How Will Coronavirus Impact Craft Beer?
Brewers Association predictions suggest small brewers need your support now more than ever.
For generations, in times of stress, beer has offered an outlet: a chance to relax and a chance to socialize. Unfortunately, in these stressful times of social distancing, quarantines, and bar closures, the coronavirus has stripped beer of half its powers: It can still intoxicate, but it shouldn’t socially lubricate. So the question becomes what does that mean for the brewing industry? Clearly, fewer people will be going out to drink, but will more people be stockpiling at home? And what about smaller breweries that rely on taproom sales?
Yesterday, Bart Watson—chief economist for the craft beer trade group the Brewers Association (BA)—weighed in on “The Coming Economic Challenges Facing Craft Brewers.” Despite the title of his analysis, his assessment was about as upbeat as things can be at a time when entire industries are at risk of getting decimated. Two things appear to work in beer’s advantage: One, it’s the kind of item some people may want to be well-stocked with during an emergency, and two, even in times of economic trouble, people don’t necessarily give up their brewskis.
Of course, on-premise sales at bars, restaurants, and breweries are in trouble, and Watson didn’t pull any punches, saying sales “are certain to fall.” And yet, for breweries that package their beer, “the short-term effects may be more mixed.” “Some consumers may actually buy more beer as they prepare to self-isolate,” he writes. “That said, beer is a luxury, and so others may buy less as they stock up on other goods.”
For now, though, the numbers would seem to show that beer is a part of people’s prepping plan. For BA-defined craft breweries, sales volumes had actually been down 0.3 percent for the first nine weeks of 2020 compared to last year, but last week, sales jumped up 3.7 percent over the year before. “One week is a small sample that I typically don’t like to show, but these are unusual times,” Watson wrote.
And what about long term? If the stock market is any indication, our economic situation moving forward could be troublesome. But again, Watson speculates that beer as a category may be okay. “The good news is, although beer on average has performed slightly worse during recessions than during periods of economic growth, the differences aren’t huge,” he writes. “My oft-repeated phrase on the subject is ‘beer isn’t recession proof, but it’s recession resistant.’”
In general, beer has been relatively stable during economic downturns; though Watson also explicitly states, “Comparing a recession brought on by a novel virus pandemic to one brought on by bankers taking huge risky bets on the housing market isn’t taught in Econ 101.”
"This is a challenging time for everyone. We’re all navigating these new circumstances together and as things change, so will we," Dan Kenary, CEO and co-founder of Boston's Harpoon Brewery, told me via email. "While it’s too early for us to know what the full impact to our business will be, we’re doing what we can to help our employee owners, our customers and our community in the short run. Although our beer halls in Boston and Vermont have closed following local and state mandates, we just launched a new service offering packaged beer, hard cider and hard seltzer to go from Harpoon Brewery in Boston."
"Starting today, beer and other beverages will be available to order online and pick-up from noon [to] 7 p.m. (last order in at 6:30 p.m.)," Kenary explained. "As a show of support to local bars and restaurants that may be closed to the public for dine-in services, Mass. Bay Brewing Company is also including a small surprise for consumers who show a take-out receipt from this week. The Harpoon Brewery and Riverbend Taps are both still open for take-out food orders through normal business hours and our retail store will also be open for merchandise and beer, cider, and hard seltzer to go."
The worst impact may be reserved for the smallest breweries. Watson told me via email that independent breweries—which now number over 8,000 and have consistently and significantly grown over the past decade—could be in trouble. “This will halt and perhaps reverse the growth in the number of breweries in the short-term,” he explained. “It’s impossible to predict how many breweries will close this year, but it’s going to be the highest number we’ve seen in recent years.”
His suggestion: If you have a local brewery you love, do everything you can to support them. “Consider buying beer to go (if available) or purchasing a gift card from [your] favorite local brewery (or favorite five or ten),” he said. “Thousands of breweries around the country are currently seeing cash flow dry up and until the government steps in, they still have rent to pay.”