Even as New Yorkers delight in the idea of keeping to-go cocktails after the pandemic passes, master brewers, winemakers, and bar owners across the country are struggling.
As states instituted physical distancing policies and lockdowns, on-site beverage sales plummeted. According to a report by Nielsen, a global data and analytics firm, “the U.S. alcohol market needs to sustain 22% volume growth across all alcohol categories sold off premise in order to merely level off from the impact of closed bars and restaurants.”
In other words, in a time when consumers are spending less and businesses are operating at reduced capacity, companies need to increase sales to sustain pre-pandemic revenue. Thus far, increases in online sales have not been able to buoy demand.
Consumer spending on food services is about 60% of pre-pandemic levels, and according to a report by Bloomberg around 40% of adults plan on cutting back discretionary spending for the foreseeable future. The scenario has been described as “existential” for American breweries. “The current situation is not sustainable. Being a responsible business owner means scenario planning, but few if any build plans for a near complete drop in revenue,” according to a brewing industry impact report.
Bryan Olson, the owner of 8one8 Brewing in Canoga Park, California, described the struggles his brewery has faced throughout the state’s multiple shutdowns and called on the federal government to step in to ensure the economy could recover. “For the independent brewing industry, this economic fallout has hit us particularly hard and we are unsure of what the future holds for our brewery,” Olson said. “We need Congress to act quickly to minimize the economic fallout from COVID-19 and help us retain our staff, pay our rent, and adapt to new regulations and requirements. We need to get our country back up and running and we need Congress to think bigger and bolder solutions so we can keep our doors open and employees in their jobs.”
Elsewhere in California, Bill Wilson, the owner of Wilson Creek Winery, painted a similar picture. “California was one of the first in the nation to implement a state-wide shutdown, meaning our winery has been operating at a reduced capacity for longer than most,” he said. “While we have slowly begun to reopen, the process has caused a major disruption to our usual operations. Just like the wine we produce, coming back from this shutdown will take many months. We need big, bold congressional action to keep our doors open and our employees safely in their jobs.”
According to the National Association of American Wineries, it will take most wineries up to six months “to get fully back to pre-COVID normal in terms of operations” and 55% are experiencing unanticipated costs associated with reopening safely. Taken together, you have wineries which are not only attempting to make up for lost revenue, but also trying to cover additional expenses.
The size and scope of the problems facing the alcoholic beverage industry are too large for any single business or industry sector to handle on its own. Bart Watson, an economist with the Brewers Association, wrote in a recent report: “To truly recover, we need to solve (or at least contain) the public health issues, restore consumer confidence in reentering social life, not to mention repair the gaps in demand resulting from laid off workers and shuttered businesses.”
Repairing the gaps, as Watson puts it, will require additional support from Congress. Low consumer confidence and reduced spending will make achieving normal levels of business a drawn-out process. The alcohol industry – both its producers and its retailers like bars and restaurants – are suffering from economic losses that will be close to impossible to make up for in the short-term without additional fiscal support.