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Pandemic could mean permanent changes for S.C craft beer industry

Hospitality and Tourism
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A tongue-in-cheek coping mechanism that got some movie characters through a zombie apocalypse is not an option for craft beer fans dealing with the COVID-19 pandemic.

In the horror/comedy Shaun of the Dead, the titular character, played by Simon Pegg, urges his buds to deal with an unfortunate turn of undead events in a typically English manner: “Go to the Winchester, have a nice cold pint, and wait for all this to blow over.”

In reality, beloved neighborhood pubs haven’t been open since March 17, when an executive order from S.C. Gov. Henry McMaster banned sit-down dining, which also nixed bellying up to the bar. While another edict from McMaster, issued April 20, allowed some nonessential establishments also shuttered by executive order, such as florists and sporting goods stores, to reopen, the future of bars and restaurants — and breweries — remains unclear, as do the consequences of being largely closed for more than a month.

“It feels like it’s been a long decade,” Brook Bristow, owner and managing attorney at Bristow Beverage Law and executive director of the S.C. Brewers Guild, said. “Days feel like weeks and weeks feel like months. It’s been pretty crazy.”

Bristow spoke the Columbia Regional Business Report on April 29, the same day the S.C. Restaurant and Lodging Association urged McMaster to allow restaurants to resume outdoor dining on May 4, with indoor dining beginning two weeks later.

“I don’t know what that does for bars and breweries and those kinds of places,” Bristow said. “I’m going to try to dig in a little bit on that and see.”

Bristow has spent much of the past six weeks sifting through state law, with his law firm leading the charge to relax state restrictions on alcohol sales during the pandemic. Previously prohibited practices such as curbside pickup of beer and wine have been temporarily permitted as local businesses try to balance public safety concerns with economic interests.

“We’re still trying to advocate for some allowance for home delivery and direct shipping of products to balance commerce and the need for businesses to have alternative revenue streams with public health and trying to keep people at home,” Bristow said. “We’re still under an emergency declaration and we’re still asking people to stay home, but we also want to be able to stay in business, and do so safely.”

Columbia Craft Brewing Co. co-owner Andrew Strauss said April sales could be down as much as 60% after COVID-19 concerns forced the closing of the brewery's taproom. (Photo/Melinda Waldrop)The ability of the state’s 92 breweries and brew pubs to do that was called into question by an S.C. Brewers Guild survey released April 14. Eighty percent of respondents said they would have to close if bars and dining rooms remained closed for another 90 days. Fifteen percent said they could only survive for one to four weeks.

“That’s two weeks from now,” said Bristow, pointing out that no follow-up survey has been done to see if respondents had received any emergency federal business loans or other assistance to help keep the lights on. “So this is the first week we’re going to see breweries dumping beer. That’s going to be a tangible thing where a lot of people can see, ‘Oh, that wasn’t just talk. There’s an issue there.’ It’s industry-wide, and it’s not just South Carolina.”

Nationally, the craft beer industry is also reeling. In late March, 87% of respondents to a Brewers Association survey said they had closed their brewpubs or taprooms, and 95% expected April sales to show a resulting dip. The survey predicted a median percent sales change of 60%.

“It is a once-in-a-generation event, and there’s no question it’s going to have an impact on the way we do business in the future,” Bristow said “I think that is definitely going to be reflected in the laws going forward once those change and modernize, because they have to. The way things have been, ‘just because we’ve always done it that way’ is not going to work anymore.”

Immediate impact

The national projections in the Brewers Association survey are right in line with what Andrew Strauss, co-owner and business development officer at Columbia Craft Brewing Co., expects once April sales numbers are tallied.

“For us, it’ll be every bit of probably 50% to 60% down in sales,” Strauss said.

Strauss, however, is remaining optimistic, grateful that his brewery has a robust off-premise distribution system in place with its familiar cans of flagship beers Columbia Craft Lager and Famously Hop IPA. He said Columbia Craft has been able to redistribute some of the beer planned for kegs for use in its taproom or sale to local restaurants into cans that can reach customers through the brewery’s mobile canning line, “but it’s not going to be perfect. I would guess that we will be dumping beer here in the next couple of months.”

Strauss said that even when his taproom, along with bars and restaurants, are open again, it will take a while for consumer consumption to ramp back up to pre-pandemic levels. “Our sales to our distributor are going to be affected by that,” he said.

Charleston’s Tradesman Brewing Co. had already begun throttling back production in the months before COVID-19 struck as it changed distributors, co-owner Chris Winn said. But even though Winn said that means most of the beer produced at Tradesman will still be fresh for up to three more months, the impact of an empty tasting room has been substantial.

“For everyone in the industry, it’s like rolling down the freeway and slamming your transmission apart,” Winn said. “Whatever was in the back of your Subaru is now hitting the windshield.”

The coronavirus pileup could wind up being quite expensive. Craft beer contributed a $796 million economic impact to South Carolina in 2018, according to the Brewers Association.  

The changes, and the complications, wrought by COVID-19 stretch beyond the brewers to their customers. Kellan Monroe, co-owner of popular Columbia bottle shop and tasting room Craft and Draft, said ordering product from distributors has become something of a crapshoot as draft sales (and therefore keg purchases) have dried up while increased demand for packaged beer has left Monroe hustling to keep shelves stocked.

