Louisville breweries don't know if the keg is almost tapped as the coronavirus pandemic continues to wreak havoc on their small businesses.
The statewide "healthy at home" order's impact has been rippling for weeks, hitting everyone from restaurants to farmers to food truck owners. Almost immediately, those ripples hit breweries: closing Louisville's bars and restaurants meant Louisville's breweries took an immediate 50% hit with the loss of on-premise sales. Distribution and carryout sales, while allowed, are a gamble in the new coronavirus world as carryout can't be predicted and many distributors have cut orders to sell the stock they have.
Most Louisville breweries are seeing between a 60% and 75% dive in business — if not more — numbers that line up with those reported by a recent Brewers Association survey. Even adapting quickly is just about "tempering the bleed," Against the Grain co-owner Sam Cruz said.
Against the Grain shut down its Slugger Field brewery location, 401 E. Main St., immediately after Gov. Andy Beshear's order and furloughed more than 90 employees. The operation was moved to the Public House by Against the Grain location at 1576 Bardstown Road for carryout beer and food.
"We're still able to maintain our grocery store sales, which has helped keep the brand alive," Cruz said. "I think for us the most important thing is understanding the world is different and we're going to have to respond to that. I think we are."
Against the Grain has been running a variety of specials to make sales: $2 margaritas on Mondays, gift card discounts, a Bargain Bundle of any burger with any four-pack of beer for $22 and happy hour and mixed case discounts.
So far it's going better than expected, Cruz said. And people as far as Los Angeles have been visiting the brewery's website to buy gift cards, T-shirts and hats.
Nathaniel Gravely, owner of Gravely Brewing Co., 514 Baxter Ave., said he was also blown away by the amount of local support for the brand.
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"We are proof of being financially successful because of the love that Louisville has for its local businesses, and it makes me want to cry," Gravely said. "We are so lucky they are still coming to get their beer to keep us alive. It's kind of an apples and bananas scenario, but at the same time, it's still a fruit. They're still drinking our beer."
Gravely Brewing Co. went from a bustling on-premise business to a retail bottle shop overnight, Gravely said. About 20 of its 30-person staff were furloughed, on-premise sales are down 75% and distribution sales — most of which are draft sold to bars and restaurateurs — fell 50%.
It was a huge blessing that the nearly 3-year-old brewery launched its canning operation in February, Gravely said. Now, Gravely is counting on sales of cans, bottles of wine and even plastic growler fills to get by, plus pulling from Gravely's "rainy day fund."
"Even the big breweries count on selling pints on-site, we make a way higher margin on taproom stuff," Gravely said. "Turning that off for any brewery or bar is almost like a death sentence. This is not the business model I drew up to survive. But for now, we can tread water."
Gravely said the closures came at a time when many restaurants, bars and breweries have exhausted their reserve funds from the slow winter months. They needed the traffic they would make in the spring and summer through events like St. Patrick's Day, races, rallies and the Kentucky Derby. The events being canceled and customers staying home is devastating.
Gravely and Cruz both applied for funds from the government's stimulus package, which includes $350 billion in the Paycheck Protection Program, a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. Even Goodwood Brewing, the largest brewery in Louisville in terms of production with locations in Louisville, Frankfort and Jeffersonville, Indiana, is counting on stimulus funds to make it.
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Goodwood CEO and chairman Ted Mitzlaff said the brewery's sales have plummeted 95%, with just a handful of carryout beer orders going out per week. Distributors are depleting the inventory they already have before making new orders.
Goodwood has furloughed about 70 of its 80+ employees and scaled back production in response to the pandemic, Mitzlaff said. The comparison year to year is unbelievable, especially with March usually being the brewery's busiest month.
In the meantime, the brewery's executive staff have been working on strategy revamps and projects they've been postponing, such as an updated restaurant menu, education for key employees, adding an office to the Frankfort location and adding bathrooms at the Louisville taproom.
"Mostly we're just trying to cut as much as possible and weather the storm," Mitzlaff said. "The biggest variable is when are we going to open back up? It's easy to plan for something if you have a date. But if you don't, it's very difficult."
Monnik Beer Co. co-owner Brian Holton said carryout sales at 1036 E Burnett Ave. are down about 60%, and half of the 35 employees have been laid off. Scaling down a brewery is difficult, though: equipment orders for things like kegs, growlers and more are usually made in bulk. He's counting on disaster relief loans and PPP to pull the company through, plus combos and discounts such as $10 growler fills, new beers in cans and burger, fish-and-chips or schnitzel combos with a 12-ounce can of beer for $15-$19.
Holton also works as an emergency room nurse at Baptist Health, so he's been picking up shifts at the hospital to cover expenses.
For brewers, the biggest question "causing everyone anxiety is the inability to know how long this is going to last," he said.
Hundreds of craft brewers across the country expect to see a year-over-year 60% sales decline in the coming months. A Brewers Association survey of 900 brewers on March 25 found that about 61% have laid off employees and 28% have stopped production. And nearly 46% of brewers in a second survey on April 9 said they could only sustain their current social distanced business model for one to three months.
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No one knows what will happen after the pandemic subsides.
"Is everyone going to be too traumatized to go out? Will the spacing in bar seats become the standard? I don't know," Gravely said. "I don't know how to plan for a post-pandemic world."
Dahlia Ghabour: 502-582-4497; dghabour@gannett.com; Twitter: @dghabour. Support strong journalism by subscribing today: courier-journal.com/subscribe
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