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What in the World! Beer in the time of Covid19

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28/4/2020
Ralph Bungard

Trying to predict what Hospitality and Craft Brewing will look like post pandemic is something (less usual) that is keeping Hospitality and brewery owners and staff awake into the wee small hours.

One thing we know for certain is that the industry is set to change; that change will be painful, and some businesses will not survive, but one certainty is that others will make it through and of those, some will thrive.

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“Their price cutting along with the popularity of the pseudo-craft ranges will almost certainly spill over to hard times for genuine craft brewers”

For the big boys, turning the taps off in bars will hurt. Cutting off the flow of draft beer will have a serious impact on production infrastructure as they move from keg to packaged products. As the big boys battle it out for market share in a shrunken market, price competition will be even more cutthroat than usual.

The big boys will do it tough, but they have dealt with reduced beer sales and increasing competition for several years now. They have the backing of multinational conglomerates who have hugely diverse portfolios. You can bet your last pandemic bag of flour that they won’t be going anywhere.

Their price cutting along with the popularity of the pseudo-craft ranges will almost certainly spill over to hard times for genuine craft brewers, and particularly those that play in the big sandpit of supermarkets and blanket distribution deals.

For the smaller independents, COVID-19 is certainly the stuff of which nightmares are made, but also the stuff where legends are built, and legacies cemented.

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“If there was a set formula that worked for all business, then it would not work for any!”

Over recent years, many small independents have begun to favour the Main Street Brewery model popular in North America. That’s where the brewery builds itself a brew-pub and takes advantage of the higher margins of retail in favour of the low margins of nation-wide distribution in an increasingly cluttered market. For many, packaged beer is not even an option and for most, draft beer to Hospitality and front-of-house is over – 100% over for now and a long slow recovery to come. Things may be even harder for those brewers who are set-up to service our once raging tourism industry.

Small and independent craft breweries are fighters, many are in the business because of a genuine passion for beer. Many will survive simply because they are “not for profit” and the reward of a beer on the home table and the “rock-star” treatment when down at the local bar is enough. Middle-sized and larger independent will do it extra hard. Being in that not boutique but not global is a difficult edged to walk at the best of times. They may have to rethink expansion plans and any desire to take over the world. It may be that shrinking becomes the new expanding.

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“With all that said, as well as being fighters, independent breweries are also innovative”

So, for those that do survive, which business model will prevail post-pandemic? I think Someone once said (and if they didn’t, I’m saying it now!) - If there was a set formula that worked for all business, then it would not work for any! Basically, every successful business needs a unique collection of tools to be a success and it is the innovation and flexibility innate in independent brewing that may be the root of those that succeed.

With all that said, as well as being fighters, independent breweries are also innovative – they have been at the cutting edge of almost everything that we now see as modern beer. Those that survive will invent, they will innovate, they will remake themselves to fit the market.

Craft beer is not going anywhere. It will survive.

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