This post was last updated on March 25 at 7:00 MT.
To help guide our communications with policy makers, we yesterday launched a survey designed to assess the early impacts of COVID-19 on the small brewing industry. Thank you to the 900+ breweries (as of early March 25) who took a few minutes to fill it out.
The numbers aren’t pretty. Given that many breweries sell a high percentage of their beer through their dining rooms or breweries, and draft sales account for around a third of craft production, the rapid closure or restriction of breweries, bars and restaurants has significantly reduced short-term cash flow. as well as medium-term production.
Here are the survey results to date (covering 938 responses and brew counts). Their representativeness has not been checked, so there may be some response bias, but we wanted to present these data as quickly as possible.
Has COVID-19 ever impacted your business? (Check all boxes)
- Yes, via on-site sales = 90.9% (85% indicated they had closed their bar/brasserie when responding, this figure increases to 87% when looking at the last 300 responses).
- Yes, via distributor orders = 59.5%
- Yes, via canceled events = 88.3%
- No = 1.0%
Breweries could check several options, but using the “no” we see that 99.0% are already seeing some effect. Canceled 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 on how the loss of revenue from slowing beer sales had been offset by the ability to use their brewery as event space. Now both streams have been cut off.
We also asked members to predict what their sales would look like over the next month and guess what the percentage change would look like.
How much do you expect your annual sales to be in the next month compared to last year?
- Low = 95.0%
- Flat = 2.8%
- Up = 0.7%
- No response = 1.5% (I assume these are mostly new breweries)
And here is the sales change data. This is not weighted by brewery size, so it is not an estimate of an industry decline, but rather an estimate of what success looks like for a small brewer individual.
- Average percent change in sales (including flat and up sales) = -59.5%
- Median = -60%
Next, we asked the brewers how their production schedule had already changed. We haven’t delved too deeply into why, but my guess is that these changes are mostly sales driven rather 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%
- Idle = 61.1%
- No change = 8.6%
- White = 1.9%
Perhaps the most disturbing 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%
- Not sure = 28.4%
- White = 1.9%
Only 8.6% of respondents answered “no”. This percentage decreased as we added more answers and yes increased.
Again, this is not weighted by the size of the breweries or the number of employees, and we did not ask about the extent of the layoffs, so in no way does this mean that almost half small jobs in breweries are threatened. That said, as with other small businesses, each day of closure increases the pressure, and it’s clear that this unexpected shock will lead to large-scale layoffs. Every day without relief will likely increase the cost of jobs.
Finally, we asked brewers to rank policies based on their importance to their brewery. I had assumed that people would rank from 1 to 10, but a lot of brewers put “1” (most important) for multiple choices. I think this only underlines the importance of a broad package including multiple forms of help and support. Here are the ten options we’ve presented in order of importance to brewers.
What policy responses would be most helpful to your business over the next month? (Please rank; 1 = highest priority to 10 = lowest)
- Make unemployment insurance available to all temporarily laid off or furloughed employees, with no long-term negative impact on employers’ insurance premiums
- Create a compensation fund for companies affected by the coronavirus crisis
- Suspend payroll taxes
- Paid quarantine leave for employees of businesses closed due to quarantine (minimum of 14 days maximum of 30)
- TTB treatment of the national emergency as if it were a natural disaster and waives penalties on late excise tax payments
- Loan deferrals of up to two months with no accrued interest from commercial lenders
- Paid sick leave for people who do not have benefits through their employer (minimum 14 days, maximum 30)
- Increased Small Business Administration (SBA) funding for low-interest or interest-free loans
- Immediate Loan Payment Deferral on SBA Loans with No Accrued Interest
- Cash transfers to US individuals
Each option was chosen by a large number of brewers as their first choice, but it is clear that tax policies that give brewers and their workers access to money and slow down payments were the most important. Cash transfers were the least important. While cash transfers to individuals can play 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’re too slow to replace. lost income or help with business bills to come payable.
What do we do with this information? Mainly, we do what we try to do every day: tell the story of small independent brewers to legislators. This time it’s much more urgent. We also share this data with state guilds and ask them to reach out to their federal legislators, and work with a broader liquor coalition to amplify our voice.