Thousands of US small breweries could close for good

A nationwide survey by The Brewers Association indicates the majority of breweries do not think their business can last three months given current conditions, suggesting thousands might close. 

The survey shows that sales at breweries are down on average by 65%, while distributed draught sales are down approximately 95%. 

The survey, of more than 500 breweries from 49 states in the US, indicates 15% expect to close their businesses by May, with 60% fearing they may have to close by July if these challenging sales trends continue. 

Off-trade beer sales are seeing huge gains in the US, as they are in the UK, as a result of people stocking up for lockdown and as some of the volume lost in the on-premise shifted to off-trade sales, but the report notes this is not representative of many small brewers. 

Bart Watson, chief economist for the Brewers Association, said: “While there is likely a bump for the overall category in off-premise, this isn’t helping the smallest micros, taprooms, and brewpubs that much, since much of the bump is concentrated in bigger retailers and larger package sizes.” 

In total the survey estimates that the overall sector for craft breweries is down 29%, with many brewers, particularly those without a packaged product, down much further than this. 

Watson said: “For many small brewers, the current situation is not sustainable. Being a responsible business owner means scenario planning, but few if any build plans for a near complete drop in revenue with no insurance protection and continued bills to pay.

“Consequently, in response to the question, “Given current costs, revenues, and the current level of state and federal aid, how long do you project you can sustain your current business if social distance measures stay where they are now?”, many brewers indicate that their business has a matter of weeks, and a majority say they can only last a few months based on current trends.”

About 75% of the 8,150 active breweries in the US make 1,000 barrels or less a year and the median craft brewer makes about 400 barrels. 

Watson added: “The breweries indicating they may need to close are by and large very small.”

Asked what help they would like, the majority of breweries said they need more direct relief, and failing that, they need help in the form of excise tax certainty and credits to offset the hundreds of millions of dollars that was already in the trade or sitting in tanks when the on-premise ground to a virtual standstill. 

Watson said: “There is no easy way to summarise the results of the survey other than to say they show the extreme urgency for further action to forestall the closures of thousands of small businesses and the loss of jobs of tens of thousands of more workers.”

 

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