Dear Client:

SweetWater is one of the latest top 50 craft brewers to articulate a keg “buyback” program. 

CBD intercepted a note to distributors in the Southeast offering the producer’s plans for keg relief: The brewer is offering “55% credit of the laid in cost on the kegs in your warehouse and full kegs at retail” and to “split the cost of the keg destruction.”  

“We would like to also have a discussion on a market-by-market basis on the kegs at retail that have been tapped,” per communication. “We realize this is a potential challenge in many markets, but we at least want to discuss how we can potentially make this an easier transition for the retailers and get a better understanding on how you might be handling this process.”

As many states have started articulating plans to reopen, albeit slowly, it will be interesting to see how many more brewers offer plans for buybacks. We’ve heard more brewers may offer some credit, as the on-premise will not fully recover for quite some time, and social distancing measures will likely limit the amount of people in restaurants — and of course, draft sold. 

MORE PAYCHECK PROTECTION FUNDS FOR SMALL BUSINESSES, BUT ARE SMALL BREWERS SECURING THEM? 

Late last week, Congress passed another coronavirus relief bill, to the tune of almost $500 billion total. 

That bill earmarked more than $300 billion for the second round of the recently created Paycheck Protection Program, which provides forgivable loans to small businesses (you know, like craft brewers). The first round of PPP ran out swiftly due to high demand. 

“About $60 billion of the additional PPP funding would be set aside for businesses that do not have established banking relationships, such as rural and minority-owned companies,” NBC explained in its coverage of the recently passed bill. “Expanding access to the aid was a priority for Democrats who worried that some businesses were being shut out of the fund.”

We asked BA chief economist Bart Watson if he had any idea how many craft brewers had secured PPP aid. Recall, through the Brewers Association, Bart has conducted a couple of craft brewer COVID impact surveys. 

But Bart said they don’t have a holistic number on the amount of craft brewers getting PPP relief. 

“We have requested this data from the SBA [Small Business Association], but they do it by NAICS codes, so we’d only get a partial picture,” he said. 

(Note here: If you follow Bart on Twitter, you may know that the BA has petitioned to change the NAICS code for brewpubs, “or brewery-restaurant hybrids,” which make up almost half of all craft brewers. It would differentiate brewpubs under the “restaurants and other eating places” designation. Such a chance wouldn’t be made until next year, at the earliest.) 

We also wondered if he’d heard which craft brewers are getting denied vs. accepted for the loans, and why. Is it simply a matter of who applied first?

“…We are hearing that one variable is a previous relationship with the lender they are going through,” Bart said. “We are hearing more positive results from brewers who worked with smaller local lenders they have previously worked with than some of the brewers who went through larger national lenders.” Bart believes this is an issue “they were trying to fix in the second round” of relief efforts. 

BA/BOTTLESHARE LAUNCH RELIEF FUND. But even if PPP funds (which have hit many snags due to demand) don’t make it to craft brewers, the BA has partnered with a craft-facing nonprofit fundraiser, Bottleshare, to create its own relief fund. The Believe in Beer Fund aims to “support breweries and state brewers guilds impacted by the coronavirus pandemic,” who can “apply for immediate financial assistance for operational expenses such as payroll, rent, and utilities,” the BA announced on Friday. 

Through the end of American Craft Beer Week on May 17, people can contribute to the fund here.  

“Relief funds will be available to breweries and state guilds that demonstrate immediate financial need due to COVID-19 and meet the outlined criteria,” per BA. 

ARE PEOPLE DRINKING MORE? NAH, SAYS BART  

Though it’s been a popular thesis of late, Brewers Association chief economist Bart Watson isn’t convinced that Americans are drinking more in the COVID-era. 

“It’s very clear that beverage alcohol buying patterns are shifting,” he wrote in his latest BA blog post. “What’s much less clear is if total consumption levels have changed at all.”

Yes, scan data trends have been off the charts as of late, but that’s only a “partial picture,” he said and reminded that “scan is a measure of purchase, not consumption.”  Indeed, just because a ton of bev alc was sold in stores over the past month and a half, doesn’t necessarily mean that a lot of bev alc was consumed over that frame. A lot of it could still be sitting in peoples’ pantries.

So let’s look at the numbers: According to Bart’s calculations, which factors in recent volume trends from the on and off-premise and weights them by 2019 volume share (see the exact math here), total bev alc volume sales were only up 2.2% for the three weeks ending April 12.

“So all it takes is an assumption that the additional 2.2% sales bump are stock up purchases that aren’t immediate consumption, and you can argue that total beverage alcohol consumption hasn’t gone up at all,” Bart wrote. “If you assume the stock up percentage is more than that, it may have even gone down.”

BEER BRIEFS:

ROGUE PARTNERS WITH COLUMBIA DISTRIBUTING TO RAMP UP HAND SANITIZER PRODUCTION. As we reported last month [See CBD 03-30-20], Rogue has been donating its “Helping Hand” hand sanitizer to first responders in their area, as many craft brewers have converted their expiring keg beer into COVID-19 “help” of late.  But here’s a twist in that trend: Rogue today announced a partnership with Columbia Distributing to meet this ever-increasing need, utilizing “excess” beer donated from the wholesaler — and they have expanded their sales to the public. “Working with Rogue to make hand sanitizer was a natural way for us to help during this crisis,” Mike Specht,  Senior VP of Sales for Oregon and California at Columbia, said. “Helping Hand” is available for sale in 375 mL bottles at Rogue’s website; it’s $5 for a single unit and $57.60 for a 12-pack, from which a portion goes to first responders. 

Until tomorrow,

Jenn, Jordan, and Harry 

“There’s an old saying about those who forget history. I don’t remember it, but it’s good.” – Stephen Colbert

———- Sell Day Calendar ———-

Today’s Sell Day: 19

Sell days this month: 22

Sell days this month last year: 22

This month ends on a: Thurs.

This month last year ended on a: Tues.

YTD sell days Over/Under:  +1