Coronavirus could force 80% of SC craft breweries to shut down in 3 months, owners say
The booming craft beer industry in South Carolina could collapse if the coronavirus pandemic lasts for three months, according to a survey of owners by the S.C. Brewers Guild.
The survey shows that 80% of the owners of the state’s 92 breweries and brew pubs would have to close if the pandemic forces the state to extend for another 90 days its order to keep bars and dining rooms closed. The survey showed that 15 percent of the owners said they could only survive for one to four weeks.
“The industry has almost ground to a halt at this point,” said Brook Bristow, the guild’s executive director.
Other results in the survey are equally grim:
▪ On average, sales from breweries and brewpubs are down by 70%, with about 45% showing sales declines of more than 80%.
▪ More than a third of all breweries have ceased production, with 60% drastically cutting back.
▪ About 70% of the breweries have been forced to lay off or furlough employees.
‘A knockout punch’
Like other restaurants and bars in the state, most craft breweries depend on on-premises sales for the majority of their business. And because so many are relatively new, owners with a heavy debt load and lean bank accounts are most susceptible to losing their businesses, said Bristow, a Charleston beverage attorney.
“In the first three or four years, you’re in debt trying to dig out,” he said. “Because the vast majority have opened in the last five or six years, many are not deep on cash reserves.”
Most of the 92 breweries and brewpubs in the Palmetto State are located in Greenville and Charleston. Columbia was a little late entering the craft beer game, but there are now 10 in the Midlands, according to the guild:
▪ In Richland County — Hunter Gatherer, The Hangar, Columbia Craft, Swamp Cabbage, Twisted Spur, CottonTown Brew Lab and River Rat.
▪ In Lexington County — Steel Hands, Angry Fish and Hazelwood.
Most small breweries — those that produce fewer than 1,000 barrels a year — don’t distribute in bottles and cans to grocery stores and other retail outlets that have been allowed to stay open, said Richard Strauss, owner of Columbia Craft Brewing Company in the Capital City.. They depend on taproom income and sales of kegs to restaurants and bars, which are not allowed to open under an executive order issued by Gov. Henry McMaster, he said
As a result, “ninety days is probably a knockout punch,” Strauss said.
Of the possible closure of 80 percent of the breweries, he said: “It would not come as a total surprise if those numbers aren’t right on.”
‘Going to be tough”
Columbia Craft on Pulaski Street has been open since 2017. It produced 1,500 barrels last year and was on pace to produce 3,000 to 4.000 barrels this year, Strauss said.
The coronavirus has taken a bite out of those projections, he said. But because the brewery has a robust bottling and distribution operation — distributing six-packs in Columbia, Greenville, Aiken and Augusta — and adequate cash reserves, the business should be able to hold on, he said..
“We’re OK,” he said. “We have a lot of boxes checked. We don’t feel perfect, but we’ve got some legs.”
One of the smaller breweries locally is Swamp Cabbage Brewing Company, located near Williams-Brice stadium.
Co-owner Doug Boyd said the road ahead “is going to be tough.”
The brewery, in its sixth year of operation, doesn’t bottle its beer, depending instead on taproom sales and kegs distribution to restaurants and bars.
“But we’re strictly family run and so we don’t have to make payroll,” he said. “We all have day jobs and our landlord is working with us.”
Breweries that will be in the most danger are the ones who already had slim profit margins or were just getting started, Boyd said.
“If you were already struggling before, you will be in big trouble,” he said.
The state’s newest brewery, Tidal Creek in Myrtle Beach, has delayed the opening of its The Market Common beer and coffee shop indefinitely, but may start curbside pickup, president Dara Sawczuk told the Sun News.
Boyd said the state allowing curbside pickup has helped, but he would like to see other initiatives, such as delivery or direct shipping.
Also, some states can sell growlers — jugs of draft beer — door-to-door from a truck, “like an ice cream truck,” he said.
One of Columbia’s newest breweries is CottonTown Brew Lab. Owner Zack Jones echoed the need for easing restrictions on getting their product directly to customers.
“I can tell you that SC breweries are fragile,” he said in a text. “Responsibly easing the tight restrictions on us getting our product to our customers is desperately needed.”
‘It’s asinine’
Mike Tourville, owner of River Rat on Shop Road, said that the state’s “antiquated, three-tier system” of distribution is hampering local breweries.
State law requires that local breweries use third-party distributors to get their products to market. Even in Columbia, he can’t directly deliver his beer to stores, bars and restaurants.
“We put our life savings in this and can’t distribute ourselves,” he said. “That’s why all the breweries are in trouble night now. (If they could distribute directly to retailers), the price comes down, we make more money, everybody wins.”
He noted that South Carolina residents can order beer, wine and even liquor online from other states, but not locally produced craft beer.
“It’s asinine,” he said.
The S.C. Brewers Guild has sent a letter to the S.C. Department of Revenue asking that the agency allow home delivery and direct shipment of products “in order to balance the needs of commerce with the promotion of public health and social distancing needs.”
At least twenty-six other states have already enacted such temporary emergency measures during the pandemic, the letter says.
It notes the state’s brewing industry last year had an economic impact of $796 million and supported roughly 5,000 jobs.
Bristow, the guild’s executive director, said “allowing these practices would ease the blow on commerce while promoting proper social distancing, self-isolation, and quarantine protocols by providing one more way to keeping people at home with their families while allowing the hospitality industry to better take care of theirs.“
In an email to The State, the revenue department said state law does not give the agency authority “to allow or license at-home deliveries of beer and wine.”
This story was originally published April 20, 2020 at 10:40 AM.