Craft Brew News # 74 - COVID-19 - A "Shock to the System" for Craft Breweries

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Craft Brew News # 74 - COVID-19 - A "Shock to the System" for Craft Breweries

Craft Beer Storm

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Craft Brew News
4/17/20
(Courtesy of www.Brewbound.com)

BA’s Bart Watson: COVID-19 ‘A Shock to the System’ for Craft Breweries

By most metrics, small and independent craft brewing companies posted solid volume growth in 2019. However, the disruption caused by the COVID-19 pandemic, which has forced many craft brewers into “survival mode,” is overshadowing 2019’s growth.

In 2019, BA-defined craft brewing companies held 13.6% of the beer industry’s market share by volume, and accounted for more than a quarter of the industry’s dollar sales.

Nevertheless, craft breweries have lost a considerable amount of sales in 2020 as on-premise and own-premise sales were cut off in mid-March 2020.

That’s left many craft breweries struggling to survive. According to the BA’s second impact survey, 46% of respondents said they may be forced to close their doors within the next three months if the shutdown continues.

Asked which breweries might be most at-risk of closing, Watson said the smallest breweries are the most at-risk due to relying on onsite sales and draft production.

Responding to a question of how the current downturn compares to the recession that began in late 2007, Watson said beer and other alcoholic beverages are “recession-resistant, but not recession-proof.” Consumers are likely to continue buying beer, wine and spirits, even after they cut spending elsewhere. Since 2009, beer prices have increased, while wine and spirit prices have decreased.

Watson also addressed the number of breweries in planning. The BA counted 8,275 in operation in the U.S. in 2019. Citing Alcohol and Tobacco Tax and Trade Bureau (TTB) numbers, he said there are now 11,800 active brewing permits in the U.S., of which he estimated there are around 2,000 breweries in the planning stages.

Watson added the industry was already moving in a direction similar to the restaurant and bar industries, in which locations close and new ones open in their place.

“We were already seeing 25% to 30% of breweries that close get a new brewery going in,” he said. “And that rate may rise over the next few years as people look to get in at a lower price point than they couldn’t before.”

The way those breweries operate once they open may also change. A flaw in the taproom brewery model, which has been hailed as possibly the best way to build a brand and cash flow a brewery by selling beer directly to consumers with little to no distribution, was exposed by COVID-19. Watson said in a post-COVID-19 world, businesses will be forced to consider other revenue streams, such as beer to-go sales and direct-to-consumer sales with limited distribution, either self-distribution or through a wholesaler, where legal, “as a hedge against future shutdowns.”

A common thread in off-premise data reporting since the pandemic began is a resurgence of the nation’s largest craft brewers’ long-declining flagship offerings, which haven’t grown in months or even years. Though it may be easy to assume that troubling times inspire consumers to turn to trusted brands, Watson pointed out that these brands have much wider distribution than their smaller craft counterparts.

Since March 9, off-premise dollar sales in retailers such as grocery stores, where shelves are typically stocked with products from major domestic and regional craft brewers, topped $3.4 billion, according to market research firm Nielsen.

Social Standards Examines Possible Loss of Summer Drinking Occasions, Increase in Virtual Happy Hours

With summer drinking occasions at risk of being lost due to the coronavirus disease COVID-19 shutting down gatherings at beaches and pools, consumer insights firm Social Standards looked at the potential effects of that loss on beverage alcohol products.

The firm analyzed 30 beverage alcohol products whose conversation volume increased more than 10% between the first and third quarter of 2019 in an effort to determine those that “may be most vulnerable if social distancing continues.”

Products on Social Standards’ potential most vulnerable list include canned wine, Mexican beer, hard seltzer, rosé and non-alcoholic offerings.

Those least affected by the potential loss of summer gatherings include malbecs, wheat beer and craft cider.

Whether those projections become reality are still to be seen. For example, hard seltzers have maintained their triple-digit dollar sales growth and continued to be the beer category’s growth driver in off-premise retailers during the COVID-19 crisis. According to market research firm Nielsen, hard seltzers increased dollar sales 327% and gained 2.5 share points during the week ending March 28, outpacing pre-COVID-19 growth rates.

As consumers connect to family, friends and co-workers on platforms such as Google and Zoom, conversations around virtual happy hours have increased 1,505% during March, according to Social Standards.

The winners so far have been wines and whiskeys — but not beer, despite several beer companies turning to virtual happy hours in an effort to engage with consumers. Over-indexing in virtual happy hour conversations are classic cocktails, such as martinis and old fashions, as well as spritzes and margaritas.

