It took a little over a decade for Los Angeles to transform its craft brewery landscape from virtually nonexistent to one of the most dynamic in America. But amid the novel coronavirus pandemic, LA’s tight-knit craft beer community, which was thriving just a few weeks ago, suddenly finds itself in peril.
“This pandemic is by far the most significantly challenging time our industry has ever seen,” said Frances Lopez, executive director of the Los Angeles County Brewers Guild.
Figures released yesterday by the California Craft Brewing Association (CCBA) reinforce Lopez’s dire proclamation. Since stay-at-home orders went into effect last month, breweries statewide averaged a 43 percent decline in overall sales while 29 percent of the workforce has been laid off and an additional 31 percent furloughed. The sobering statistics come from a survey conducted by the CCBA, with data provided by 230 breweries located across the Golden State.
California is currently home to approximately 1,040 craft breweries, the most in any state, but CCBA executive director Tom McCormick estimates that number will shrink by 15 to 20 percent in the coming months, with an additional 5 to 10 percent contraction by year’s end.
Though breweries, which have been deemed essential businesses in California, are permitted to keep the suds flowing, the absence of sales at taprooms, not to mention sales to venues such as restaurants, bars, clubs, and sports arenas, has the industry reeling.
Even with the increase in beer demand at big-box retailers, craft beer behemoths with a large national distribution footprint, like Chico-based Sierra Nevada Brewing Co., are unable to make up for the lost revenue. But according to McCormick, “[Breweries] at the end of the spectrum that depend mostly, if not exclusively, on their direct-to-consumer sales at the brewery are struggling the most.”
The news is particularly troubling for the Los Angeles craft beer scene, with several of the 100-plus breweries that call the county home falling into the smaller category of businesses that depend on direct-to-consumer sales.
“We made a very conscientious decision to be direct-to-consumer and focus on the freshness of our product and not have there be a middleman,” said Bob Kunz, owner of Highland Park Brewery. It’s a strategy that worked well for the award-winning brewer, who found increasing critical and financial success since opening the brewery’s Chinatown flagship in 2018. He spent the previous four years earning accolades while operating Highland Park Brewery out of the back of the Hermosillo bar on trendy York Boulevard. But over the last month, sales at Highland Park Brewery have dropped by nearly half. “Eighty percent of our business is draft beer,” Kunz lamented.
While the inability to sell pints at the taproom and distribute kegs represents a significant blow to a brewery’s bottom line, revenue generated by to-go sales of bottles, cans, growlers (large jugs that can be filled with tap offerings), and crowlers (the now-ubiquitous 32-ounce can version of the growler) is not insignificant. “That allows us to pay our employees,” said Brent Knapp, co-owner of Common Space Brewery in Hawthorne. “Something to help them get food on the table, to help them pay bills until these stimulus checks and unemployment benefits come.”
Though only two years old, Common Space was quickly establishing itself as a neighborhood destination and watering hole for locals and SpaceX employees in Hawthorne. Along with rapidly increasing onsite beer sales, the brewery was also finding huge success hosting private events — 20 were already confirmed for May. “We had so much momentum and so much excitement,” said Knapp. “And then at the beginning of March, we saw what was happening and were like, oh, there is a big wave coming that’s going to crush us.”
With two substantial revenue streams suddenly dry, the brewery needed to drastically change course. “We closed our taproom on Sunday [March 15],” said Knapp. “Even though all of our employees had just been furloughed, they built a beer delivery service overnight and launched it Monday. That has been a huge reason why we have a much better chance of surviving this thing.”
Common Space is one of several breweries that is now reliant on e-commerce platforms such as Toast and Upserve to move its beer. According to Matthew Garcia, owner of Pomona-based saison specialist Homage Brewing, collaboration has been vital. “Everybody’s sharing resources and ideas and different ways to just keep going and push through this. That was always happening within the LA beer community, but even more so now.”
Cans, which are sold onsite as well as through delivery via local drop-offs and statewide shipping, are now the lifeblood of Los Angeles breweries. Kunz suspects that without a canning line, which he purchased last year, Highland Park Brewery wouldn’t have a pulse. Through pick-up, delivery, and distribution to vendors such as Glendale Tap, the brewery was able to move 225 cases of cans last week.
While Los Angeles craft beer fans continue to be strong in their support of local breweries, it’s unclear how long the current business model is sustainable as social-distancing restrictions remain in place.
“In the beginning, our sales were doing really great, comparable to what we would be doing normally,” said Garcia, recounting the early days of the shutdown. “Then, after about two weeks, it started to trail off.” Kunz acknowledged a similar pattern. “It’s kind of a slow bleed,” he said, attributing the drop to a decline in disposable income coupled with an increase in fear of contracting COVID-19. It should be noted that local breweries have been steadfast when it comes to strict safety measures, from the use of masks and gloves to thorough growler sanitation and six-feet markers for pickup.
“At the end of the day, it all boils down to relief,” said Lopez. “The small-business grants and payment protection programs that have been put in place with the CARES Act only scratch the surface.”
Still, hope remains. Garcia, who was slated to launch Homage’s long-awaited Chinatown offshoot this month, plans to have the doors open soon after the current Los Angeles stay-at-home order, which is scheduled to be lifted May 15 (unless extended further).
“As long as our beer keeps selling, we’re staying optimistic and we’re keeping our foot on the gas pedal,” Garcia said. While Lopez sees a rough road ahead, she is convinced there is a path forward. “We are hoping to come out of this with the battle scars to prove that our community is resilient, and we are hoping our supporters continue to double down on our local businesses so that we can continue to bring jobs, community, and great beer to our region.”