Survey finds Texas brewers losing more than 70% of revenue because of coronavirus

(Community Impact Newspaper staff)
(Community Impact Newspaper staff)

(Community Impact Newspaper staff)

As the craft beer industry continues to watch sales plummet due to closed taprooms, brewers in the Austin area and across the state are renewing calls for Gov. Greg Abbott to grant temporary waivers for shipping, delivery and tax relief.

According to a survey distributed and assembled by the Texas Craft Brewers Guild, craft breweries across the state have experienced an average 71% decline in revenue because of the coronavirus pandemic.

This comes after cities and counties in March prohibited gatherings of 10 or more people and ended all dine-in services. Abbott on March 19 issued an executive order mandating people cease eating inside restaurants and drinking inside bars.

“This situation is hurting craft breweries substantially,” said Charles Vallhonrat, executive director of the Texas Craft Brewers Guild. “A lot of people in the hospitality business are suffering during the economic impact of this crisis. We need to understand the implications for people to be able to get paychecks so they can survive and pay their rents and feed their families.”

A petition sent to Abbott by Texas Craft Brewers Guild that now shows more than 16,000 signatures asks the governor to temporarily waive restrictions on beer shipping and delivery.

The petition further asks for streamlined label approval for breweries and tax relief, including deferment of Texas Alcoholic Beverage Commission tax collections and tax credits for surplus beer that has to be dumped throughout the coronavirus pandemic.

The Texas Craft Brewers Guild’s survey shows 92% of respondents said that, if approved by the governor, they are at least somewhat likely to engage in shipping, delivery and expedited label approval to get products to the market.

Vallhonrat said these measures may help some breweries survive an economic crisis that is leaving some beermakers on the brink of survival.

“Given the feedback we have on the economic situation, we anticipate there will be breweries that will not be able to open their doors after this event is finished,” Vallhonrat said.

Beer delivery

Across the Austin area, many breweries have adjusted their sales models to sell six packs, crowlers and growlers at curbside stations. Regardless, local beer makers are taking a substantial hit on revenue, according to the Texas Craft Brewers Guild survey.

Numbers from the group show 67% of breweries that responded to its survey have reduced beer production. Further, 27% have temporarily stopped beer production or are managing current inventory.

National data shows taproom sales have become increasingly important to craft breweries in recent years.

As previously reported by Community Impact Newspaper, data from Nielsen, a data analytics company, shows retail craft beer sales were down 0.2% in 2018, a sharp decline from the 12.9% growth the industry enjoyed in 2015. However, craft beer sales were still up nationwide 3.9% in 2018, according to the Brewers Association, a nationwide craft beer trade organization. These figures suggest craft beer customers increasingly prefer to buy the product from the source.

“For our small, taproom-driven or farmhouse-driven breweries, something like shipping or delivery would be critical to them,” Vallhonrat said.

In North Austin, Celis Brewery founder Christine Celis said her company is now working at approximately 30% of its capacity.

“Luckily, we do sell beer to go and packaged beer to the distributor. That’s pretty much it,” Celis said.

Curbside beer delivery is available only because last year Abbott signed legislation into law that allows Texas breweries to sell beer to go out of their taprooms to customers.

The Texas Craft Brewers Guild asked Abbott in its petition to further expand its ability to deliver products to customers through delivery and shipping. According to the organization’s survey, those waivers enjoy overwhelming support from the brewing community.

Numbers show that 89% of respondents believe direct-to-consumer beer shipping is important, while 91% believe direct-to-consumer delivery is important.

Celis said the delivery option will allow her to increase workplace safety by limiting direct interaction with customers. The move, Celis said, would be beneficial to both the community and general public.

“People have to stay at home, so you want to minimize the exposure. If we can drop off the six pack or case at their doorstep—that’s it—we don’t even need to make contact with the person,” Celis said. “It would benefit the breweries, it would benefit the customers and, overall, the health impact of the community.”

Brewery tax relief

Texas brewers currently pay state and federal excise taxes on every barrel of beer that is produced. According to the TABC website, breweries can pay a tax rate of up to $6.138 per barrel.

The petition sent to Abbott requests a temporary suspension of these tax collections.

The Texas Craft Brewers Guild further requested in its petition tax credits for produced beer that has to be disposed of due to coronavirus-related sales decline.

Vallhonrat said the trade organization has not received many reports of brewers having to dump their products yet, but he fears that trend may not last.

“It is not terribly widespread, but it is certainly out there. We anticipate given how long the crisis lasts, that volume will go up,” Vallhonrat said.

Celis Brewery has not had to dump any of its brewed product, Celis told Community Impact Newspaper. Celis, who originally hails from Belgium, said she was checking the situation in Europe and was prepared for the slowdown in production.

“We’ve been really cautious on overproducing,” Celis said. “I had already heard about the virus overseas. The west was away behind the curve in being proactive. ... We were prepared by not overproducing.”

Brewing forecast

The Texas Craft Brewers Guild survey found 63% of responding breweries have had to lay off or furlough staff as a result of the economic effects of the coronavirus pandemic.

Celis said her brewery has so far only been forced to furlough one employee, but she fears that a prolonged economic shutdown may force her hand as production slows.

“As long as we can produce a little bit of beer, we’ll be good to go,” Celis said.

Some Texas breweries are already victims of the coronavirus pandemic’s economic downturn. According to the Texas Craft Brewers Guild’s survey, 14% of responding breweries have temporarily closed their facilities.

Abbott’s office and the Texas Craft Brewers Guild have not yet held extensive conversations over the proposed waivers, Vallhonrat said, though he said the governor’s staff has been responsive to the organization.

Vallhonrat said Texas breweries are waiting to progress the conversation with the state.

“They’re promising to get to us. Unfortunately, it hasn’t happened yet,” Vallhonrat said.
By Iain Oldman
Iain Oldman joined Community Impact Newspaper in 2017 after spending two years in Pittsburgh, Pa., where he covered Pittsburgh City Council. His byline has appeared in PublicSource, WESA-FM and Scranton-Times Tribune. Iain worked as the reporter for Community Impact Newspaper's flagship Round Rock/Pflugerville/Hutto edition and is now working as the editor for the Northwest Austin edition.


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