The Bar Towel

Fear on tap as COVID-19 chokes off small brewery sales

"Veteran industry observer and beer writer Jordan St. John predicts COVID-19 could break a significant portion of craft brewers. "I would say that you're probably looking at something like a quarter to a third of the craft brewing industry basically disappearing within the next three months, depending on how long the situation continues," he said."

S. St. Jeb wrote:Fear on tap as COVID-19 chokes off small brewery sales

"Veteran industry observer and beer writer Jordan St. John predicts COVID-19 could break a significant portion of craft brewers. "I would say that you're probably looking at something like a quarter to a third of the craft brewing industry basically disappearing within the next three months, depending on how long the situation continues," he said."

Yeah those financial fundamentals are really going to play out. Are some of these nice breweries and brew pubs paying huge rent, are they heavily extended or are they solvent?

Let's do what we can, that's the easy part - and I hope the rest of you are doing well, cheers.

Belgian wrote:

S. St. Jeb wrote:Fear on tap as COVID-19 chokes off small brewery sales

"Veteran industry observer and beer writer Jordan St. John predicts COVID-19 could break a significant portion of craft brewers. "I would say that you're probably looking at something like a quarter to a third of the craft brewing industry basically disappearing within the next three months, depending on how long the situation continues," he said."

Yeah those financial fundamentals are really going to play out. Are some of these nice breweries and brew pubs paying huge rent, are they heavily extended or are they solvent?

Let's do what we can, that's the easy part - and I hope the rest of you are doing well, cheers.

I see a lot of similarities with the restaurant (non-chain) industry in general, and obviously there is co-dependence.

Most craft breweries and restaurants are result of someone's passion, even if there are some money people behind them thinking it is a good bet.

Most are ultimately a positive contribution to a community, whether it be beers lovers benefiting from choice or lively neighborhood streets. Oh, and don't forget employment and skills development, opening an economic ladder etc.

Other similarities are probably general input costs (including energy) and possibly the debt taken on to build the facility whether brewing equipment or kitchen and chattels.

There are some differences to note.

Restaurants are very largely impacted by rent costs in our big cities. Even to the point of being victims of their own success. Help gentrify an area and then get run out. I'm not sure, but I'm guessing restaurants also have a higher relative labour cost as there are more customer facing roles.

Brewers likely have higher marketing costs which they might just cut back on for a while. They definitely have higher distribution costs (OK, yes scruber eats costs restaurants).

Of course some brewers are brewpubs, so all of the conditions apply.

What's my point? Well, some effort has been made to help restaurants mitigate rent challenges. Keep in mind these are temporary, many have been on the edge for a while and will likely go right back to that precarious place. Also many cannot take advantage of assistance for various reasons such as uncooperative landlords. One quick fix is to stop subsidizing property taxis on vacant commercial spaces. It's completely logical for a landlord to want to keep a good tenant and work things out instead of losing even reduced revenue. That is, until those stupid tax breaks kick in.

Labour cost solutions are being tried that will hopefully support both industries, we shall see.

Now for brewers, this is not new, but it is still their biggest cost challenge: distribution. Is this not the time to have the provincial government leverage the resources of LCBO to reduce distribution costs? Waive listing costs or obstacles? There must be so many levers that could be pulled to assist. I'm not an expert, just my observation.

Also, not to be nasty, as I said above, these businesses are someone's passion and employment, but on a purely quality basis, maybe some of the herd should be culled anyway.

Tapsucker wrote: ... Also, not to be nasty, as I said above, these businesses are someone's passion and employment, but on a purely quality basis, maybe some of the herd should be culled anyway.

Let us hope the best survive, there's some really good talent and hard work going into Ontario brewing such that the quality & range of brews we have didn't even exist 10-15 years ago. I don't even miss the American brewing scene and rarely think about going down there to shop & pay exorbitant border duties for these lovely goods.

I haven't even minded the notable Ontario craft beer retail and bar serving price climbs, because often the experience improved along with it. They are hitting it out of the park.
I'm constantly surprised what new beer or brewery I really enjoy. And brewers (and shockingly even brewpubs) have multiplied like rabbits, there are SO many that I was always concerned about the slightest downward economic pressure.

Belgian wrote:

Tapsucker wrote: ... Also, not to be nasty, as I said above, these businesses are someone's passion and employment, but on a purely quality basis, maybe some of the herd should be culled anyway.

Let us hope the best survive, there's some really good talent and hard work going into Ontario brewing such that the quality of brews we have didn't even exist 10-15 years ago. I don't even miss the American brewing scene and rarely think about going down there to shop & pay exorbitant border duties for these lovely goods.

