Impact Survey Shows Extreme Challenges

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This post was last updated on March 25 at 7:00am MT.

To help guide our communications with policymakers, yesterday we launched a survey designed to gauge the initial impacts of COVID-19 on the small brewing industry. Thanks to the more than 900 breweries (as of early on March 25) who took a few minutes to fill it out.

The numbers aren’t pretty. Because so many breweries sell a high percentage of their beer through their taproom or brewpub, and draught sales make up roughly a third of craft production, the rapid shuttering or restriction of breweries, bars, and restaurants has drastically cut short-term cash flow as well as production in the medium-term.

Here are the survey results to date (covering 938 brewery responses and counting). These haven’t been checked for representativeness, so there may be some response bias, but we wanted to present this data as rapidly as possible.

Has COVID-19 already impacted your business? (Check all that apply)

  • Yes, through onsite sales = 90.9% (85% indicated they had closed their taproom/brewpub when they responded, that goes up to 87% looking at the latest 300 responses).
  • Yes, through distributor orders = 59.5%
  • Yes, through cancelled events = 88.3%
  • No = 1.0%

Breweries could check multiple options, but using the “no,” we see that 99.0% are already seeing some effect. Cancelled events at their own brewery will be just as painful as the loss of beer sales for some brewers. During this year’s production survey, many brewers had included notes about how lost revenue from slower beer sales had been offset by the ability to use their brewery as an event space. Now both streams have been slashed.

We also asked members to predict what their sales would look like over the next month and hazard a guess at what the percentage change would look like.

What do you anticipate your YoY sales to be over the next month compared to last year?

  • Down = 95.0%
  • Flat = 2.8%
  • Up = 0.7%
  • No response = 1.5% (I’m guessing mostly new breweries)

And here is the sales change data. This 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.

  • Average percent sales change (this includes flat and up) = -59.5%
  • Median = -60%

Next, we asked brewers about how their production schedule had already shifted. We didn’t delve too deeply into why, but my assumption is that these changes are primarily sales-driven more than worker-driven (lack of availability due to illness, quarantine, etc.).

Have you changed your production schedule in response to COVID-19?

  • Stopped = 28.4%
  • Slowed = 61.1%
  • No change = 8.6%
  • Blank = 1.9%

Perhaps the most sobering statistic came from the question about layoffs. We asked brewers if they anticipate layoffs as a result of ongoing events?

Do you currently anticipate layoffs as a result of ongoing events?

  • Yes = 61.1%
  • No = 8.6%
  • Unsure = 28.4%
  • Blank = 1.9%

Only 8.6% of respondents said “no.” This percentage has gone down as we added more responses and yes has gone up.

Again, this isn’t weighted by the size of breweries or number of employees, and we didn’t ask about the size of layoffs, so this in no way implies that anywhere near half of small brewery jobs are in jeopardy. That said, like other small businesses, every day being shutdown increases the pressure, and it is clear that this unexpected shock will lead to layoffs at a broad scale. Every day without relief will likely increase the cost in jobs.

Finally, we asked brewers to rank policies by how important they would be for their brewery. I had assumed people would rank 1 to 10, but lots of brewers put “1” (most important) for multiple choices. I think that just underscores how important a broad package that includes multiple forms of relief and support will be. Here are the ten options we presented in order of their importance to brewers.

What policy responses would be most helpful for your business over the next month? (Please rank; 1 = highest priority to 10 = lowest)

  1. Make unemployment insurance available for all temporarily laid off or furloughed employees, with no long term negative impact on employers’ insurance premiums
  2. Create a compensation fund for businesses affected by coronavirus crisis
  3. Suspend payroll taxes
  4. Paid quarantine leave for employees of businesses shut down due to quarantine (minimum of 14 days maximum of 30)
  5. TTB treatment of National Emergency the same as they would a natural disaster, and waive penalties on late excise tax payments
  6. Loan deferments for up to two months with no interest accruals from commercial lenders
  7. Paid sick leave for people who don’t have benefits through their employer (minimum of 14 days, maximum of 30)
  8. Increased funding for Small Business Administration (SBA) for low/no interest loans
  9. Immediate loan payment deferment on SBA loans with no interest accruals
  10. Cash transfers to individual Americans

Every option had a high number of brewers select it as their top choice, but clearly fiscal policies that allow brewers and their workers access to cash and that slow payments out were the most important. Cash transfers were the least important. Although cash transfers to individuals may serve a vital role in getting the economy back on track (and a high percentage of members supported), for many businesses feeling immediate pain right now, they are too slow to replace lost revenue or help with business bills coming due.

What are we doing with this information? Primarily, we’re doing what we try to do everyday: tell the story of small and independent brewers to lawmakers. This time it has far more urgency. We’re also sharing this data with state guilds and asking them to contact their federal legislators, and working with a broader beverage alcohol coalition to magnify our voice.