2020 was supposed to be a banner year for Lindgren Craft Brewery in Duncannon.
In January, owners and father and son, Clifford and Michael Lindgren, announced they had purchased the former PNC Bank building at 5 N. Market St. in the borough and were moving operations from their Perry County family farm.
The new building offers ample space to expand production from a two to a 15-barrel system with additional room for a taproom and possible restaurant. They anticipated an end-of-summer opening.
But weeks later, the Lindgrens’ expansion plans were delayed when the coronavirus pandemic hit in March.
“It was a stumbling point at the beginning of the pandemic,” Michael Lindgren said.
“I would say the hardest part has been not necessarily knowing what comes next, the uncertainty.”
Across the nation, the craft beer industry is being drained by the pandemic. Brewers have faced shutdowns and lockdowns, dining restrictions and lower sales. The shakeout could shutter some small breweries.
More than one in five of all craft brewers, or about 22%, said in a Brewers Association survey they don’t think they’ll still be operating by the end of 2021, according to The Motley Fool, a financial site.
In central Pennsylvania, at least two craft brewers - River Bend Hop Farm & Brewery in Newport and Miscreation Brewing Co. in Hanover - have announced permanent closures related to COVID-19.
“It seems people are very passionate about getting out and supporting local businesses. I pray no others close because I hate writing those articles, but undoubtedly I think it’s inevitable,” said Matt Kozar, co-owner of Breweries in PA, a digital company that promotes the state’s beer industry.
The next couple of months will be critical for the industry, Kozar said, adding any shakeout will likely be dependent on how quickly vaccines are rolled out and how comfortable beer drinkers will feel about returning to taprooms.
The outbreak comes as the craft industry is already leveling off after years of explosive growth. Last year, a handful of brewers announced closures, including Stoudts Brewing Company in Adamstown and Crystal Ball Brewing in York County.
Now as a means of survival, craft brewers are adapting business plans and adopting new ways of selling beer as beer drinkers’ habits are changing. Brewers are streamlining operations, bumping up production of canned and bottled beer and relying on shipping, subscription services, curbside pickup and delivery sales.
‘From kegs to bottles and cans’
If one thing has held true during the past 10 months, it is consumers are still drinking beer.
In fact, alcohol consumption among American adults has sharply risen. According to a RAND Corporation study, frequency of alcohol consumption increased by 14% among adults over age 30 over the previous year.
The pandemic has simply changed where people buy beer.
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Restaurants and bars shut down or have been open with limited seating, while many live sporting events were scrapped or took place without fans. So ordering a draft at ballparks, local taprooms or clubs has been replaced by virtual “Zoom” happy hours and backyard socially distanced gatherings. Sales have shifted to packaged beer sold at retail outlets such as supermarkets, distributors and convenience stores.
In fact, total beer sales at off-premise retailers reached nearly $43.8 billion in 2020, according to market research firm IRI, which tracks scans at major retail chains, grocery outlets and convenience stores. This summer, Nielsen reported sales of at-home alcohol in June spiked nearly 27%.
“I’m very encouraged to be honest with you. I think getting off-premise sales going - cans bottles and crowlers - helped a heck of a lot,” said Jim Weber, correspondent for Mid-Atlantic Brew News, a bi-monthly publication focused on the craft beer industry.
For the Lindgrens, the pandemic flipped the business plan upside down.
They turned their attention away from the brewery and toward boosting distribution, transitioning from hand-filling bottles to investing in a small automated canner. They also expanded Lindgren’s sales to new markets in places such as Chambersburg, Harrisburg and Selinsgrove.
“We always wanted to be large enough to do distribution but the bank was supposed to be our avenue to do that,” Michael Lindgren added.
Plans are to install a 10-barrel system by fall and ramp up production. The taproom and restaurant will follow in a phased in approach.
Bigger brewers such as Troegs Independent Brewing in Hershey have also felt the impact but co-owner Chris Trogner admits they are better positioned than smaller brewers. The introduction of curbside pickup has helped the tasting room survive the ups and downs associated with temporary closings and limited seating capacity, he said.
On the production side, Trogner said the brewery wasted no time switching gears as consumer buying patterns changed.
“We had to be nimble and act quickly, and shift our overall production from kegs to bottles and cans,” he said.
However, doing so proved to be tricky. Not every market is the same. Troegs beer is distributed in 10 states.
Typically, draft beer is a big seller in major cities where a high density of restaurants operate. But with dining suspended in places such as New York City and Philadelphia, Trogner said it has been difficult to make up the lost profits.
The story is different in the suburbs, where sales at grocery stores and beer distributors have climbed as more people eat at home.