I haven't even minded the notable Ontario craft beer retail and bar serving price climbs, because often the experience improved along with it. They are hitting it out of the park.
I'm constantly surprised what new beer or brewery I really enjoy. And brewers (and shockingly even brewpubs) have multiplied like rabbits, there are SO many that I was always concerned about the slightest downward economic pressure.

Excellent post.

Belgian wrote: Let us hope the best survive, there's some really good talent and hard work going into Ontario brewing such that the quality & range of brews we have didn't even exist 10-15 years ago.

Definitely agree with this. We have done an excellent job of catching up (more or less) to the great beer nations over the last 10 years, even though not too long ago, many us of didn't think that would be possible. And our brewers deserve enormous credit for that.

Belgian wrote: I don't even miss the American brewing scene and rarely think about going down there to shop & pay exorbitant border duties for these lovely goods.

I can tell you haven't been there in a while, as I haven't paid border duties in over a decade. If you have been recently, and paid "exorbitant" fees, you must have exceptionally bad luck.

Out of curiosity, which American brewing scenes besides Buffalo have you explored extensively in person to the extent that you can speak knowledgeably about them? Are we talking about San Diego, Portland, Minneapolis, Asheville, and Vermont? Personally, I think it's hard to generalize a complex and diverse nation of 330 million, and a bit ignorant – even ungrateful – to dismiss outright a country that birthed and perfected so many of the styles that we beer nerds love.

Indeed, it is one thing to acknowledge that Ontario's beer scene is pretty awesome nowadays (couldn't agree more). But it is an entirely different thing to imply that this progress renders America's heterogeneous beer scene irrelevant.

Anyway, I agree with your original, non-inflammatory statement that Ontario brewers have put an immense amount of work into dramatically improving our beer scene, and that the better ones should be rewarded for their work. I just don't understand why that has to devolve into comparisons with the States and fatuous America-bashing.

cratez wrote:

Belgian wrote: Let us hope the best survive, there's some really good talent and hard work going into Ontario brewing such that the quality & range of brews we have didn't even exist 10-15 years ago.

Definitely agree with this. We have done an excellent job of catching up (more or less) to the great beer nations over the last 10 years, even though not too long ago, many us of didn't think that would be possible. And our brewers deserve enormous credit for that.

Belgian wrote: I don't even miss the American brewing scene and rarely think about going down there to shop & pay exorbitant border duties for these lovely goods.

I can tell you haven't been there in a while, as I haven't paid border duties in over a decade. If you have been recently, and paid "exorbitant" fees, you must have exceptionally bad luck.

Out of curiosity, which American brewing scenes besides Buffalo have you explored extensively in person to the extent that you can speak knowledgeably about them? Are we talking about San Diego, Portland, Minneapolis, Asheville, and Vermont? Personally, I think it's hard to generalize a complex and diverse nation of 330 million, and a bit ignorant – even ungrateful – to dismiss outright a country that birthed and perfected so many of the styles that we beer nerds love.

Indeed, it is one thing to acknowledge that Ontario's beer scene is pretty awesome nowadays (couldn't agree more). But it is an entirely different thing to imply that this progress renders America's heterogeneous beer scene irrelevant.

Anyway, I agree with your original, non-inflammatory statement that Ontario brewers have put an immense amount of work into dramatically improving our beer scene, and that the better ones should be rewarded for their work. I just don't understand why that has to devolve into comparisons with the States and fatuous America-bashing.

Belgian obviously knows what he meant better, but I didn't read it that way at all. I wouldn't call it dismissal, but rather Ontario's beer scene has become so good it's negated the need to drive down to the US to get excellent beer. Which if you think about it isn't preferable to getting great beer locally, no matter how good the craft beer scene is down there (like Belgian touched on, the duties, along with cost of travel and nowadays our weak dollar). Personally I still love to try US craft when I get the chance, and respect that they paved the way for the beer scene we have now, but the improvement locally means that I don't go to the US anymore strictly for the purpose of buying beer.

I also don't mean to dismiss people who plan trips around brewery touring, I'd like to go on a Vermont brewery road trip one day myself, but I still think it's fair to say one doesn't miss getting US beer without it being derogatory or inflammatory towards US brewers.

seangm wrote: Belgian obviously knows what he meant better, but I didn't read it that way at all. I wouldn't call it dismissal, but rather Ontario's beer scene has become so good it's negated the need to drive down to the US to get excellent beer. Which if you think about it isn't preferable to getting great beer locally, no matter how good the craft beer scene is down there (like Belgian touched on, the duties, along with cost of travel and nowadays our weak dollar). Personally I still love to try US craft when I get the chance, and respect that they paved the way for the beer scene we have now, but the improvement locally means that I don't go to the US anymore strictly for the purpose of buying beer.

