Latest BA Survey Results Paint Bleak Picture

Breweries looking at likely closures and layoffs as pandemic continues indefinitely.

Brewing Industry Guide Staff Apr 7, 2020 - 5 min read

Latest BA Survey Results Paint Bleak Picture Primary Image

A handful of breweries are already planning to close, with many more unsure they will make it through the next few weeks or next few months, as beer drinkers continue to stay home in a widespread effort to slow down the COVID-19 pandemic.

Those are among the findings from the most recent survey conducted by the Brewers Association, the trade group that represents the country’s independent breweries. The survey received 455 responses from breweries in 49 states. BA Economist Bart Watson presented the findings on the group’s website this morning.

Much hinges on how long stay-at-home orders and other social distancing will last—or more specifically, on how long bars, restaurants, and taprooms will need to remain closed. Until then, draft beer is in hibernation, and many smaller taproom-focused breweries and brewpubs have lost massive chunks of their sales and had to furlough or lay off workers.

“A majority of breweries do not think their business can last three months given current conditions, suggesting thousands of closings,” Watson says.

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“The results show a sharp drop in craft category sales, massive furloughs or layoffs, and the high likelihood of large numbers of brewery closings without a swift end to social-distance measures—which looks increasingly unlikely—or rapid government support for small brewers and hospitality more broadly,” Watson says in the update.

Among the survey’s findings:

  • Respondents report an average drop in sales of 66 percent, with the majority seeing drops of more than 70 percent.
  • Packaged distributed volume is up on average about 9.4 percent, as many people stock up on stay-at-home beer. Generally, any such gains are small compared to the near-total loss of draft beer. “So, while there likely is 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,” Watson says.
  • Based on survey responses and sales data, Watson estimates that off-premise sales are down 23 to 29 percent.
  • Respondents have laid off and/or furloughed more than 65 percent of their total staff. That includes 54 percent of full-time staff, compared to 80 percent of part-time staff.
  • About 46 percent of respondents say their breweries can last another one to three months, but no longer. About 13 percent say they have no more than four weeks, while 2.5 percent of respondents say they are already planning to close. That suggests the potential closure of more than 3,700 breweries if social-distancing measures must continue for three months, barring additional government support.

That’s another major factor in how long many of these breweries can stay open: how much support they can expect from the government. On March 25, Congress passed the unprecedented $2 trillion CARES Act, a stimulus package meant to help keep the economy afloat during the pandemic.

The BA asked brewers which aid provisions they plan to use. Their responses:

  • Forgivable SBA loans: 84.7 percent
  • Emergency grants up to $10,000: 55.7 percent
  • SBA disaster loans: 50.4 percent
  • Increased unemployment provisions: 47.5 percent
  • Delayed payroll-tax payments: 46.5 percent
  • Increased interest-expense deduction: 26.4 percent
  • Facility write-off provisions: 23 percent
  • Excise tax waiver for alcohol used to make hand sanitizer: 11.9 percent

“Taken together with the previous questions,” Watson says, “these results suggest that the CARES Act had value for small brewers but simply didn’t go far enough to counterbalance the economic challenges they face while being closed.”

The BA also asked brewers what additional measures ought to be taken—a key question that helps the group to focus its lobbying efforts on Capitol Hill. The responses:

  • More direct grants for breweries and other hospitality businesses: 80 percent
  • Permanent excise-tax recalibration: 70.8 percent
  • Spoiled-beer tax credit: 67.4 percent
  • Additional market access in my state (such as the ability to sell beer to-go, to deliver, or to sell directly to consumers: 50.8 percent
  • Excise-tax payment delays: 49.7 percent

“Brewers need more direct relief,” Watson says, “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 [sales] ground to a virtual standstill.”

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