Yes, they can

Craft breweries that used to depend on taproom traffic explore other packaging and distribution options to survive

by

Although the coronavirus created challenges for all small businesses, small craft breweries that depend on taproom traffic are among the hardest hit. While some of these breweries offered growlers or crowlers to-go before the pandemic, packaging beer for off-site consumption was never their primary business. And that’s a big problem.

“Instead of having a few beers out, people are now having a few beers at home,” says Mark Garthwaite, executive director of the Wisconsin Brewers Guild.  

Some local brewers who spoke with Isthmus say they are experiencing 50-70 percent lower gross revenues compared to the same time last year, making it difficult to pay rent, cover labor costs, and to purchase supplies and ingredients. One Madison brewpub, Rockhound, has already announced it is closing for good in November.

“It’s difficult everywhere you look, but the smaller breweries that depend upon high traffic through the door and do not distribute are especially vulnerable,” says Garthwaite. Among Dane County’s 26 breweries, half produce 1,000 barrels of beer or less, with no or very limited distribution beyond their own taprooms.  

While outdoor seating helped some smaller breweries through the summer, tougher times loom. Garthwaite is concerned. “Looking forward is a little daunting, especially because the winter is a normal slow time,” he says. To survive, these breweries are having to explore other avenues to package their beer and get it to the public. 

The Parched Eagle Brew Pub is Madison’s smallest brewery. It made just 91 barrels in 2019. Its ability to adjust is limited. 

“It’s been constant adaptations to try to get through this,” says brewmaster Jim Goronson.

The Parched Eagle brews on a small three-barrel system in the building’s basement. There’s no room for packaging equipment and barely enough space for a makeshift cooling room that chills the kegs for the upstairs taps. In the past, Goronson occasionally contract-brewed with Ale Asylum, but his limited cash flow doesn’t allow for that on a regular basis. So, the Parched Eagle is almost entirely reliant on patrons coming to its taproom.  

Since the coronavirus hit, the Parched Eagle has seen over-the-bar sales drop more than 25 percent. During the early part of the shutdown the brewery’s inside seating was closed and it survived with curbside pickup of bombers, crowlers and growlers. Since March neither Goronson nor his two bartenders made money other than from tips.  

In July the brewpub, located at 1444 E. Washington Ave., took advantage of Madison’s Streetery Program and created outside seating for about 20 patrons. It installed a small patio next to a loading dock. Now as colder weather sets in, the Parched Eagle will install a tent with heaters.

But Goronson knows there’s a limit to how inviting that will be in January and February. “I really don’t know what the hell is going to happen with us during the winter,” says Goronson.  

Even so, Goronson doesn’t see it as hopeless. The Parched Eagle has a small but very devoted group of regular drinkers, many of whom are mug club members, and they have supported the business. (Mug clubs usually involve paying an annual fee for the right to keep a special mug behind the bar, and members get special deals on beer throughout the year.) “They are passionate, and they really support us, they like beer. They understand the gravity of the situation.  And, they have been generous with their tips,” Goronson says. Given Parched Eagle’s limited ability to package for distribution, the brewery’s current focus is on offering a range of styles for patio patrons and takeout.

A number of breweries have turned to “pop-up” events to bring the beer to customers at a convenient and safe outdoor location. Madison’s Working Draft Beer Company and Young Blood Beer Company are among those organizing pop-ups in places like McPike Park, grocery stores, and brewery parking lots.

“We’re just trying to find ways to get our name out and talk to customers,” says Young Blood co-owner Tom Dufek. 

With indoor occupancy limited, tasting rooms are quiet or have been repurposed as staging areas for preparing to-go and pick-up orders, as at Working Draft.

“Contracting with a mobile canner is important for us while our taproom is closed,” says owner Ryan Browne. The brewery’s overall production is down 20 percent from pre-COVID levels. Much of Working Draft’s sales now come through online orders; customers come to the brewery to pick up beer at the taproom door, without going inside.

“Canning has become foundational in our ability to remain open, and it’s now how we are known to consumers,” says Browne. Before COVID-19, the brewery had produced only one run of cans; now the canner is coming in twice a month, Browne says. Working Draft is now offering more than 10 different beers in 16-ounce cans.

