For many small brewers, the current situation is not sustainable. Being a responsible business owner means scenario planning, but few if any build plans for a near complete drop in revenue with no insurance protection and continued bills to pay.
Percent Responding None, I am planning to close 2. As of writing, there are about 8, active breweries in the country. Update: A reminder that most small breweries are really small. Consequently, the breweries indicating they may need to close are by and large very small. The The brewers who responded to our survey stated they employed a collective 15, workers prior to COVID, with 8, full-time and 6, part-time workers.
The brewers surveyed have already laid off a majority of those workers. The table below shows the percentage of workers laid off by various metrics. Total is simply the percentage laid off. Recent government support has helped a small amount, but as others have pointed out, the PPP forgivable loans are not ideally designed for small hospitality businesses with little to no revenue coming in.
Percent Responding No Only We surveyed brewers about which provisions in recent packages they have used or plan to use. Specializing in sour, fruited and barrel-aged beers, which can take months to develop, that volume wasn't always there. Competition grew from both the arrival of new entrants and also acquisition moves by the multinational beer-makers.
We increasingly have depended on people who live in the area. The brewery's founders opted to close the business entirely and funnel all remaining sales to the brewery's seven employees. The curveball flung into operations forced brewers to scramble and get creative. The unexpected shift in operations created a bottleneck in the supply chain for to-go packaging.
Crowlers, the large aluminum cans that can typically hold two pints, are on back order. Brewers desperate to find ways of selling the beer that's sitting in tanks have flooded craft beer delivery site Tavour with calls, texts and emails, said Meghan Packard, vice president of the Seattle-area operation. Shifting gears.
Other brewers' resourcefulness turned into unanticipated business ventures. Yellowhammer Brewing, a year-old craft brewery and distillery in Huntsville, Alabama, repurposed its entire production line to make hand sanitizer.
The craft beer industry, with its youth and laidback attitude, is collaborative. Breweries work on beers together, use guest artists to design labels, and name their beers based on social media polls. Even brewers who have experienced the consequences of intellectual property disputes with other craft breweries may not fully grasp the severity of IP theft from a corporation. It seems JavaScript is either disabled or not supported by your browser.
Please enable your JavaScript in order to use the site in standard view. Simply put, master your business. Often brewery owners will discuss an expansion without a real plan. You should consider the profitability of the expansion and work through a detailed business plan and projections. Consider discussing your expansion with a specialized lender or business consultant to point out ideas to consider in your plan.
Now more than ever, we see tenured breweries close their doors or file for bankruptcy. Their finances may not have been healthy enough to expand, but they chose to do so because it seemed like a logical next step. However, many small hyper-local breweries conservatively expand to meet local capacity restraints and are three times more profitable than a larger brewery. If the expansion only leads to top-line growth and stunts or constrains bottom-line growth, then you need to rethink your plan.
Ninety percent of sales come from the taproom. Both were pushing the same volume, but the margins were night and day. Breweries are still thriving and growing, and for many, it is time to expand. If you are considering expansion whether the business is two years old or ten years old, an expansion plan and projections are a necessity.
Once you have crunched the numbers several times over, then you must understand the capital stack needed to achieve your goals. Business cash flow, debt, equity and crowdfunding are a few ways to source funds for a craft brewery expansion. Of course, there are folks out there who will write you a check with lots of zeros, but you must ask yourself if they bring added value to the business relationship. Also, make sure the investor is willing to back the business in good and bad times.
All too frequently, brewery owners are eager to start a business, but possess little financial literacy and promise a crazy and unrealistic rate of return. Additionally, not properly vetting investors is another big issue. Another common mistake, seemingly rampant in the past few years, is relying on crowdfunding portals.
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