I also don't mean to dismiss people who plan trips around brewery touring, I'd like to go on a Vermont brewery road trip one day myself, but I still think it's fair to say one doesn't miss getting US beer without it being derogatory or inflammatory towards US brewers.

If we are talking about the fact that craft beer in Ontario has improved enough that we no longer "need" to make trips to border towns like Port Huron and Buffalo to access good beer, then of course I would agree with that. I too no longer make frequent trips to these places (haven't been to Buffalo since 2017, and Port Huron since 2018) due to an abundant supply of great beer from local breweries. This is an indicator of the substantial progress we've made since, say, 2009. And I'm thrilled to see it come about.

None of this negates the value of exploring the world class beer scenes in America's larger cities, and even smaller places like Grand Rapids, Asheville, Boulder, Vermont, etc., drinking beer fresh at its source. And Ontario is still a ways off from making the best beers globally (see the BA/RB/Untappd top beer lists if you have doubts), though I think we'll get there eventually. But yes, things have definitely advanced enough that I no longer feel the need to drive to Michigan or NY for good beer, and that is fantastic.

cratez wrote:

seangm wrote: Belgian obviously knows what he meant better, but I didn't read it that way at all. I wouldn't call it dismissal, but rather Ontario's beer scene has become so good it's negated the need to drive down to the US to get excellent beer. Which if you think about it isn't preferable to getting great beer locally, no matter how good the craft beer scene is down there (like Belgian touched on, the duties, along with cost of travel and nowadays our weak dollar). Personally I still love to try US craft when I get the chance, and respect that they paved the way for the beer scene we have now, but the improvement locally means that I don't go to the US anymore strictly for the purpose of buying beer.

I also don't mean to dismiss people who plan trips around brewery touring, I'd like to go on a Vermont brewery road trip one day myself, but I still think it's fair to say one doesn't miss getting US beer without it being derogatory or inflammatory towards US brewers.

If we are talking about the fact that craft beer in Ontario has improved enough that we no longer "need" to make trips to border towns like Port Huron and Buffalo to access good beer, then of course I would agree with that. I too no longer make frequent trips to these places (haven't been to Buffalo since 2017, and Port Huron since 2018) due to an abundant supply of great beer from local breweries. This is an indicator of the substantial progress we've made since, say, 2009. And I'm thrilled to see it come about.

None of this negates the value of exploring the world class beer scenes in America's larger cities, and even smaller places like Grand Rapids, Asheville, Boulder, Vermont, etc., drinking beer fresh at its source. And Ontario is still a ways off from making the best beers globally (see the BA/RB/Untappd top beer lists if you have doubts), though I think we'll get there eventually. But yes, things have definitely advanced enough that I no longer feel the need to drive to Michigan or NY for good beer, and that is fantastic.

I agree with all that, and having done a Grand Rapids long weekend a couple years ago, I would say the best US cities still outclass us to a degree. Perhaps our very best breweries could hold their own, but we have a lot of mediocre breweries too, so I'd say the median is much better places like GR or the bigger US cities.

Overseas for sure as well, for instance I've yet to find a locally made abbey-style beers that rival stuff coming from the Trappists. Luckily the LCBO and importers like Keep6 bring in a fair bit of the good stuff, but no doubt there are still gaps here.

I dunno, I was in New York earlier this year and I definitely had some pretty mediocre at best beers from local breweries while I was there. Obviously I had plenty of outstanding beer too, but I'm not really sure where the median lies. The selection up here and down there is now such that I rarely have to drink an average beer if I don't feel like it. Even chain restaurants normally have good stuff on tap now.

That said, one thing I will say is that while I might be prepared to consider the Ontario brewing scene equivalent to that of one of the States, I haven't really thought about it to be honest so I'm not sure where I would land on that, I think we still lag behind them badly in selection because we get so few imports in Ontario. A good beer bar in the US will have stuff not only from the local state and surrounding ones, but also things from top brewers across the US and the world. We pretty much get Ontario here, plus the occasional thing from outside.

Craig wrote:I dunno, I was in New York earlier this year and I definitely had some pretty mediocre at best beers from local breweries while I was there. Obviously I had plenty of outstanding beer too, but I'm not really sure where the median lies. The selection up here and down there is now such that I rarely have to drink an average beer if I don't feel like it. Even chain restaurants normally have good stuff on tap now.

