The U.S. craft beer industry is on the verge of collapse, according to a survey by the U.S. Brewers Association (BA). Nearly two thirds of all breweries in the United States think their business cannot last three months given current conditions, suggesting nearly 5,000 of closings in the next months.
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 an unlikely swift end to social distance measures or rapid government support for small brewers and hospitality more broadly.
Not surprisingly, the breweries experienced the sharpest declines in draught beer sales and since most of the breweries depend heavily on the sale of their beers in brewpubs and restaurants, the majority of the 455 breweries that responded to the survey reported a drop in sales of more than 70 percent.
14% of the breweries believe that they can sustain their business with current costs, revenues and state and federal aid only up to one month, 46% believe they can survive for one to three months and 25% for three to six months, 9% six months to a year, and only 6% say they can stand the current situation for longer than one year. According to these figures, nearly 5,000 of the about 8.150 active breweries in the U.S. are likely to go out of business If the lockdown lasts for 3 months.
In a country like Italy, where the COVID-19 pandemic started earlier, government has started the lockdown of the country on March 9 and just extended it until early May, which means already a duration of the national quarantine of two months. So far, the situation in the US seems similar to that in Italy and it is likely that the spread of the virus in both countries will follow a similar pattern.
When asked, what has already helped brewers in the current situation 84% of all respondents mentioned forgivable loans, 56% emergency grants up to USD 10,000, 50% disaster loans, 47% increased unemployment provisions and 46% delayed payroll tax payment, amongst other measures.
When asked, what would help most in the future, 83% of the respondents asked for more direct grants for breweries and other hospitality businesses, 71% for permanent excise tax recalibration, 69% for spoiled beer tax credit, 51% for excise tax payment delays and 50% for additional market access in the brewery’s home state.
“These results suggest that the CARES Act [inside.beer, 30.3.2020] had value for small brewers, but simply didn’t go far enough to counterbalance the economic challenges they face while being closed,” the BA concludes its findings.