by Rick Laxague, a 20-year veteran of the Industry.
It has been 10 days since the BA release of “Brewery Sales Dropping Sharply, Many Set to Close” (because of COVID-19). By publishing results of a survey that shows 46% of American breweries will close if they have to stay closed for just one month, this article is rattling the industry and imposing fear, sadness, panic and truth to what has been the “elephant” in the industry.
The elephant is that we have TOO MANY breweries open today … and the BA survey proves the coronavirus may swiftly bring the shakeout we’ve feared. It goes without saying that you don’t want to fall into that 46% statistic. So, let’s discuss the reality of what the space is … and was … and what you need to do to live through it.
I turned 21 back in 1999 and that year there were 1,500 craft breweries, most of them brewpubs. Living in San Diego, Karl Strauss Amber Lager was my beer of choice. In 1999 AOL was THE .com, cell phones were just gaining traction, and no one could spell IPA let alone drink one. Fast forward 21 years and today there are 8,150 craft breweries in the US. This makes an average of 316 openings per year over the 21 years.
(Ska Brewing Co. Durango, CO. Photo Credit Ray Guerena)
Yes, consumer demand has increased and there are always new 21 yr. old who wants better beer, more flavor, or anything but what their parents had. Breweries are now socially accepted and have become a destination experience for consumers. The retail outlets have changed both on and off premise, wanting, yes, more variety and all trying to get your attention and dollars.
But while beer has become a HUGE multi-billion-dollar industry, the average consumer who buys beer is not. This pandemic has magnified that, and consumers are experimenting less and buying trusted brands. The taproom sales model has been impacted more so than dine in restaurants.
IF you are over extended and praying to get the EIDL or PPP program from the government just to pay the next few months of lease, then you might be one of the 46% that close. This is a very sad realization and unfortunate to small business across the country. The beer industry is hard, expensive, tiresome, competitive, fickle at times, and not for the here-today, happy-go-lucky free spirit. Survival and business thought process will change after this passes for many breweries.
Big beer does not have a free spirit, they have a business-oriented spirit. I am not referring to ABI, MolsonCoors I am talking about Boston Beer, Sierra Nevada and Boulevard-Duvel. They have teams-divisions of smart talented people to run their business.
Boulevard Brewing Co. Photo Credit Kat Laxague
(Dead Armadillo Brewing Co. Photo Credit Tony Peck)
Who will survive?
The breweries that have business as the foundation, quality as the most important wall and branding and good people — employees and partners — that make up the other walls of the business.
What are you doing during these trying times to circle the wagons or review your business from top to bottom? For example, it can be expensive to have experienced people in your sales and marketing team. If you cannot pay the market price for these types of people, outsource them. The beer boom has produced a lot of smart, hardworking people who learned from big beer and can now teach you how to better operate in order to survive.
Here’s where consultants come in. Consultants can help your paradigm shift as a brewery owner — bringing insight to the foundation of the business and helping guide you through these times. Those of you who can weather this storm will need help with a relaunch plan. The history we are living in as a country and world will be benchmarked by how we respond and recover.
Pivotal question: Can you afford not to seek out help to get your business back on track?
I encourage you to seek out a consulting firm. We have a great team of individuals here at Craft Beverage Consultants. Myself, as a partner, know many other great consultants in the industry that like me got tired of working for big companies and want to help genuine, passionate people and not just be a bean or number to big business.
Brewery Education Training at Yard House GM Conference. Photo Credit Rick Laxague