So who is posting to social media the most about virtual happy hours? Social Standards said they are women, ages 30- to 44-year-old, in higher income brackets relative to the average beverage-alcohol consumer. Those posters also skew more toward urban tech hubs, including San Francisco, Seattle and Austin.

Social Standards also examined why people are hosting virtual happy hours. The top reasons are to replace canceled events and stay connected with family, friends and co-workers. Those events also over-index in relation to supporting local businesses, which indicates that virtual happy hour participants want to support local businesses.

Craft Beer Storm Website: www.craftbeerstorm.com

If your Company, Hotel or Restaurant wants to book a CraftBeer Weekend or Craft Beer Evening for your guests or employees send an email to Michael@craftbeerstorm.com

Linked In: https://www.linkedin.com/in/craft-beer-storm-podcast-30776075/

Subscribe to Craft Beer Storm Podcast iTunes:
https://itunes.apple.com/us/podcast/craft-beer-storm/id1438117278?mt=2

*** A Top 20 Podcast in Food on iTunes ***

Michael Potorti is the Host of Craft Beer Storm and Founder/Brewer at Beara Brewing Co. in Portsmouth, NH

*** Interested in starting your own brewery? Our Portsmouth, NH TURNKEY facility is for sale! Follow link for more info:

https://www.neren.com/Listing/2800-Lafayette-Rd-12A/5cdda2dabf34cb9150a7faeb

Michael Potorti
Founder/Brewer
Host of "Craft Beer Storm" Podcast
michael@craftbeerstorm.com

**LISTEN to our Craft Beer Storm Podcast and share with a friend**

Craft Beer Storm Podcast iTunes:
https://podcasts.apple.com/us/podcast/craft-beer-storm/id1438117278

Craft Beer Storm You Tube: https://www.youtube.com/channel/UCp3PVuCGmywNWlGFh0N0ukg?view_as=subscriber

Craft Beer Storm Podcast Stitcher:
https://www.stitcher.com/podcast/podcast-center-la-2/craft-beer-storm

Craft Beer Storm Linked In:
https://www.linkedin.com/in/craft-beer-storm-podcast-30776075/

