COVID-19

Retail beer sales are up but that’s not cutting it for many craft breweries

Andy Uhler May 27, 2020
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A brewery in Washington, D.C. seen in 2019. One brewery owner said about 40% of his brewery’s revenue comes from selling kegs to bars and restaurants. Saul Loeb/AFP via Getty Images
COVID-19

Retail beer sales are up but that’s not cutting it for many craft breweries

Andy Uhler May 27, 2020
A brewery in Washington, D.C. seen in 2019. One brewery owner said about 40% of his brewery’s revenue comes from selling kegs to bars and restaurants. Saul Loeb/AFP via Getty Images
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Before the pandemic shut down its indoor-outdoor taproom, St. Elmo Brewing Company in South Austin sold patrons beers on tap with names like “Carl” and “Norm!”

“We’re looking at a split of probably between 78% to 85% of our sales coming from in-person traffic. So, when social distancing is in place, that 80% just kind of vanishes,” said co-founder Timothy Bullock.

Retail beer sales are up around the country, but that doesn’t help St. Elmo. It doesn’t sell its beer in grocery stores. While the taproom remains closed, St. Elmo is trying a few different things to bring in revenue like selling growlers and four-packs of cans directly to the consumer out of its taproom.

“It’s a middle school dance, like where everybody’s just out on the dance floor and not knowing exactly what to do,” Bullock said.

St. Elmo also recently worked with another local craft brewery, Austin Beerworks, on a limited edition hazy IPA just for the quarantine. St. Elmo’s version was called “Air Five” (like a high five but without slapping hands). And Austin Beerworks’ beer was called “No Touching” (for all those “Arrested Development” fans). 

Michael Graham, one of the owners of Austin Beerworks, said about 40% of his brewery’s revenue comes from selling kegs to bars and restaurants. But unlike St. Elmo, Austinites can find Beerworks beer at grocery stores all over town. 

“More people are buying beer in the grocery stores and convenience stores, but not nearly enough to make up for that lost volume from bars and restaurants,” Graham said.

The numbers also tend to be more favorable to breweries when selling draft beer.

“One of the things that I think people aren’t aware of is just how dramatically different brewers’ margins are when they’re selling into bars and restaurants versus when they’re selling packaged beer,” said Michael Uhrich, chief economist at the alcoholic beverage consultancy, Seventh Point Analytic Consulting.

Graham and the other Beerworks owners have talked about lowering the price of its beer to move more volume. But playing the price game can be treacherous. 

“You might attract new customers, but those are customers who are buying you not just because of the strength of your brand or the beers but also because of the price and so what happens if somebody else comes in at a lower price,” said Bart Watson, chief economist at the Brewers Association.

That value market isn’t really a craft brewers wheelhouse market, either. And most small breweries can’t compete with AB Inbev or MillerCoors on price.

COVID-19 Economy FAQs

What’s going on with extra COVID-19 unemployment benefits?

The latest: President Donald Trump signed an executive action directing $400 extra a week in unemployment benefits. But will that aid actually reach people? It’s still unclear. Trump directed federal agencies to send $300 dollars in weekly aid, taken from the federal disaster relief fund, and called on states to provide an additional $100. But states’ budgets are stretched thin as it is.

What’s the latest on evictions?

For millions of Americans, things are looking grim. Unemployment is high, and pandemic eviction moratoriums have expired in states across the country. And as many people already know, eviction is something that can haunt a person’s life for years. For instance, getting evicted can make it hard to rent again. And that can lead to spiraling poverty.

Which retailers are requiring that people wear masks when shopping? And how are they enforcing those rules?

Walmart, Target, Lowe’s, CVS, Home Depot, Costco — they all have policies that say shoppers are required to wear a mask. When an employee confronts a customer who refuses, the interaction can spin out of control, so many of these retailers are telling their workers to not enforce these mandates. But, just having them will actually get more people to wear masks.

You can find answers to more questions on unemployment benefits and COVID-19 here.

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