By: Jessica Infante and Justin Kendall
As the coronavirus disease known as COVID-19 spreads across the U.S., beer companies are adjusting their businesses for a reality in which being social is discouraged.
Many companies are bracing for a downturn in on-premise business, including brewery taprooms, which have become an effective business model for small beer companies in recent years. Last year, an estimated 3.5 million barrels of beer were sold directly to consumers at brewery taprooms, Brewers Association chief economist Bart Watson said recently, citing preliminary figures.
As consumers prepare to practice “social distancing” by staying home, off-premise sales are spiking, National Beer Wholesalers Association chief economist Lester Jones.
“Clearly the off-premise segment is having a little bit of a run right now as people stock their pantries, and that is clearly giving a boost to beer-buying,” Jones said. “The question is, how much are people spending at the grocery store on beer?
“Are they taking home more than they usually did before, which I probably think is true, since they’re now planning on eating at home and drinking at home and spending their time at home,” he continued.
Jones said the lack of information about the disease and its spread makes it difficult to predict how on-premise business will be affected. The NBWA has created an online resource center for distributors to navigate the next few weeks.
“We’ve just got to wait, sit still and let public health do their jobs and figure out how to protect the population,” he said.
The one constant, however, is change.
“We’re in a constant state of market evolution of what, how and where we drink,” Jones said. “This event is definitely going to cause an inflection point to the trends that we have been on and shift them in their directions.”
Although Boston Beer Company’s on-premise business has not yet been impacted, CEO Dave Burwick said he “can’t imagine” the coronavirus disease is not going to affect the company’s on-premise business.
The impact from a loss of on-premise sales for Boston Beer, which closed its Samuel Adams taprooms and tour center in Boston, Massachusetts, for a week starting today (March 13) and canceled all events for the rest of the month, will likely be made up by an increase in off-premise sales as consumers stock up, Burwick told Brewbound prior to the closures. He pointed to the growth of Truly Hard Seltzer and Twisted Tea, which are primarily sold in off-premise retailers and he said has shifted a bigger portion of Boston Beer’s business to the off-premise “than it’s ever been.”
Dogfish Head Craft Brewery, which merged with Boston Beer last year, has closed its retail locations for a week beginning today, March 13, and canceled all events for the rest of the month.
In Providence, Rhode Island, cancelations of large events at the city’s convention center and Dunkin’ Donuts Center arena have led to hard decisions for business owners. Joshua Miller, a state senator and owner of Trinity Brewhouse in the city’s downtown area, told the Providence Journal that the downturn in business at the brewpub forced him to lay off about 20 employees.
Citing the economic impact of COVID-19, Seattle’s Pike Brewing Company announced Thursday the temporary closure of its Tankard & Tun seafood restaurant and oyster bar in the city’s Pike Place Market neighborhood.
“We have transitioned as many of our staff as possible to The Pike Pub, and all affected team members are on standby unemployment until we reopen,” the company said in a press release.
The 12,000 sq. ft. Pike Pub will remain open, with increased cleaning and sanitation procedures. The company has also canceled its Women in Beer 2020 event, citing Washington state, Gov. Jay Inslee’s ban on events of more than 250 people in King, Snohomish and Pierce counties through the end of March. Governors in California, Oregon, New York, New Jersey, Ohio, Massachusetts and other states issued similar warnings against large gatherings.
“We do not want to see people shoulder to shoulder in bars,” Inslee said at the time. “That is unacceptable.”
New York City-based e-commerce alcohol delivery platform TapRm, which serves New York, has lowered its minimum order for same-day delivery and online orders from $50 to $25 “to encourage customers to stay home and limit unnecessary exposure to others.”
The greater uncertainty has led to changes in marketing plans at the world’s largest beer manufacturer. With the cancellation of the PGA’s Players Championship, Anheuser-Busch InBev decided to cancel the planned debut of a new Michelob Ultra commercial featuring professional golfer Brooks Koepka.
Some breweries have stepped up community outreach efforts. Because schools in Framingham, Massachusetts closed Thursday and Friday and would not provide lunch to students, Jack’s Abby co-founder Jack Hendler announced on Twitter that the company’s beer hall would provide half of a cheese pizza for free to any students in need of a meal.
“We’ll hand out as much pizza as we have dough available,” he wrote.
The Brewers Association (BA) created a coronavirus resource center on its website that includes links to sanitary draft maintenance practices, antimicrobial products, the BA’s food safety plan for craft breweries, cleaning and sanitation practices for manufacturing and the Occupational Safety and Health Administration’s COVID-19 control and prevention guidance, among other helpful documents.
The National Restaurant Association, a trade group representing the nation’s restaurants, created a similar online resource page for members.
“According to the CDC, this virus is not foodborne,” vice president of communications and media relations Mollie O’Dell said. “State and local food codes establish strict safe food handling requirements for restaurants, and operators are being proactive by stepping up existing cleaning and sanitation procedures. These measures extend to the increased demand for food delivery in some areas.”
Trade group the Beer Institute (BI) emailed its members to say that it will close its Washington, D.C., office beginning Monday and all employees will work remotely.
The U.S.’s second largest beer manufacturer, Molson Coors, sent its wholesalers a note Friday evening saying its brewing, supply chain and sales operations would continue operations, but as of today, the company was recommending “employees and contractors across North America who are not doing business-critical on-site activities work remotely through March 31 if they are able to do so.” Additionally, the company placed restrictions on all travel and all large meetings. Brewery tours have also been canceled at all North American brewery locations, including craft breweries through the end of March.
While consumers plan to practice social distancing, Narragansett Beer sent an email blast encouraging fans to support on-premise retailers by purchasing gift cards to use at a later date.
“We work with a lot of bars, restaurants and shops — most of which are small, family-owned businesses who are gravely affected by this outbreak. Many of these businesses are suffering financially,” the company wrote.
Brewbound has received notices from breweries from across the country about how they are adjusting. Here’s a running list — albeit, non-exhaustive — of some off the measures companies are taking:
Taproom Changes and Closures
Event Cancellations and Postponements
This article originally appeared on Brewbound on March 13, 2020.