“Only the warehouse people are at distributors at the moment,” Monroe said. “The sales team doesn’t have an idea when beers are being delivered to the warehouse. … I’m getting (beer) the Monday of the next week (after an order) instead of Wednesday. It’s difficult to say the least. I feel like all the things I’ve been attempting to order are going to show up all at the same time, and we’re going to be in big trouble.”

Craft and Draft, like many breweries, is taking advantage of relaxed regulations to provide curbside pickup, as well as filling carry-out and online orders.

“But that represents a fraction of the revenue we would normally generate,” Winn said. “Our taproom is open seven days a week, and we host all kinds of community events and food trucks and other fun things, and all that business is on hold.”

Like Columbia Craft, Tradesman, which had to cancel its sixth anniversary party the weekend of April 4, uses a mobile canning line, and Winn said he hopes to have a batch of beer ready to go to market in the next month.

“A good thing that could come from this is your Harris Teeter, your Publix, are working hard to feature some local beers now and are seeing traction on those brands,” Winn said. “You’re seeing more receptive retailers who are trying to support local breweries. You’re getting maybe some shelf space or floor space in your grocery stores that you didn’t normally get, which all goes into how those stores decide what beers to sell in the future.”

Strauss said Columbia Craft is planning a 16-ounce can release soon and will also be adding a third beer, a sour, to its packaged offerings.

“We’re going to try to get more beer on shelves, because that’s what selling,” Strauss said. “So there’s opportunity there. We’ve just got to be able to work with logistics and get it to the consumer another way.”

Strauss said an expansion of the brewery’s downtown location at Huger and Greene streets, begun earlier this year, is on track for a summer completion date, and both he and Winn are grateful for the support of local customers who pop in to pick up a growler, crowler or six-pack.

“My staff tells me stories every day of people coming by,” Strauss said. “We had a customer open up a $100 tab for first responders and doctors and nurses, so we’ve kept that going.”

But while appreciated, walk-in traffic is not the same sharing a pint and some laughs with regulars, both men say.

“We’re lucky to get a chance to offer products and services that are generally associated with people in some form or celebration or gathering,” Winn said. “Beer drinking has typically always been a team sport, and right now, you feel like everyone’s sitting on a bench somewhere else.”

Lasting effect

How many of the changes prompted by the COVID-19 crisis become a permanent part of the beer-providing business model remains to be seen and is largely up to state legislators.

“There aren’t a lot of regulations when it comes to alcohol. It’s all mainly statutory,” Bristow said. “One thing we asked was, ‘OK, if we can’t suspend the statute, can we just suspend the enforcement of it?’ … For whatever reason, we weren’t allowing curbside, which a lot of states already do. Now that we’ve had it, and we’ve seen, oh, you know what, it didn’t seem to be that big of an issue and consumers liked it, I’m not sure you can put that genie back into the bottle.”

The S.C. General Assembly, which suspended its session on March 20 amid public health concerns, will reconvene on May 12, two days before the session is scheduled to end. A two-week extension of the spring session is a possibility, lawmakers have said.

“Whenever they come back for a full session, I would expect there’s going to be a lot on their plate in terms of things to address,” Bristow said. “ … We’d certainly be looking for some kind of budget proviso that would give us some allowances to do these things, because I just don’t think — even with a limited reopening, the pain’s not going away.”

Bars and restaurants reopening won’t automatically provide a panacea, Bristow and brewers agree, especially if social distancing and limited capacity guidelines must still be followed.

“If you open up your taproom and you’re only going to allow 10 people in there, the numbers don’t work,” Strauss said. “A restaurant (owner) is going to lose less money by keeping his staff on unemployment than to open his business and only allow six or seven people inside.”

There’s also the matter of consumer confidence, Bristow said.

“Current polling suggests that somewhere between 75% and 85% of people would have concerns about going out right now to a bar or restaurant, a brewery,” he said. “It’s not to say it’s a slam dunk just because we reopened. There might be an initial push, but after that opening weekend, does that sustain itself? That’s a concern for a lot of businesses.”

Winn said small breweries’ size can be both an advantage and a detriment as beermakers try to figure out an uncertain future.

“Maybe to all the small breweries’ benefit, we are a pipeline-type of operation,” he said. “We all want to sell more volume, but it’s not like it’s just sitting there without thought, pushing as much product through the system because that’s how you utilize the assets. … We’re small enough to be nimble enough to hopefully be able to pivot.”

On the other hand, Winn said, “When every industry in the state is hemorrhaging, our industry as a whole is not large enough to merit the spotlight it needs. We’ve got to figure out how to keep growing our industry to where it gets to that tipping point.”

Bristow said he has not yet been approached by a brewery owner seeking advice on selling a business or declaring bankruptcy, “so that’s really encouraging. But that being said, we’re still going to be ready to counsel people on that if and when that comes, because I’m just not convinced that everything’s going to be sunny and peachy when we’re done. I just don’t know that things will be normal again, or at least not for a long, long time.

“It’s business as usual, but it’s also not.”

Winn said the pandemic has provided one potential silver lining.

“It anything has come from this, it has added some volume to the rallying cry around supporting your local breweries and local restaurants and local bars,” he said. “Support your local businesses, because that’s the only way they’re going to be around when this thing lets up and people can go back to business.”

Reach Melinda Waldrop at 803-726-7542.

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