It’s a trend Pizza Boy Brewing Co.’s Al Kominski noticed right away. Canned beer now makes up 99% of the Hampden Township brewer’s sales versus 1% nearly a year ago.
Kominski also is offering curbside pickup and delivering six-packs and cases within a three- to five-mile radius of his restaurant, Al’s of Hampden in Hampden Township.
Al Kominski of Al's of Hampden operates Pizza Boy Brewing and sells beer at the pizza shop. He is pictured on Jan. 17, 2020. File photo by Sean Simmers | ssimmers@pennlive.com
At the start of the pandemic, Kominski invested $300,000 in an automated canning line instead of renting a line as he had done in the past. Still, while Kominski said the canning expansion allowed Pizza Boy to enter more places, overall wholesale orders have dropped off as sales at restaurant and bars decline.
He admits Pizza Boy is not making a profit, especially when factoring in the purchase of the new line plus bulk orders for aluminum cans and ingredients such as hops. In addition, business at the restaurant is down.
“This is our 20th year in business this year and this last year has been the most pressure and the most stress I have ever felt in my entire life. I didn’t think I was capable of carrying such a [explicative] load as I did,” Kominski said.
Staying afloat
Trying to stay afloat has been challenging, Kozar said, especially for those brewers with taprooms and restaurants contending with the changing restrictions. It’s also a struggle during the winter months with a lack of outdoor seating availability due to the weather.
“It’s tough when we are not in control and we aren’t in control,” said Artie Tafoya, co--owner and chief operations officer for Appalachian Brewing Company.
ABC’s five brew pubs and one micro pub in central Pennsylvania remain open with limited hours for dining as well as carryout food, beer and craft liquor sales.
While Appalachian laid off employees during the temporary dining ban over the holidays, Tafoya said the company’s programs and cost control mechanisms have helped it weather the storm. On a positive note, Tafoya stressed the pandemic has given the company an opportunity to reevaluate its business plan, shifting from a restaurant to a sales company.
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“The only place we have improved is our outside sales of beer,” Tafoya said, adding beer and craft soda sales increased at grocery stores.
Appalachian is just one example of how breweries are forging ahead. At least 30-plus breweries opened in the state in 2020, with several in the pipeline to open this year, including Spring Dam Brewing Company in Roaring Spring and Bonafide Beer Company in Pittsburgh’s Strip District, Kozer said.
Other newcomers in 2020 include Big Dog Craft Brewing in Lancaster, 633 Brewing in Waynesboro, Axemann Brewing in Bellefonte and Rubber Soul Brewing Company in Hummelstown.
Mid-Atlantic’s Weber noted some new brewers are taking a conservative stance and holding off on opening taprooms until the state lifts capacity limits and COVID-19 regulations, such as social distancing. Other brewers are producing less beer and sticking to flagship beers instead of new and seasonal releases, he said.
Brewers have also had to become creative about selling beer. Some smaller brewers are delivering beer within a few miles of their headquarters, while others are shipping canned beer in-state, Kozar said.
“They are doing everything they can,” he added. “It’s a little all over the place.”
In some cases, Kozar said brewers such as East End Brewing in Pittsburgh are assisting smaller brewers through a Loophole series of canned collaboration beers. Smaller brewers can sell the beer for a profit.
“It’s basically some people are coming together and saying how can we get these big batches out to smaller brewers and at least help them survive until things go back to normal,” he said.
What does the future hold?
It’s hard to picture life after the pandemic. Brewers remain optimistic but realistic about what’s next.
Moving forward, Trogner said the big question is how the seasonal Hershey tourist trade - or lack thereof - will impact Troegs’ tasting room. The brewery can draw hundreds of visitors on weekends, some from Hersheypark, concerts and events such as car shows.
“We’re planning that it will be a slow and gradual return,” he said.
Behind the scenes, Trogner said Troegs has not stopped producing, marketing and selling beer. At least two new beers are in the pipeline, including Joyous IPA, a new spring seasonal release that will replace First Cut. Also, Grand Cacao, a new chocolate stout, will substitute the phased out Java Head Stout.
Troegs plans to continue concentrating on packaged beer sales through at least the second and third quarter of this year.
At Pizza Boy, Kominski said in the short term operating is like walking on eggshells waiting for another shutdown or employees to get sick. In the longterm, he’s concerned about the changing market, especially as people lose jobs or fear coming out to eat and buy beer due to the virus.
“It takes our target market from being wide open to very specialized, which limits our sales,” he said.
Others like Weber are optimistic beer drinkers will return to old habits.
“I think it will be a great relief and there’s a lot of pent-up demand for sitting down over a couple of drafts with friends and having a nice session,” he said. “Session drinking will come back.”
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