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How Coronavirus Could Change the Way You Get Your Favorite Craft Beer

Competition is fierce for cans, labels, and customers as breweries rush to package their beer for home drinking

The craft beer aisle at a supermarket. Mihai_Andritoiu/Shutterstock

It’s been a rough couple of months for craft beer. Like the coffee and wine industries, the entire beer ecosystem was upended as the COVID-19 pandemic shuttered breweries, closed bars, and scared people away from beer shops. “March was kind of a bloodbath, financially speaking,” says Josh Stylman, co-founder of Threes Brewing in Brooklyn. “If you had asked me two months ago, I would have said I don’t know if our company is going to make it.” And that’s coming from a well-known, award-winning brewery in a huge market.

The pandemic has forced some breweries to close, and while COVID-19 has certainly pummeled the beer business, recent data from the Brewers Association shows many brewers are optimistic about their chances of survival. Operations that remained open the last few months found new ways to serve customers; others are now reopening alongside bars in some states.

Still, the crisis has forced breweries to completely reimagine operations. While bars and taprooms were forced to close, demand for beer remained through the darkest hours of lockdowns (plenty of socially distanced people still want to drink at home). Instead, the major disruptions were in distribution. According to Bart Watson of the Brewers Association, before the pandemic, 10 percent of an average American brewery’s output went into kegs, and that beer would go on to be sold on draft at bars, restaurants, and breweries’ own taprooms. For craft brewers, that number was much higher, nearly 40 percent, and they especially relied on in-house taprooms and brewpubs.

The rest went into off-premise sales like cans and bottles. But as on-premise sales dried up completely, brewers had to repackage their beer any way they could. “As soon as we closed, we decided any drop of liquid that can go in a can needs to go in a can,” Stylman says. While Threes had already been canning its beer for a few years, the shift required recalculating the brewery’s entire operation, costing time and money. “We just ordered a million different kinds of boxes to find the best one. We never did this before. We’re inventing a supply chain from nothing.”

Some breweries that were forced to pivot to repacking use growlers or crowlers, relatively affordable entries into packaging for many small breweries. Crowler machines or other manual can seamers only cost a few thousand dollars, but they’re labor intensive, they’re usually filled and sold directly from taprooms (not at retail), and their DIY packaging doesn’t provide the best shelf life. Other brewers that never canned before have partnered with mobile canning companies like Codi Manufacturing or Mobile Canning, some of which have provided discounts or donated labor to help the struggling industry keep afloat. A few brewers, unable to redirect their entire stock into packages, had to dump beer that couldn’t be moved.

Pivoting may be more difficult depending on how a brewery’s business was spread across sales channels before the pandemic. Brewmaster Ben Edmunds of Breakside Brewery in Portland, Oregon, for instance, says pre-COVID-19, the brewery put 70 percent of its beer in kegs. Shifting to packaging has “softened the blow, but hasn’t allowed us to grow back to where we were,” he says. “We’re operating at about 50 percent.”

Even as alarmist headlines declare Americans are drinking shocking amounts of alcohol at home, for many breweries, off-premise sales can’t make up for the loss of on-premise sales. Part of the trouble is that once the beer is in cans, breweries still have to find ways to get their products into drinkers’ hands.

Greater placement in mainstream grocery chains may seem like an attractive way to reach customers, but it’s an uphill battle. Chains typically refresh their lineups twice a year, in spring and fall. “Even though the total volume of packaged beer is up, the market for packaged beer has actually tightened. When there are such good sales going through grocery stores, they’re loath to add new items. They don’t need to,” Edmunds explains. “If you’re in there and you have those chain placements, things are going gangbuster right now. But if you don’t, it’s hard to crack into it.”

Luckily for small operations like Denver’s Lady Justice Brewing, a wave of localism has risen to support community brewers that may not have the ability (or interest) to access widespread distribution. Kate Power, Betsy Lay, and Jen Cuesta used a fundraiser to launch the one-barrel brewery as a philanthropic project in 2016. It was one of, if not the first to introduce membership beer sales to Colorado through its Community-Supported Beer (CSB) program. Customers paid ahead of time to provide funds to brew the beer, and all profits went to local organizations benefiting women and girls.

