As the COVID-19 pandemic continues to present an unprecedented challenge for breweries in 2020—with widespread layoffs and potential closures—the Brewers Association today released its annual “State of the Industry” growth report based on statistics from the previous year.
The numbers depict a continuation of what had become a familiar pattern of modest but steady growth in independent brewing over the past several years—a pattern that looks sure to be disrupted this year.
“Although craft brewers entered 2020 on a solid foundation, the beer landscape is dramatically different today than it was just a few months ago,” said Bart Watson, BA economist, in the announcement. “Breweries will be facing new realities due to the pandemic with extended closures, tight cash flow, societal shifts, and other economic variables in play. These 2019 figures will allow us to see how much COVID-19 affects small-brewer production and jobs.”
Representing the country’s smaller, independently owned breweries, the BA says craft-beer production grew a bit less than 4 percent in 2019. That increased craft’s share of the wider beer market to 13.6 percent. The growth in dollar value was larger, increasing 6 percent over the previous year to reach 25.2 percent of dollar market share.
Other key stats:
- The BA says that craft brewers also provided more than 160,000 direct jobs, an increase of 7 percent over the previous year. Unfortunately, that job growth is one of many successes hollowed out by the pandemic. A BA survey released last week found that respondents had laid off 65 percent of their total staff—a number sure to grow as social-distancing measures continue.
- The report notes that the growth occurred despite the overall beer market being down 2 percent by volume.
- The BA counts 8,275 craft breweries in operation at the end of 2019. During the year, there were 294 closures but 942 new brewery openings.
Even before the pandemic, some economists were predicting a more modest economic slowdown. “We would have expected maybe 400 to 500 closings this year anyway,” Watson said at a virtual news conference after releasing the report. “Obviously, COVID-19 is going to be a shock to that system and is going to cause far more closures.”
Much hinges on how long stay-at-home orders and other social-distancing measures 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.
Watson discussed the evolving situation for brewers during the pandemic. Due to the loss of draft beer in bars, restaurants, and taprooms, overall sales are down an estimated 25 to 30 percent, he said. Many breweries quickly pivoted to make more packaged beer available to local customers. However, smaller breweries that depend most on their own taprooms are most vulnerable, Watson said, with on-site sales down an estimated 65 percent. “In general, the smaller you are, the more in danger you are.”
Watson also said that packaged beer sales are up 8 percent, including both off-premise retail and beer sold to-go, be it curbside, delivery, or using direct-to-consumer platforms. “This is going to force breweries to think about other revenue streams,” he said. “I think we’re going to see breweries keep some piece of what they’ve learned about direct-to-consumer, about limited distribution. … I think this is going to have long-lasting effects on how breweries think about their businesses and how they adapt in the future.”