Ohio Breweries Try to Weather the Corona Virus Pandemic

Life over the last month is like nothing I’ve experienced. As I write this, the sun is shining, flowers are coming into bloom, and crimson red cardinals fill the air with song in hopes of attracting a mate.  Hardly the stuff of a Hollywood pandemic movie.  In some ways the world seems normal, but in so many other ways it’s turned upside down.  Health care providers in hard hit areas are fighting a dangerous, harrowing battle, while for others (virtual) happy hour still rolls around every day. As the death toll from COVID-19 pandemic approaches 90,000 worldwide, and the US unemployment rolls surge by tens of millions, it seems pointless, almost inappropriate, to write a column about beer. At the same time, it’s no exaggeration to say that society is fighting a war we didn’t start, and isn’t protecting your way of life the point of defending yourself against an enemy invader?  I for one consider breweries to be institutions worth fighting for and I’m hopeful that most will still be standing when availability of PPE is no longer a talking point. In that vein here’s an update from the front lines, with some information on how you can support our cherished institutions.

Ohio Timeline

For readers who don’t live in Ohio, let’s begin with a brief recap of how social distancing measures have ratcheted up pressure on businesses large and small, including those in the beer industry.  On Monday, March 9 the first cases of COVID-19 were diagnosed in Ohio. Later that day my employer, Ohio State University, suspended face to face teaching. By the end of the week the men’s and women’s NCAA basketball tournaments were cancelled, the NBA season was toast, and all schools in Ohio were closed. On Sunday, March 15 Governor Mike DeWine ordered all bars and restaurants to close, except for carry out and delivery operations. On March 20 the first COVID-19 death in Ohio was reported. On Sunday, March 22 the governor issued a stay at home order, urging all Ohioans to only venture out for essential businesses.  This closed many businesses, but breweries offering carry out and delivery services are rightly deemed essential businesses.

Interestingly, multiple brewers have told me that the weekend before the closure of bars and restaurants their taprooms were busier than normal, some even went so far as to say they were packed. As hard a pill as it is to swallow, everyone I’ve talked with seems to agree it was the right thing to do.

Selling Beer in a Pandemic

How can a brewery keep its head above water in these unprecedented times?  Ironically the business model that was a smart play when 2020 began—hyper local, neighborhood breweries, built around on-premise sales—doesn’t seem so attractive when the government orders all taprooms closed.  The situation is exacerbated by the fact that bars, restaurants, sporting venues, and just about every other retail outlet for draft beer are also closed.  Tom Ayers from Ill Mannered Brewing sums it up perfectly:

Sales are down significantly as our business model was built around taproom draft pints as the primary revenue source, followed by cans/crowlers/growlers to go, and lastly wholesale kegs to bars & restaurants.  Two of those three are non-existent now so we are working the to-go model as best we can.

Necessity is the mother of invention, and breweries throughout the Buckeye State are doing what they can to keep beer going out the door and revenues coming in. According to data compiled by the Ohio Craft Brewers Association (OCBA) approximately 20% of the breweries in Ohio have stopped selling beer directly to the public.  Some of those, like Columbus Brewing Company, are focusing on getting beer into distribution, while others, like JAFB in Wooster or Staas in Delaware decided to temporarily close in order to reduce expenditures and limit risk for employees (although as this stretches on both have adapted with options for people to order beer to go). The silver lining is that you can still get beer direct from ~80% of Ohio’s breweries. Many breweries are offering carry out sales at their taproom, often with a curbside service that means you don’t need to get out of your car.  Several will deliver to your house, provided you live within a certain radius of the brewery. In Central Ohio, the list of breweries that deliver includes Land Grant, Seventh Son, Wolf’s Ridge, North High, Grove City, Nocterra, Homestead, Pretentious, Parsons North, Nostalgia, Antiques on High, and BrewDog (apologies if I’ve missed anyone). A few, including some of the most highly regarded breweries in Ohio (Little Fish, Jackie O’s, Branch and Bone, BrewDog, Urban Artifact, Listermann, Saucy Brew Works, Rolling Mill), will ship beer to your house.  The shipping option is limited to addresses in Ohio, and as I understand it is only an option for breweries that self-distribute. Click here to find an up to date list of beer sales options for breweries that are OCBA members, including hours of operation.

IMG_83561.jpg
Picking up a delivery at Land Grant Brewing in the early days of the shutdown (St. Patrick’s Day).

Deciding the best way to respond to the crisis is not an easy one.  Breweries don’t normally deliver beer to your doorstep because it’s not an economically viable model in the long run.  Shipping beer is expensive, and also not an optimal way to move product. There’s the added dilemma of balancing the need to keep people employed vs the possibility that employees may become infected while on the job. Chris Davison, head brewer at Wolf’s Ridge, walked me through the deliberations they went through.

We toyed with reduced hours, complete layoffs, locking the doors to ride this out with as few costs as possible, and probably everything else in between. There’s been a lot of fear and uncertainty with staff not knowing how long their livelihood will be impacted, in addition to concerns over how at risk our own health is when reporting to work under these conditions. This is nothing unique to us, I’ve had conversations with a lot of industry people who are all making the same impossible choices we are. There’s no right or wrong answer here, there are risks with any course of action unfortunately.