The trio grew into a new taproom in March, but when Denver locked down, they revived the CSB concept and immediately saw record demand. “People feel good when they buy our beer because they know it’s going to help their own communities. It’s a way to help people stay connected,” Lay says. “The neighborhood has really been investing in us.”

Beer delivery has also seen a huge jump, with 30.5 percent more breweries saying they are delivering beer locally, 3.8 percent newly partnering with third-party delivery platforms, and 4.8 percent adding direct-to-consumer shipping, according to the Brewers Association. Loosened alcohol delivery laws have allowed brewers to list products on services like Doordash and UberEats. Stylman, who has seen how restaurants have struggled with those platforms, says Threes launched direct-to-consumer delivery in-house in order to avoid fees, rehire furloughed taproom workers, and offer subscriptions for cases of its flagship beers.

Online beer retailer Tavour has also seen a bump in business. Once mostly a platform for craft geeks to drop big money on rare brews, lately Tavour has welcomed more casual customers who typically shop at brick-and-mortar retail. The online market usually adds seven new breweries a month, but 47 have joined since March. Megan Birch, director of marketing for Tavour, says about half of those entirely self-distributed before partnering with the service, and a handful only sold through their own taprooms. Big names like Mikkeller and cult brands like Parish Brewing have listed beers that may have never appeared on such a site under ordinary circumstances. “You’re definitely seeing breweries that never wanted to work with us because they never really needed to,” Birch says.

Even as brewers adapt to the new normal, new challenges appear all the time. In April, brewers worried about a shortage of CO2, a byproduct of ethanol production used to carbonate beer. Demand for ethanol, which is mixed with gasoline, dropped during the pandemic, and plants halted production. While plummeting ethanol sales didn’t end up harming breweries as much as expected, the episode illustrated how supply remains extremely vulnerable to global developments. More recently, with nearly every brewery transitioning to packaged beer, more pressure has fallen on supply chains for raw materials. “All of the glass suppliers, all of the label suppliers, all of the can suppliers in particular have seen increased lead time,” Edmunds says.

Looking ahead, as the nation officially experiences a recession, Edmunds expects financially cautious drinkers may dampen the explosive growth the craft industry has seen over the last decade, both in beer prices and product availability. “Five years ago the $16 six-pack was the outlier. Now it’s routine to see beers go for $20 or even $25 for a four-pack,” he says. “I don’t think we’ll see beer prices fall like crazy for your average six-pack, but more for that super-premium tier.” He also expects the market to curb “SKUmaggedon,” the proliferation of brands and niche releases. Both at retail and bars, Edmunds says, owners may eschew the constant churn of new products for surefire sellers. “Wholesalers but also retailers have wanted to have a reset on that, to go back to a more controlled method for getting beer out,” he adds.

The pandemic has also united breweries across regions to call for a reset on another aspect of distribution: local regulations that have limited or complicated alcohol delivery. The pandemic has inspired legislators in some areas to relax those rules temporarily, but changes could become permanent if brewers get their way.

“The temporary orders and the demonstrated ability of state regulators to enforce them have … shown that beer to go can be done responsibly,” Brewers Association president and CEO Bob Pease says. Consumer caution could choke on-premise sales for years to come; Pease emphasizes that responsible, flexible distribution will help save countless businesses and jobs. Long-term policy changes could provide a silver lining to the economic crisis.

The COVID-19 pandemic may last months or years, but it has also permanently changed how some brewers do business. “I was talking to another brewer who said, this is great, we’re selling stuff on our website, but we can’t wait until it goes back to the way things were. That is decidedly not our approach,” Stylman says. Digital sales and delivery will remain “connective tissue” for the brewery long into recovery.

That may be wise, as the pandemic could affect consumer demand for a long time to come. “There are a lot of people who have really gotten used to staying at home,” Birch says, “and when everything does open up, they’re not really going to want to go out. It’s so much easier to just get beer delivered to their house.”



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