The Brewer’s COVID Hangover: A Swig of the Pandemic Poison

Beer is considered a “vice” by governmental bodies at all levels. Yet this vice acts like a “normal good” in the face of economic downturn.

During the economic turbulence of the COVID pandemic, the large mass-produced domestic beer market got off reasonably unscathed, though not untouched by the market forced which they found themselves subject to.

According to the Beer Institute the industry lost 568,040 jobs, close to 22 billion dollars in wages, and close to 20 billion dollars in lost sales revenue.

These losses were felt most profoundly by independent micro-breweries. The beer industry finds itself in a place of onerous regulations during the best of times, when this recent conflagration occurred many smaller (micro) breweries were unable to stem the tide of costs associated with industrial regulation and COVID specific edicts.

These costly circumstances will cause a realignment of capital in the independent brewing space for possibly decades to come. Independent breweries were estimated to number in excess of 1100 in 2019 (we can extrapolate the population of hipsters in 2019 therefore to be in excess of 1100^3!). Current projections show the number of microbreweries set to survive 2021 to be around four hundred and sixty.

The Brewer’s Association released its 2019 output numbers and the contrast is jarring. In the pre-COVID environs of 2019, independent brewers had an astounding revenue of 29.3 billion, and perhaps more importantly, a 25.2% market share.

Bart Watson, chief economist of the Brewers Association, had this to say regarding the effects of COVID on the market space, “Although craft brewers entered 2020 on a solid foundation, the beer landscape is dramatically different today than it was just a few months ago. Breweries will be facing new realities due to the pandemic with extended closures, tight cash flow, societal shifts, and other economic variables in play” (Brewers Association, 2020).

By the end of 2020 craft and micro breweries saw their market share drop to just above 12% and a subsequent 22% drop in revenue to 22.2 billion. With some of the economic stimulus ending and more labor onerous labor laws set to take effect toward the end of this year, there is a widely held view that 2021 may prove to be even worse than its predecessor.

With all this said, for craft brewers, hope springs eternal.

“Humankind was built on beer. From the world’s first writing to its first laws, in rituals social, religious, and political, civilization is soaked in beer.”
–William Bostwick

Beer Institute. (2021). Industry insights.

Brewers Association. (2020). Brewers association releases annual growth report for 2019.

Radcliffe, B. (2021). Beeronomics: factors affecting your pint. Investopedia.

Snider. M. (2020). America’s craft beer boom may go flat as coronavirus shutdown slows brewery taps. USA Today.

One Reply to “The Brewer’s COVID Hangover: A Swig of the Pandemic Poison”

  1. I think one of the biggest impacts of Covid was that taprooms, which bring money into breweries more directly than distribution, were hit so hard. Additionally, many smaller breweries may have had to pivot from a draft-based model to a package-based model of sales, which has costly capital investments.

    It would be interesting to find more data on how breweries like 10 Barrel, Elysian, Lagunitas which are craft brands of larger companies like Anheuser-Busch & Heineken fared.

    From a hop farmer and beer enthusiast!

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