of Covid on her business in a recent podcast, ‘Courage and Other C Words’. As the cidery doesn’t have a taproom or outdoor space to serve customers, it relies heavily on the on-premise can and keg sales—70%. Martell explains that she and her team needed to respond quickly to make up for that incredible loss. As many, South City Ciderworks resorted to curbside pickup and shifting cider in kegs into cans. But as demand grew so quickly for cans, a can shortage incurred creating yet another hurdle for businesses.

South City Ciderworks is just one of many cideries that have been negatively impacted by Covid, suffering a 40% loss. Curbside pick-up has slowed, and the can shortage continues to be troublesome.

John Behrens, owner of Farmhaus Cider Co. (Hudsonville, Mich.) says: “We have reinvented our business model four times this year, continuing to shift bases on the needs and recommendations of elected leaders, health department officials and most importantly our customers. We are in a part of the world with very distinct seasons and the needs and desires of our guests change with the seasons independent of and in addition to the changes caused by COVID-19.”

What next?

Lester Jones, CBE, chief economist with the National Beer Wholesalers Association, said “The entire alcohol beverage market is tied to consumer health. The COVID-19 recession and subsequent business cycle are clearly having a disproportionate impact on consumers and markets around the country. Pay close attention to how your territory responds to consumers, businesses and policymakers during the next six to 12 months. Some areas will actually be better off, while others will be worse off. Overall, a mixed bag full of opportunities and risks.”

Looking to the future, South City Ciderworks is looking to innovate with exclusive local partners to bolster sales.

“We’re making a bone-dry cider and a fall seasonal cider for a local grocery chain,” says Martell.

“A brewery in Fresno has reached out to us to make a cider for them which is really exciting…

We’re focusing on building out new accounts for off-premise sales and expanding options at existing accounts. Mainly, we’re just going to keep canning and kegging and trucking along. It’s all we can do.”

Western Cider Co. also looked to form partnerships with local businesses to not only show support but create a unique offering for its consumers and grow its customer base.

“With our Estate Ciders we wanted to connect on the local level too,” says Clarenbach. “Our retail manager, Ellie Costello, brainstormed the idea for a pairing of an Estate Cider with local charcuterie and cheeses. We took pre-orders online and were able to double sales for the day. We will be using this model going forward for subsequent Estate Bottle releases. It’s a great way to illustrate how well more tannic, full bodied ciders go with food.”

Other cideries, including Bold Rock (Nellysford, Va.), which is the second largest in the U.S. according to Fintch, for example, offered takeaway taco kits when picking up their cider curbside.

However, not all cideries were quick to shift their sales model. Some, says McGrath, shied away from delivery or pick up services, cautious of how this might impact distributor relationships.

The tides continue to change and there is no certainty in the future. However regardless of regulations, restrictions, closures, etc. those businesses that will weather the storm will be those that keep quality and high standards as top priorities.

Behrens says: “The secrets to success remain unchanged by Covid; they’ve just proven to be even more important: Great products, great service and supreme adaptability.”