Craft Beer Storm Facebook:
https://www.facebook.com/craftbeerstorm/

Craft Beer Storm Instagram:
https://www.instagram.com/craftbeerstorm/

Craft Brew News 4/17/20 (Courtesy of www.Brewbound.com) BA’s Bart Watson: COVID-19 ‘A Shock to the System’ for Craft Breweries By most metrics, small and independent craft brewing companies posted solid volume growth in 2019. However, the disruption caused by the COVID-19 pandemic, which has forced many craft brewers into “survival mode,” is overshadowing 2019’s growth. In 2019, BA-defined craft brewing companies held 13.6% of the beer industry’s market share by volume, and accounted for more than a quarter of the industry’s dollar sales. Nevertheless, craft breweries have lost a considerable amount of sales in 2020 as on-premise and own-premise sales were cut off in mid-March 2020. That’s left many craft breweries struggling to survive. According to the BA’s second impact survey, 46% of respondents said they may be forced to close their doors within the next three months if the shutdown continues. Asked which breweries might be most at-risk of closing, Watson said the smallest breweries are the most at-risk due to relying on onsite sales and draft production. Responding to a question of how the current downturn compares to the recession that began in late 2007, Watson said beer and other alcoholic beverages are “recession-resistant, but not recession-proof.” Consumers are likely to continue buying beer, wine and spirits, even after they cut spending elsewhere. Since 2009, beer prices have increased, while wine and spirit prices have decreased. Watson also addressed the number of breweries in planning. The BA counted 8,275 in operation in the U.S. in 2019. Citing Alcohol and Tobacco Tax and Trade Bureau (TTB) numbers, he said there are now 11,800 active brewing permits in the U.S., of which he estimated there are around 2,000 breweries in the planning stages. Watson added the industry was already moving in a direction similar to the restaurant and bar industries, in which locations close and new ones open in their place. “We were already seeing 25% to 30% of breweries that close get a new brewery going in,” he said. “And that rate may rise over the next few years as people look to get in at a lower price point than they couldn’t before.” The way those breweries operate once they open may also change. A flaw in the taproom brewery model, which has been hailed as possibly the best way to build a brand and cash flow a brewery by selling beer directly to consumers with little to no distribution, was exposed by COVID-19. Watson said in a post-COVID-19 world, businesses will be forced to consider other revenue streams, such as beer to-go sales and direct-to-consumer sales with limited distribution, either self-distribution or through a wholesaler, where legal, “as a hedge against future shutdowns.” A common thread in off-premise data reporting since the pandemic began is a resurgence of the nation’s largest craft brewers’ long-declining flagship offerings, which haven’t grown in months or even years. Though it may be easy to assume that troubling times inspire consumers to turn to trusted brands, Watson pointed out that these brands have much wider distribution than their smaller craft counterparts. Since March 9, off-premise dollar sales in retailers such as grocery stores, where shelves are typically stocked with products from major domestic and regional craft brewers, topped $3.4 billion, according to market research firm Nielsen. Social Standards Examines Possible Loss of Summer Drinking Occasions, Increase in Virtual Happy Hours With summer drinking occasions at risk of being lost due to the coronavirus disease COVID-19 shutting down gatherings at beaches and pools, consumer insights firm Social Standards looked at the potential effects of that loss on beverage alcohol products. The firm analyzed 30 beverage alcohol products whose conversation volume increased more than 10% between the first and third quarter of 2019 in an effort to determine those that “may be most vulnerable if social distancing continues.” Products on Social Standards’ potential most vulnerable list include canned wine, Mexican beer, hard seltzer, rosé and non-alcoholic offerings. Those least affected by the potential loss of summer gatherings include malbecs, wheat beer and craft cider. Whether those projections become reality are still to be seen. For example, hard seltzers have maintained their triple-digit dollar sales growth and continued to be the beer category’s growth driver in off-premise retailers during the COVID-19 crisis. According to market research firm Nielsen, hard seltzers increased dollar sales 327% and gained 2.5 share points during the week ending March 28, outpacing pre-COVID-19 growth rates. As consumers connect to family, friends and co-workers on platforms such as Google and Zoom, conversations around virtual happy hours have increased 1,505% during March, according to Social Standards. The winners so far have been wines and whiskeys — but not beer, despite several beer companies turning to virtual happy hours in an effort to engage with consumers. Over-indexing in virtual happy hour conversations are classic cocktails, such as martinis and old fashions, as well as spritzes and margaritas. So who is posting to social media the most about virtual happy hours? Social Standards said they are women, ages 30- to 44-year-old, in higher income brackets relative to the average beverage-alcohol consumer. Those posters also skew more toward urban tech hubs, including San Francisco, Seattle and Austin. Social Standards also examined why people are hosting virtual happy hours. The top reasons are to replace canceled events and stay connected with family, friends and co-workers. Those events also over-index in relation to supporting local businesses, which indicates that virtual happy hour participants want to support local businesses. Craft Beer Storm Website: www.craftbeerstorm.com If your Company, Hotel or Restaurant wants to book a CraftBeer Weekend or Craft Beer Evening for your guests or employees send an email to Michael@craftbeerstorm.com Linked In: https://www.linkedin.com/in/craft-beer-storm-podcast-30776075/ Subscribe to Craft Beer Storm Podcast iTunes: https://itunes.apple.com/us/podcast/craft-beer-storm/id1438117278?mt=2 *** A Top 20 Podcast in Food on iTunes *** Michael Potorti is the Host of Craft Beer Storm and Founder/Brewer at Beara Brewing Co. in Portsmouth, NH *** Interested in starting your own brewery? Our Portsmouth, NH TURNKEY facility is for sale! Follow link for more info: https://www.neren.com/Listing/2800-Lafayette-Rd-12A/5cdda2dabf34cb9150a7faeb Michael Potorti Founder/Brewer Host of "Craft Beer Storm" Podcast michael@craftbeerstorm.com **LISTEN to our Craft Beer Storm Podcast and share with a friend** Craft Beer Storm Podcast iTunes: https://podcasts.apple.com/us/podcast/craft-beer-storm/id1438117278 Craft Beer Storm You Tube: https://www.youtube.com/channel/UCp3PVuCGmywNWlGFh0N0ukg?view_as=subscriber Craft Beer Storm Podcast Stitcher: https://www.stitcher.com/podcast/podcast-center-la-2/craft-beer-storm Craft Beer Storm Linked In: https://www.linkedin.com/in/craft-beer-storm-podcast-30776075/ Craft Beer Storm Facebook: https://www.facebook.com/craftbeerstorm/ Craft Beer Storm Instagram: https://www.instagram.com/craftbeerstorm/ read more read less

4 years ago #barley, #bartwatson, #bearabrewingco, #bearairishbrew, #beer, #beertogo, #brewersassociation, #covid-19, #craftbeer, #craftbeerpodcast, #craftbeerstorm, #food, #hops, #local, #lyft, #malt, #socialstandards, #uber, #virtualhappyhour, #yeast

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