With sales down 77%, most U.S. craft breweries won’t survive 3 months, survey says - OregonLive

Median sales for American’s craft-beer industry have plummeted 77% since coronavirus closed bars and restaurants last month, and most breweries say they can’t survive three months under current conditions, the national Brewers Association reports.

The results of a survey taken last week show a sharp drop in sales and massive furloughs or layoffs across the nation’s 8,150 craft breweries. The survey also indicates a “high likelihood of large numbers” of breweries going out of business if social distancing measures don’t end soon or “rapid” help isn’t offered by the federal and state governments.

Bart Watson, an economist for the association that oversees and advocates for the craft-beer industry, wrote in a report on the survey that “many brewers indicate that their business has a matter of weeks” before closing, and a majority say that they can only last a few months based on current trends.

“For many small brewers, the current situation is not sustainable,” Watson said. “Being a responsible business owner means scenario planning, but few if any build plans for a near complete drop in revenue with no insurance protection and continued bills to pay.”

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Tony Roberts, the co-executive director of the Oregon Brewers Guild, said the numbers weren’t a surprise. He said guild polling of the state’s breweries, taken a week after the March 16 closure order for bars and restaurants, showed a 72% drop in revenue.

“For any small business, a 70% revenue decline three months in a row is a very tough thing to survive,” Roberts told The Oregonian/OregonLive. “I can understand why brewers are saying they need to see some sort of government intervention or see some sort of change to survive.”

The Brewers Association report, taken from 455 responses through Monday morning across 49 states, shows an adjusted 68% average decline in sales. The sharpest decline is caused by the closures of bars and restaurants, with distributed draught beer down 95%.

Additionally, onsite sales for breweries have dried up, previously constituting about 40% of sales. And about 66 percent of the craft-beer industry workforce has been laid off, the survey found.

The report shows increasingly dire numbers since the association’s first survey, which was released March 18. In response to a question not asked in the first survey, about 60% say they will close their business in the next three months if conditions don't change.

One slightly bright spot in the report came for off-premise packaged beer, which saw adjusted volume up 9.4% as grocery and other retail outlet shoppers stock up on canned and bottled beer. But the association said despite the overall bump, microbreweries, taprooms and brewpubs aren’t sharing in the growth, which is being seen mostly by bigger operations and in larger package sizes.

Sam Holloway, a University of Portland professor of management and entrepreneurship who tracks the beer industry, said the survey’s predictions are likely accurate, and most breweries are indeed in survival mode.

At the same time, “it’s also a chance to innovate and pivot your business model and hopefully reduce that percentage” of closures, he said, adding that he has seen some creative responses among Northwest breweries.

Backwoods Brewing in Carson, Washington, for example, converted a field next to the brewery into a drive-in movie theater.

“They asked people to stay in their cars,” Holloway said, “and they’d walk beer and pizza over from the pub to any car that wanted it.”

As bad as things are in Oregon, the state may be faring slightly better than most.

“Things are a little better here because we were so quickly able to do takeout and delivery,” Roberts said, which some states don’t allow. “The environment and the (Oregon Liquor Control Commission’s) help in permitting to make things a little bit easier for us -- it’s given us a bit of a lifeline for now.”

Roberts said the Oregon Brewers Guild is focused on trying to get the state’s breweries any help it can, including working with representatives should a special session be called, though none is yet scheduled. He said if the situation continues into summer, breweries, like all small businesses, are going to need government intervention to survive.

“There are Small Business Association loans, … but it’s also seeing what if anything the state can do to help out,” he said. “Hopefully there are some things the governor can do with tax relief, and the moratorium on evictions has been helpful. … And with breweries, we’d like to see a suspension on excise taxes.”

Roberts also said Oregon’s breweries – about 300 in all -- have one thing going for them: their customers.

“The one bright spot has been the incredible support from Oregon beer drinkers,” he said. But delivery is something breweries are doing “just so they can pay the rent and survive a few months. ... Delivery and takeout has provided a little bit of a band-aid, but it’s not sustainable in the long term.”

-- Andre Meunier

Check out Andre’s beer reviews on Untappd, where he’s andremeunier13, and follow him on Instagram, where he’s @oregonianbeerguy.

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