Craft breweries fight for survival

Many seeing furloughs, sharp sales declines

Paul Albani-Burgio
palbaniburgio@coloradocommunitymedia.com
Posted 4/27/20

Since opening in Sheridan's River Point development west of South Santa Fe Drive in 2016, Dead Hippie Brewing has seen “continuous growth” in its revenues. However even by those standards, owner …

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Craft breweries fight for survival

Many seeing furloughs, sharp sales declines

Posted

Since opening in Sheridan's River Point development west of South Santa Fe Drive in 2016, Dead Hippie Brewing has seen “continuous growth” in its revenues. However even by those standards, owner Dean Edmundson said January and February had been two of the “most amazing” months of business in the brewery's existence.

But then came March, the COVID-19 epidemic and, eventually, Gov. Jared Polis' stay-at-home order. The result? A 60% drop in revenue that is creating a “very challenging situation” for the brewery, where Edmundson said he has remained committed to keeping on his six-person staff.

Now, Edmundson is left to hope that the staff can begin serving customers again in the brewery's taproom soon (for now only to-go sales are allowed) — and that those customers start coming back once they can do so.

"As long as we are opening back up around mid-May we should be OK,” Edmundson said. “If this goes to mid-July it's a different story, but I think we will probably still survive.”

Thousands could close nationwide

Edmundson's read on the situation and its impact seems to be a common one among brewers, both along the Front Range and around the country. On April 7, the Brewers Association, a trade group of approximately 5,400 small and independent brewers, released the results of a survey it had conducted of its member breweries about the impact COVID-19 was having on them.

The survey found that member breweries reported an average drop in revenue of 65%, with 62% of respondents reporting they could not sustain their breweries for longer than three months if current social distancing restrictions remain in place. There are 8,150 active breweries in the country, according to the data, meaning that 5,053 breweries could be in danger of closing across the nation in the next three months. So far, no breweries are known to have closed in Colorado, according to the Colorado Brewers Guild.

Government help uncertain

Chris Reigrut, the owner of Halfpenny Brewing Company in Centennial, said that his brewery's sales have declined by 70% and that the overall fate of his brewery will depend not only on how long social distancing measures remain in place but also what kind of assistance he is able to get from the government.

“We had our applications in for almost two weeks and we did not get money from the first round of the Paycheck Protection Program,” Reigrut said. “We are hoping we get some from the second round passed this week but it's looking tough.”

With the epidemic looming, Denver Beer Co. founder Charlie Berger said he “had to make quick decisions in order to conserve cash to be able to reopen the doors at the end of this.” So he made “drastic cuts” to the hours of the staff at his breweries in Denver's LoHi neighborhood and on Wadsworth Boulevard in Olde Town Arvada.

But the brewery also got creative and launched new virtual events, including a beer pairing series and a virtual Friday afternoon happy hour with guests ranging from Colorado Rockies pitcher Kyle Freeland to former governor and current Senate candidate John Hickenlooper.

“By doing some of these creative things we've driven some more interest and demand in our current beers, to the point where we have more hours for a staff and everybody who is wanting hours is getting them,” Berger said.

Despite that, overall sales are still way down from where they typically are and Berger said he is no longer sure about how fast the brewery will be able to proceed with a plan to build a third taproom on Downing Street in South Denver.

“I'm very nervous honestly that that is going to be a year to 18 months to get through this, and for those reasons I'm losing sleep,” Berger said. “We are not going to go out of business but we are going to be a super different thing based upon the way I'm reading the governor's plans to open up but maintain social distancing and the health authority's suggestions. It's nobody's fault, but it is going to take that long.”

Tickets help first responders

Golden's Holidaily Brewing Company, which furloughed employees at the start of the pandemic, has also seen sluggish sales. However, many of the customers that do come in are buying tickets for the brewery's Red For Med fundraiser, in which customers can buy $5 tickets which can then be exchanged for a free beer by first responders and those who have lost their jobs due to the pandemic.

“The response has been so great,” said owner Karen Hertz. “We actually need more people to come in and take some free beers.”

Still, Holidaily continues to take a big hit — particularly in distribution.

“Our beer is in Coors Field and Mile High and things like that, so with summer concerts and baseball not happening, that hurts our distribution real bad because that's a lot volume that we move through those accounts,” Hertz said.

Tristan Schmid, the marketing and events manager for the Colorado Brewers Guild, said many breweries have also been able to take advantage of Polis' decision to allow beer to be delivered during the crisis. However, he said breweries will also need to innovate and adapt in other ways to survive.

“We'd encourage them to be nimble, be able to pivot to opportunities they'd shied away from or outright avoided before,” he said. “But brewers are smart people, and they already know this.”

At Dead Hippie Brewing, Edmundson said he is now working to do just that.

“One thing this is forcing us to do is move into distribution and canning our beer, which is something I thought we were eight to 12 months way from,” he said. “Once we open up we might only be able to have 25 percent of our occupancy so something like distributing cans becomes real important.”

Ultimately, however, it will be up to customers to determine whether Dead Hippie and other breweries survive.

“Support your brewery, because if you want them to be around and be able to go hang out there again, they are going to need it,” Edmundson said.

COVID-19, Colorado

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