US craft brewers face first year of diminished sales

USA | The Brewers Association estimates a 10 to 20 percent decline in sales for small and independently-owned craft breweries in 2020, after a drop of around 10 percent through the first half of 2020. This could mean a loss of  3 to 6 million hl beer over 2019.

Bob Pease, CEO of the Brewers Association, said in August that “2020 will be the first year that beer sales from small and independent breweries across the nation don’t grow,” and he blames it largely on the covid-19 pandemic.

There are roughly 8,300 craft breweries across the US, categorised into three different types: taproom brewery, which doesn’t have a significant food component; a brewpub, which is a restaurant/brewery; and a production brewery, which brews and packages its beverages before selling them to a distributor.

Taprooms hit hardest

As for the taprooms and brewpubs, which make up 70 percent of the craft brewing industry, they have been hit hardest. They are dependent on the on-premise consumption, where a customer goes to the brewery to drink the beer. In states like Texas and Florida they have been banned from re-opening, unless they obtain a food licence and turn themselves into restaurants. Acquiring a food licence isn’t easy. What is more, it isn’t a business model taproom operators wanted in the first place.

The Texas Craft Brewers Guild, which represents nearly 350 craft breweries that are accounting for USD 5 billion in economic impact, recently conducted a survey of its members. It found out that one in three don’t believe they will make it out of the pandemic if current regulations persist.

No self-distribution permitted

Because – unless they have 51 percent or more of their sales coming from food, they cannot be open in Texas. Therefore, many craft brewers find it highly unfair that punters can sit down at the restaurant next door and have a beer, but they cannot come and have a beer in their taprooms.

Between unclear and ever-changing state rules, and a lack of government relief for those recently opened, Texas craft breweries are struggling to survive the covid-19 crisis.

A similar situation has evolved in Florida. As in Texas, the state’s 329 small brewers are hampered by laws that don’t let them distribute their product to restaurants, retailers and elsewhere. Unless they want to get into the food game –  a requirement to open taprooms during covid-19 – it will be very challenging for them to continue selling their products.

“Doing a permanent change based on a temporary solution is never a good idea,” one craft brewer was quoted as saying. “It is like getting married because you are lonely. We all know that doesn’t work out very well.”