The end of COVID, though almost in sight, might not be soon enough for a great number of the country’s breweries. Which face the greatest threat? Those with slim operating reserves and those which rely on taprooms sales for the majority of their business.
Back in early April 2020, a survey conducted by the Brewers Association determined that over 45% of the small brewers were in jeopardy, indicating they could only survive approximately three months of COVID restrictions. Many small breweries were dependent on a business model which focused on the high margin of Taproom sales, even foregoing the kitchen aided “Brewpub” format. Those smallish breweries produced about 400 barrels per year during pandemic-free times, however, sales have dried up with limited seating and other restrictions.
Of the Craft Beer growth, a significant proportion came from this Taproom only strategy. Over 40% of the increase in each of the last three years has come from this segment. Since the beginning of the pandemic average revenue for brewers has dropped 43%; those in the best shape have income streams from a combination of taprooms, keg sales, package product (bottles and cans), and kitchen take out.
The year 2020 might have dealt a mortal blow to hundreds of local breweries with the totals becoming visible in the coming year.
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Copyright Gregg Smith – his latest book “American Beer History” is available on Amazon