Canning is also important to Young Blood, so it has teamed up with Working Draft to share the mobile canner’s time. That’s also extended to brewing together. “COVID has really increased the collaboration among breweries because we’re all in the same boat and there’s shared anguish over it,” says Young Blood’s Dufek.

Even Madison’s venerable Great Dane sees a rocky future as the coronavirus continues.

Since opening in downtown Madison in 1994, The Great Dane Pub and Brewing has grown to four locations in Madison and one in Wausau. It is among the nation’s largest brewpub groups. Last year it employed approximately 500 people across all of its brewing and restaurant operations. Co-owner and brewmaster Rob LoBreglio says the Great Dane is down approximately 60 percent in gross revenue for 2020. Madison-area Great Danes have reduced staffing by 60 to 70 percent, cut back on employee hours and serving hours, and shifted the focus within brewery operations to rely on the Hilldale location for core beers while the downtown location is responsible for most seasonals and special releases. The Fitchburg location has dramatically reduced in-house brewing. (The eastside location doesn’t have its own brewhouse.)  

Since 2015 the Great Dane has been using a mobile canning service to package select brews in 12-ounce cans. Before COVID-19, packaged sales represented a small part of the brewpub’s overall business, says LoBreglio. Can sales add to the Great Dane’s visibility in grocery and liquor stores, but pale compared to past in-house beer sales and income generated by the Great Dane Duck Blind, the private party venue at the Madison Mallards' stadium at Warner Park. 

Now, says LoBreglio, “Canning has become more important to make up some of our losses.” The Great Dane recently changed its distributor to work with Frank Beer, in hopes of increasing sales in Milwaukee and the Fox Valley, where previously it had not done much distribution.

Despite all of the challenges, LoBreglio doesn’t currently foresee closing any locations but adds that could change as coronavirus cases continue and consumer confidence remains low. 

As if small breweries needed any more challenges, there is also a can shortage.

Even before the coronavirus hit, many small brewers were having trouble finding the aluminum cans they needed. With keg sales down, larger breweries immediately began shifting production to cans — and that shut out smaller breweries that did not already have a contract with suppliers. “If you’re a small brewer you’re likely at the bottom of the list of getting cans,” says Wisconsin Brewers Guild’s Garthwaite.  

“It’s terrible, there are no cans in the market,” says Isaac Showaki, owner of Octopi Brewing in Waunakee. Octopi specializes in making beer under contract for other breweries.  

While the current situation has created more business for Octopi and other contract brewers, the can shortage has been a limiting factor. “We are buying cans from anywhere we can get our hands on them,” says Showaki.

While several of Octopi’s larger brewery clients have their own can contracts, he’s asking new clients and small breweries to help look for their own cans. The result will be a backlog of some beer getting released, and higher prices at the store. 

Delta Beer Lab, which opened on Madison’s south side in 2019, recently accelerated plans to install its own canning line. “We really were not ready to start distributing to liquor stores, but we felt we had to move up our equipment installation by six to eight months,” says owner Tim (Pio) Piotrowski. “We needed more packaging options.”

To avoid the crunch, Piotrowski bought a six-month supply of cans. Piotrowski says he’s seen can prices being jacked up as much as 40 percent, and he’s also worried about larger regional breweries grabbing up cans and making it even tougher for smaller breweries without contracts to afford or find them.  

Piotrowski plans to step up distribution into Milwaukee and the Fox Valley. Despite being down in sales by 50 percent overall, Piotrowski estimates that about 70 percent of his current revenue is now coming from the sale of Delta’s beer in cans.

Some problems in getting CO2 have added another layer of stress for brewers. CO2 is a by-product of ethanol production, so as demands for fuel have fallen during the coronavirus, so has production of CO2. That has created periodic shortages of the gas, which brewers use to carbonate beer. 

Despite the supply issues and the dramatic downturn in business, Garthwaite says many in the industry remain optimistic. “It’s not all dire here. We have a strong beer culture in Wisconsin. We are attached to our breweries and love them.”