The first half of 2020 has been like no other, both for the world at large and on a much smaller level, for the craft brewing community.
The Brewers Association (BA) has been measuring these differences at different times since mid-March, but now that we’re halfway through the year, we’d like to get a more comprehensive view via our mid-year survey.
The survey is simple: you just need to know your volume or trend compared to the same period last year. We also asked brewers to estimate what your second half might look like, knowing that there is huge uncertainty.
Here’s a quick recap of the data we’ve collected so far, interspersed with other datasets.
Trends for the first half of 2020
The first two months of the year seemed to be about in pace with 2019. Analytics data showed BA craftsmanship to be roughly flat, perhaps a little weaker than the same period. in 2019, although January and February are generally the two slowest selling months of the year. At the same time, brewery sales, based on brewery growth statistics and Google search data, suggested another year of growth was in order.
Every data set I’ve seen shows this changed in the week ending March 8, which in hindsight was a transition week to very different numbers on the weeks of March 15 and March 22 . Here are some data points:
|Data Source/Channel||Past trend||Week of March 8||March 9-22|
|BA Craft Scan (IRI Group)||+0.3%||+4.9%||+29.8%|
|Google search “brewery near me”||+39.0%||-2.0%||-72.0%|
|Consumer spending on accommodation/food||-1.4%||-4.4%||-22.8%|
|Open table reservation traffic||+1.4%||-4.4%||-59.5%|
These different data channels show different levels of change and in different directions, but all show that beginning with the week of March 8, and then rapidly accelerating the weeks of March 15 and 22, American consumers have changed, and the economy with them.
The BA conducted our first impact survey during the second of these two weeks. Breweries were already seeing the effects and anticipating a big impact, with the majority having slowed or halted production and expecting layoffs.
The next period, the depths of the economic downturn, lasted roughly from mid-March to mid-April, with some faint signs of improvement from early to mid-May. From March 18 to April 21, BA craft exploded in scans, searches for “brewery near me” plummeted (26% of the year before average, down 84% from what had been a up nearly +40%), total consumer spending on accommodations and food services via credit card data remained down more than 60%, and in-person restaurant traffic was virtually non-existent (decrease average bookings above 99%). It was in the middle of this period that the BA conducted our second impact survey, and it captured the economic devastation and general negative sentiment that existed across many sectors of the economy. The survey captured the most important economic numbers very accurately, with beer packaged off-site, draft distribution virtually non-existent and brewery sales somewhere in between, with some work to keep the numbers light. less negative than for seated restaurants.
From there, some consumers adapted and began to feel more comfortable reentering the world, resulting in a slow return to sales, with high levels of variation by location and demographics. Much of this comeback took place in the second half of May and throughout June, depending on which part of the economy you are looking at and where. BeerBoard data showed just 16% of locations were open and pouring beer from May 8-10, a number that rose to 84% from June 19-21.
Throughout this rise, however, there have been constant signs that all is not returning to normal. Nielsen CGA’s June 19-21 on-site consumer survey found that only 36% had gone out to eat in the past two weeks, and only 11% had gone for a drink. Before COVID, the number of meals was 82% at least once in two weeks. At the same time, offsite remained strong even as onsite reopened, with BA craft sales up 16.7% in volume for the four weeks ending June 21 (Source: IRI Group, MULO+C, Total US) .
Want more information like this? BA members have access to the Nielsen CGA On-Premise Knowledge Center. Find the link to access it here.
Our third survey, conducted at the end of May, may have captured the mixed messages of this timid recovery. Breweries were on average a bit more optimistic, but with big variations. Reasons for optimism and pessimism also varied widely, suggesting a range of local and individual business outcomes.
Entering a new phase for the second half of 2020
Over the past few weeks, as cases have risen again, but in new places and with different demographics, it looks like we may be entering a fourth phase. It remains to be seen in which direction this phase will push economic activity. As with the previous stages, this is not just an economic issue. I’ve heard economists describe this downturn as a “supply-driven” recession, but that’s not really how we typically think of supply. The idea that restaurants cannot provide you with a meal without health risks is not the same notion of supply that you learn about in Econ 101. The economic question is closely linked to public health, to the psychology of consumer, not to mention government fiscal and monetary policy. Politics.
To truly recover, we need to address (or at least contain) public health issues, restore consumer confidence in reintegration, not to mention close the demand gaps resulting from laid-off workers and shuttered businesses. Resolving these three pieces seems unlikely in the short term.
It is more likely that we are entering a period of turbulent economic activity, with reduced spending levels that vary widely from place to place and changes in spending that will persist for some time. The IGM Forum and FiveThirtyEight describe the form of this economic outlook as a “reverse radical.”
In conclusion – the Brewers Association will continue to track the performance of small brewers to better tell your story and advocate on your behalf. It has become clear to almost everyone that COVID is going to have an impact for months, if not years, and we are committed to doing our best to help small brewers understand changes in the economy, consumer behavior and our industry as these trying times unfold.
Next up is our annual mid-year survey, so take a few minutes to fill it out to your abilities.