That said, one thing I will say is that while I might be prepared to consider the Ontario brewing scene equivalent to that of one of the States, I haven't really thought about it to be honest so I'm not sure where I would land on that, I think we still lag behind them badly in selection because we get so few imports in Ontario. A good beer bar in the US will have stuff not only from the local state and surrounding ones, but also things from top brewers across the US and the world. We pretty much get Ontario here, plus the occasional thing from outside.

this is a very valid point, even though our breweries here in Ontario have stepped up, the retail and importing laws still prevent us from having it as good as we could

I'd like to clarify, when I suggested culling the herd, it was by no means a slight on the many great breweries we now get to enjoy in Ontario. I totally agree with Belgian that we are now in an era where we no longer need to shop abroad out of desperation for quality. Although, we should still keep our eyes open for interesting things happening in other parts of the world. I'm glad Ontario brewers are producing great stuff, but beer is regional, so seeing what else is out there is also part of the joy of this.

For the record, before the whole word became a sci-fi plot, I spent a lot of time on the west coast (Bay Area to Vancouver) and in Montreal. I had the pleasure of enjoying an amazing array of great beer. Are our local brewers competitive? Absolutely. Are there breweries in those other places whose product is mediocre and I won't want again? Absolutely, just like there are some mediocre breweries in Ontario.

My comment was intended to encourage us to double down and support our friends in this business doing outstanding work. However, with the volume of players in our market, we are bound to, and have had, entrants also making mediocre product and they may be culled by the nature of the market.

One thing that impacts quality and diversity of beer is price. I once heard a statistic that Canada is second to Norway with the highest alcohol taxes in the world. The US is relatively low in comparison for alcohol taxes.

On the other hand, in Ontario specifically, we have bulk buying benefits, since the LCBO is the largest retailer of alcohol in the world. This tends to drive prices down a little. More importantly, the expensive high quality stuff seems to be marked up the same percentage as the cheap stuff. The LCBO has little incentive to gouge consumers for all they can on premium products.

Put these facts together, and you have an environment in the US where cheap beer is more inexpensive than in Canada, and expensive beer is often slightly cheaper in Canada than the US, despite our much higher taxes.

Consequently, the price differential between mainstream and craft beer is much smaller in Canada compared to USA. This has an affect of making craft beer more accessible to Canadians than Americans. This may explain why there appears to be more mediocre beers in Canada than the US, even though Ontario and Canada can produce some amazing beers. I too have noticed the dramatic increase in choice and quality of beer in recent years in Ontario.

I do agree that privately owned monopolies like Brewer's Retail and the Wine Store impede progress in craft brewing and wineries, and for that reason I would like to see Ontario proceed with opening up the market. Overall, it is a complex issue with many factors to consider.

cratez wrote:Out of curiosity, which American brewing scenes besides Buffalo have you explored extensively in person to the extent that you can speak knowledgeably about them? Are we talking about San Diego, Portland, Minneapolis, Asheville, and Vermont? Personally, I think it's hard to generalize a complex and diverse nation of 330 million, and a bit ignorant – even ungrateful – to dismiss outright a country that birthed and perfected so many of the styles that we beer nerds love.

Indeed, it is one thing to acknowledge that Ontario's beer scene is pretty awesome nowadays (couldn't agree more). But it is an entirely different thing to imply that this progress renders America's heterogeneous beer scene irrelevant.

Anyway, I agree with your original, non-inflammatory statement...

I wasn't being inflammatory, I speak from my no doubt limited experience that for good reasons I just don't covet USA (NYC, Buffalo) beers anymore (but I would gladly accept a few if anyone wants to share - I know dang well that the USA revolutionized craft beer, even if we mostly can't buy the stuff here because those in the industry hate dealing with the LCBO.)

Appreciate your comments as always. Be kind, wash your hands & drink responsibly (well... by BT standards.)

BartOwl wrote: More importantly, the expensive high quality stuff seems to be marked up the same percentage as the cheap stuff. The LCBO has little incentive to gouge consumers for all they can on premium products.

Put these facts together, and you have an environment in the US where cheap beer is more inexpensive than in Canada, and expensive beer is often slightly cheaper in Canada than the US, despite our much higher taxes.

As I understand, Canadian alcohol taxes are based on volume of alcohol, not the value of the alcohol. A 750 ML bottle at %40 alcohol has the same tax on it whether or not it's a premium whiskey or a utility grade vodka. Now the additional HST is value based, but that's a small part of the tax pie.

Many US jurisdictions do this differently, though I have never looked at the specific math. Usually when I'm in the US I'm buying in bars, which have their own pricing decisions, and not retail where I can compare.

On a related note, B.C. and Quebec retail policy really annoys me in that the listed prices don't include all taxes. You see something on the shelf, usually already at a higher price than you would in Ontario, and at the checkout, find out it's even more expensive. If you like Fat Tug, it's a bargain in Ontario.