The State of Craft Breweries Nationwide

Earlier this week Bart Watson, Brewer’s Association Economist, published the results of a survey that provides the best snapshot of the current situation as we are likely to get. The survey was based on responses of 455 breweries from 49 states plus the District of Columbia.  I would direct you to the full article for a bevy of details, but for me the most significant stats are the sales numbers. On premise sales are down 68%, with over half of all breweries down by 70% or more.  Draught beer sales to outside accounts are down 95%. (I wonder who’s responsible for those 5% of sales?)  The final category, off-premise sales of packaged beer (cans and bottles), is up 9.4% if you take a weighted average of all respondents.  While this is a ray of hope for some breweries, if you look deeper into the numbers it’s little consolation for many small breweries.  Quoting from the article:

Indeed, the median growth from the respondents (there were 291 for this question, which makes sense, since many brewers don’t package) was 0%, and an unweighted average was -11.4%. So, while there likely is a bump for the overall category in off-premise, this isn’t helping the smallest micros, taprooms, and brewpubs that much, since much of the bump is concentrated in bigger retailers and larger package sizes.

Reports from the Field

Let’s bring the focus closer to home and see how four Central Ohio breweries are weathering the storm. Here are the responses I got when asked how things were going as we entered the first week of April.  Many of the brewers I talked to were pleasantly surprised at the level of carry out and delivery sales.  In retrospect it may not be too surprising, after all some people have more time on their hands, and with no public places to enjoy a beer why not stock up your fridge.

Tony Hill (Two Tones Brewing in Whitehall): Thing are going okay for us. Last week we were down about 50% total in sales (similar to the previous week). Still doing better than I thought we would. We’re rolling out online ordering and delivery in the next couple days, so that should hopefully help a bit. Nostalgia was also gracious enough to lend us their can seamer and some cans, so we’ll have a very limited supply of beer in cans in the taproom this week. Nothing too crazy, but it’ll also help move some volume out of the taproom. Overall, I think we’ll be fine, especially considering some of the benefits we’ll receive from the latest stimulus bill.

Mark Richards (Land Grant Brewing in Columbus): I’m still not 100% certain how it is all going to work out. Especially given that the stay at home order in Ohio is now being extended through May 1.  We have been able to keep some employees on the payroll due to the conditions of the CARES Act; either working on projects around the brewery or packaging beer that was brewed prior to March 15. We are working with our distributors to keep beer on grocery shelves, and open for limited drive through sales and home delivery.  Yesterday (April 8) was the biggest day of home deliveries yet, with 48 deliveries going out (average sale $62 per customer), so that’s an encouraging sign.

At this point in time everyone at Land Grant is still employed in some capacity so that employee insurance benefits can be retained. Having said that it’s very difficult to predict how the “new normal” will affect population behaviors once the extended stay at home order has been lifted.  Who knows how long the restriction on public gatherings will continue?

Chris Davison (Wolf’s Ridge Brewing in Columbus): The sales have been staggeringly good. I never expected to see real success with home delivery, but the demand is real and the public outpouring of support for us and other local businesses has been phenomenal. While we’re still nowhere near making enough money to rehire all staff (without the stimulus help anyway), we have been slowly adding more help to get things done to support these new avenues for sales.

Now, two weeks into this new world, we’re running out of beer, running out of to-go bags, etc because beer and food sales have been much better than anticipated given the situation. Luckily there was more beer in the tank and our suppliers have been extremely helpful in working with us through this crisis and have remained responsive to our needs to keep the beer flowing.

We’re now putting orders in for future can releases and trying to find other creative ways to package and sell beer to meet demand and keep people excited. This is an unprecedented time, but we’re looking at an increasingly bright future. The team here is excited and energized by all the wonderful feedback we’re getting from the public. I think we’ve now delivered to over 500 homes in just two weeks and have had to fill cans of Daybreak three times since the shutdown, just to meet demand for our best-selling beer.

Tom Ayers (Ill Mannered Brewing in Powell): Within 24-hours of the governor’s bar/restaurant shut down order on March 15 our team stood up a full online ordering system.  We ran with carryout and online for a week, but we felt that once the Governor issued the stay at home order it was best for the safety of the community, customers, staff, and family to switch to curbside contactless pick-up.  Basically now, it is order online and we deliver it to your trunk.  There is no longer customer access to our building.  Our customers really seem to like this model.  We’ve received lots of positive feedback that they appreciate our proactive approach to eliminating contact and creating a quick and easy approach to picking up beer.

The community has been very supportive, and we’ve been able to keep things rolling.  We built our business around being resilient and adaptable.  We are ready with additional contingency plans if needed, but we hope that they are not necessary.  Throughout this whole process we’ve tried to plan for what may come next.  Hope for the best and plan for the worst.

Closing Thoughts

Make no mistake the social distancing measures now in effect, while necessary to slow the spread of the virus, are an existential threat to breweries everywhere.  The big question is how long will this last.  In Ohio the stay at home order extends through the end of April at a minimum, and the latest models from the University of Washington recommend current social distancing protocols stay in place until early June.  That would be nearly three months on life support for breweries in the Buckeye state.  In the Brewer’s Association survey respondents were asked, “Given current costs, revenues, and the current level of state and federal aid, how long do you project you can sustain your current business if social distance measures stay where they are now?”  A staggering 46% of breweries said that they could only last 1-3 months under the current conditions.  Those are worrying statistics to say the least.

Even after the stay at home orders are lifted this crisis is likely to have a lasting impact on the industry. They say alcohol sales are recession proof, and while there are some encouraging signs of that in the short term, it remains to be seen if people can still justify $4 tallboy cans of hazy IPA in the times of economic hardship that lie ahead.

If you want some more authoritative information on the effects of the corona virus epidemic in Ohio and the nation as a whole, check out the links below:

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.

Up ↑

%d bloggers like this: