BA Covid-19 Survey: Almost 60% of Respondents Anticipate Layoffs
The results of the Brewers Association survey on how COVID 19 has affected craft brewers are sobering.
The crisis, which has choked on-premise sales in more than half of the country, has affected nearly all craft brewers who took the survey (more than 600, as of late last night). As BA economist Bart Watson points out, because draft sales comprise roughly a third of craft output, and many producers rely heavily on their taproom sales, on premise restrictions have “drastically cut short-term cash flow as well as production in the medium-term” for craft.
SALES DIPS. No surprise, then, that about 95% of respondents said they expect their year over year sales for the month to be down compared to last year.
The average percent sales change is close to -60% — though Bart stressed that the number “isn’t weighted by brewery size, so this isn’t an estimate of an industry drop, but rather an estimate of what the hit looks like for an individual small brewer.”
PRODUCTION SLOWS. Bart also asked about changes in production due to virus fallout. A quarter said their production has stopped. About 64% said it has slowed. Close to 10% said it hadn’t changed.
NEARLY 60% OF BREWERS ANTICIPATE LAYOFFS. All those factors add up to the inevitable, which we reported on yesterday: Layoffs. Indeed, almost 58% said they “currently anticipate layoffs” based on “ongoing events”; another 31% were “unsure” and only 9.5% said they didn’t anticipate having to fire anyone.
Again, Bart offered an important contextual note that the survey isn’t weighted by size, and the survey didn’t ask about the magnitude of layoffs. So “so this in no way implies that anywhere near half of small brewery jobs are in jeopardy.”
What sort of relief is most important to brewers? They covered that too. The top three: Make unemployment insurance available for all temporarily laid off or furloughed employees (with no long term negative impact on premiums); create a compensation fund for businesses affected by the coronavirus crisis; and suspend payroll taxes. The least important measure to brewers: “Cash transfers to individual Americans.”
PAC NORTHWEST BREWPUB CHAIN, MCMENAMINS, LAYS OFF THOUSANDS
As CBD hinted yesterday, the layoffs are indeed starting.
Pacific NW cornerstone hotel and brewpub chain McMenamins announced Tuesday that they’ll be laying off around 3,000 of their employees (almost all of their workforce) and shut the doors on all their locations except for a bottle shop in Portland, OR, the Oregonian reported yesterday.
“This is drastic, but necessary, to allow our employees to file for unemployment benefits and ensure that there will be jobs to come back to when this extraordinary episode ends,” said the company in a written statement to the newspaper.
The company, which operates over 60 bars and restaurants and a couple dozen hotels in Washington and Oregon, will be shuttering its doors for the “next several weeks.”
Steps like these are indicative of the greater economic strain that businesses are facing as more locations transition to takeout/delivery-only models or closing entirely. In Oregon alone, “employment figures show 155,000 people work in bars and restaurants in the state” leading to “scores of workers from McMenamins and hundreds of other restaurants . . . filing for jobless benefits.”
MANY BREWERS TRY TO AVOID LAYOFFS WITH FURLOUGHS, FOR NOW
Unfortunately, amid the current climate, it’s likely we’ll see more layoffs — hopefully not of the same magnitude as McMeanmins’.
But faced with slowing on-premise demand and production, several brewers have tried to stave off layoffs via furloughs.
Today, 40,000-barrel Massachusetts brewer, Night Shift, shared on social media that they’re forfeiting 100% of founders salaries and enacting drastic other measures to weather the channel shutdowns that have impacted their business:
“Zero layoffs, every staff stays on company benefits, but we did enact a furlough program that touches every department,” per company Instaram. “This reduces workload/pay for many, but enables our staff to file for unemployment. We hope every employee is back at full capacity once this is over. “
Co-founder Rob Burns told CBD they’ve reduced payroll by 75% and all departments have been affected. “We employee over 200 people. The distribution team is closest to being at full staffing due to insane demand,” in the off premise.
“Our main goal is to preserve everyone’s job for once this is over and to have everyone maintain NSB health benefits,” he told CBD.
As Night Shift has a distribution arm, they’ve also “put out the call to all MA brewers who are taproom centric models to try and help them sell their cans in the Off-Premise trade.”
In California, which has been hit hard with COVID 19 fallout — including some of the strictest quarantine measures with “shelter in place” provisions in the San Francisco Bay area — Russian River is furloughing “90% of its staff — about 175 employees,” per Brewbound report.
This is just the tip of the iceberg, as the top story survey tells us.
A Crain’s Detroit article from earlier in the week described how local brewer, Batch Brewing Co., announced “that it was forced to lay off all of its employees as a result of the new [Michigan] executive order. It launched a Go Fund Me campaign for the impacted employees, raising more than $4,000 of its $20,000 goal as of Tuesday morning.”
The same article confirmed that Founders has closed its Detroit and Grand Rapids taprooms indefinitely, naturally, in accordance with new Michigan on-premise restrictions.
Fellow Michigan brewer Bell’s is in a bit of a stickier situation. Founder Larry Bell told the outlet that “draft beer accounts for about 35 percent of its business.”
“What’s worse, the brewer just recently shipped out high volumes of beer in anticipation of the annual Oberon launch, which was scheduled for March 23 and effectively canceled.”
“What the long-term impact is gonna be I can’t say for sure, but obviously, we’re gonna see some decreased volume,” Larry told Crain’s.
CRAFT BREWERS THE NEW FAST FOOD JOINTS? DRIVE THRU, “MEAL DEALS” ABOUND
As craft brewers pivot to offer more food (where they serve it) and beer to go, many of the country’s largest craft brewers are taking to social media to tell users of drive-through “meal deals” with beer.
Georgia’s SweetWater updated its newsletter patrons that while the taproom is closed, beer and food to go starts now.
“Want a deal on food and beer? Choose from 6 family-sized meals, pick your favorite 12 pack of brews,” it said. “Drive up to the brewery and we’ll load up your car.”
At Houston’s Saint Arnold, which has added special drive through and to-go pickup, they were advertising “Special To Go Combos” this week:
Pizza + Six Pack (Year Round Beer) = $22
Two Burgers + Hand Cut Fries + Six Pack (Year Round Beer) = $33
Whole Chicken + Two Sides + Six Pack (Year Round Beer) = $36
THE BRUERY HOSTING “FIRST EVER DIGITAL DRINKING EXPERIENCE” IN THE WAKE OF COVID-19
Here’s another neat idea, this one coming from The Bruery in Orange County, California.
The company is abiding by the orders handed down by Gov. Newsom and only serving “to-go” beer out of their tasting rooms. However, “that doesn’t mean we can’t share a beer together,” the company said.
How’s that? Tomorrow evening, The Bruery will host its “first ever digital drinking experience.”
This “virtual happy hour” will take place on The Bruery’s YouTube channel at youtube.com/thebruery at 5:00 pm (PT) tomorrow.
The schedule includes tasting through a few beers, of course. The set line-up for the happy hour, includes: Handy Man, a dry-hopped blonde saison; Rukeller Helles, a traditional Bavarian style Helles; Relax [It’s Just a Hazy IPA], a hazy IPA, obviously; Bakery: Boysenberry, an imperial stout aged in bourbon barrels with boysenberries; and Huckle & Flow, an imperial stout with huckleberries.
The Bruery encourages consumers who plan to attend tomorrow evening’s event to purchase these beers prior, by shopping online with overnight delivery, swinging by their tasting room, or finding them in a beer store nearby.
In addition to the beer drinking, the event will include an open discussion forum, live Q&A via the comments section, and founder Patrick Rue will also be joining the event as they “taste a few wines from Erosion Winery.”
“So come online and join us for a beer – we can be social AND keep our distance,” per announcement.
Jenn, Jordan, and Harry
“It takes a great deal of courage to stand up to your enemies, but even more to stand up to your friends.” – J. K. Rowling
———- Sell Day Calendar ———-
Today’s Sell Day: 13
Sell days this month: 22
Sell days this month last year: 21
This month ends on a: Tues.
This month last year ended on a: Fri.
YTD sell days Over/Under: +1