Over the last several weeks, COVID-19 has left many businesses reeling, especially those in the food and beverage sector. Despite the growth of US alcohol sales, breweries, bars and shops are stuck in a holding pattern as they navigate the pandemic’s arrival and their own survival. With National Beer Day on April 7, the beer industry is facing an uncertain future and the effects of the virus have already been staggering.
Annual beer industry events, including the Brewers Association’s Craft Brewers Conference & BrewExpo America and World Beer Cup, combined comprising the largest industry gathering in the country, have been canceled. The National Beer Wholesalers Association (NBWA), representing beer distributors, called off its annual legislative conference. And the American Homebrewers Association’s National Homebrewers Competition, which draws numerous hopeful amateur brewers each year, has been postponed.
Adding to COVID-19’s financial and social blows are the bottom-line challenges as craft beer production slows and taprooms close with no new beginning in sight. By now, most bars and restaurants nationwide have been closed for on-premise consumption in the interest of public health. But taprooms and craft breweries are also taking a hit, and much like retsuarants, having to adapt their business model to takeout and delivery is no easy feat.
Many small breweries across the country have either adapted to new regulations or been forced to close for indefinite periods of time. Despite most closures being temporary, brewery staff are being laid off as production has come to a halt. For these businesses, the hardest part is not knowing what’s ahead.
However, an unprecedented uptick in beer sales online and at local retailers has served as somewhat of a silver lining for some beer industry players. Beer sales have surged on sites like Drizly, which saw sales shoot up 300 percent from earlier this year. New Drizly orders are also larger than usual with consumers spending 25 to 50 percent more per purchase, likely with the intent to stock up.
Despite the surge in online sales, immense setbacks in the industry lie ahead. Last month, Brewers Association chief economist Bart Watson shared insights from a survey that gauges the initial impacts of COVID-19 on small breweries across the country. Among the 600 brewery respondents, 90 percent said COVID-19 has impacted onsite sales. About 59 percent said the virus has affected distributor orders and come April, 95 percent expect to see year-over-year sales losses.
Small breweries will without question suffer the most, but global brewing companies, while better-equipped to weather the storm, are already seeing stocks plummet. Anheuser-Busch (BUD), which drew down a massive credit line, has taken the steepest hit. And while Boston Beer outperformed the S&P 500, this is likely due to its Truly Hard Seltzer brand, which is the second-best-selling brand in the explosive hard seltzer category, behind White Claw.
Of course, the effects of the coronavirus reach far beyond US borders. Guinness closed both its Dublin, Ireland and Baltimore, Maryland locations last month. And just last week, the company that brews Corona beer in Mexico decided to temporarily suspend production under the country’s lockdown measures.
COVID-19 and its whiplash of effects on beer businesses are only beginning to be felt. But what’s happening now will certainly affect the future of these businesses and, ultimately, the consumption of beer in general. Since most bars and breweries across the US aren’t operational this National Beer Day, manufacturers and consumers alike will have to celebrate from a distance.