BC’s fledgling craft brewers cope with an industry crisis ranking alongside historic labour disputes and wartime

During the past decade, legislation allowing tasting lounges in BC breweries enabled a new “craft beer culture” to develop around the province. It was rooted in the value of these new rooms as community gathering places.

The sudden societal change in late March caused many breweries (along with the pubs and restaurants they have keg accounts with) to react with layoffs. There began a mass work stoppage of the sort seen before in the brewing industry only during labour disputes…back when the industry was populated exclusively by giants.

The current situation has also precipitated industrial rechannelling of the type formerly only associated with wartime, as some craft breweries and distilleries have switched gears partially or completely to the production of hand sanitizer and surgical masks.

These interruptions were horribly timed, occurring during the Spring ramp-up to what would normally be the busy season for breweries. But in a strange twist, just as brewhouses were shutting down, spiking demand on the retail side from stay-at-home drinkers obliged brewery management to instantly pivot toward a new business model based around takeout and delivery, not only in BC but continent-wide. Orders for equipment like ‘crowlers’ (for instant packaging of take-away beer) became impossible for manufacturers to keep up with.

The provincial government has identified food, liquor and cannabis businesses as essential services, encouraging them to continue operating. The Catch-22 is: the larger an operation is, the harder it is to pivot quickly to respond to these changes. But the smaller an operation is, the less likely it will be to have cash reserves to make payroll and weather an extended crisis.

The federal government has implored small businesses to retain their employees with promises of payroll support, albeit delayed, making for tough decisions for small business owners. But tough people are just the type that make up the membership of the BC Craft Brewers Guild, representing most of the amazing and talented breweries around BC that are so important to craft beer fans. We connected with Executive Director Ken Beattie to get his take on their current bewildering situation.

Q & A WITH KEN BEATTIE

Note that operations are ongoing at most BC breweries. However, we use the terms ‘interruption’ and ‘shutdown’ here to refer to the current drastic change in tasting room and dine-in operations. It’s clear that for smaller breweries whose primary revenue stream has been onsite traffic, their choice has been to adapt or shut down. 

What’s Brewing: There was a point only a couple of weeks ago when tasting rooms were still open, and the full extent of the coming shutdown hadn’t hit home.

How much of a shock was the speed of this interruption? How much of this did members foresee?

Ken Beattie: I think it is fair to say the speed with which the virus has changed our daily lives could not have been anticipated. We had first thought tasting rooms could remain open while strictly enforcing and maintaining social distancing requirements. When this changed, members quickly shifted their focus [to the new sales channels].

WB:  Yes, those moves have been supported in social networks by beer fans and media such as us. Meanwhile, the Guild has been busy collecting data from members about these changes.

Where are you at in terms of publishing your own online resource or tool, either on the Guild site or BC Ale Trail…or is it considered worthwhile given the temporary nature of this situation? What is your priority there?

KB: Our team has worked very hard on the following initiatives:

1. BC Craft Brewers Guild: Member profiles have been updated on the website to include “Temporary Business Operations” as supplied by breweries:
   bccraftbeer.com/our-breweries
2. BC Ale Trail website: Member profiles have been updated to include “Temporary Business Operations” as supplied by breweries:
   bcaletrail.ca/breweries
3. BC Ale Trail app: Member profiles have been updated to include “Temporary Business Operations” as supplied by breweries. Users can employ the new keyword search to find breweries offering “delivery” and “take out”.
   Apple | Android
4. Support for Cascadian Beer Podcast on their I Need BC Beer web page, by way of an info share:
   INeedBCBeer.ca

WB: Global News reports that liquor stores across B.C. are seeing record sales figures for this time of year. People are loading up on liquor for home consumption. Of course, not all of your members enjoy an equal degree of success in getting listings at retail.

Have you heard anything about a retail spike, and can you see any silver lining here?

KB: The Guild has been in daily communication with the BC Liquor Distribution Branch and ABLE BC (who represents the private retailers in BC). Thankfully we are considered an essential service and all members have been permitted to stay open if they want to. All reports indicate that during the last two weeks at government stores, volume has been more like December than March.

This trend is flattening as people are now confident that liquor will be available during the crisis. We are confident that the LDB warehouses are working at maximum capacity, and that to this point there have been no dramatic interruptions in the supply chain. If a brewery has multiple full time listings in government liquor stores, they will continue to see sales. The private stores also remain busy, so there is a silver lining for those brewers who have successfully built their distribution into that channel.

Members struggling most are those whose business model is hyper-local (customers in tasting room) or through accounts that only sell draught. Many have pivoted to home delivery and take-out to keep their business open, but this has come at the cost of laying off employees.

WB: Bob Pease of the Brewers Association has identified the US federal stimulus package as a “good first step” in dealing with this crisis. Meanwhile, the Canadian government has prepared an Economic Response Plan to provide relief to affected businesses. How much of it is now clear and solid? What kind of advice has the Guild been able to give its members so far about this?

KB: We send out nightly updates to members with information that is sourced from various organizations throughout the day, and store these resources on the Guild website. We will also be utilizing the recently-launched Canadian Craft Brewers Association national website (which has a federal focus). These programs are often announced with ‘details to follow’, sometimes a few days later. We encourage all members to wait until final details are are available for a full understanding of their impact on one’s business.

We are supportive of the federal and provincial governments’ efforts to help small businesses, and of the speed with which these programs are being developed compared to normal. We are confident these programs will benefit members moving forward. But we are all in uncharted waters here.

WB: What do you think the biggest challenge will be when it comes time for the industry to ease back into normal operations (which for all we know could happen during the height of summer, or during the slower fall and winter seasons). Which of the current workarounds do you think might linger, maybe turning into permanent changes?

KB: I am optimistic that when the curve flattens and we adjust to the new normal, the consumers of BC will return to and support their neighbourhood business owners. This will allow small businesses affected by the pandemic to recover from the closures or suspension of their location.

I think the move into home delivery and take-out will remain with members after the crisis. I also feel the BC consumer will have greater awareness of supporting locally-owned-and-operated BC based small businesses across all consumer categories. An awareness that these businesses play a crucial role in our economy will resonate with British Columbians, and influence their shopping decisions long after we begin to recover from the crisis.

In an exciting and much-needed initiative, the associations representing local craft breweries, wineries, cideries, distillers and refreshment beverages will be launching a collaborative awareness campaign called Time to Buy BC. You will see Time to Buy BC campaigns on social media and in stores shortly, and our hope is this will evolve into a full time awareness campaign to support locally-owned-and-produced products around the province during and after this crisis.

The challenge is: with so many people laid off, will consumers have money to go out and spend at community businesses? Many of the recovery plans are based on deferrals of monthly or yearly fees and taxes, not suspension of these payments. At some point, the small business owner will be responsible to pay back these deferrals. This will be the greatest challenge for many, who may not survive without more forgiving programs from all levels of government.

WB: There are ~200 breweries in BC. The Guild has a tricky role in encouraging further growth, because the ‘rising tide floats all boats’ concept may have its limits. How might the current experience inform your future thinking when responding to inquiries from potential new industry members?

KB: The Guild does not actively encourage or solicit new breweries. Our role is to act as a resource and streamline the process once the entrepreneur has decided to open the brewery. We provide members with education, perspective, access to industry resources and opportunities for collaboration with existing members which adds value to all.

WB: Although you can’t get specific about some of the unfortunate outcomes this shutdown will cause, can you confirm whether or not some of your members are actively exploring exit strategies as a result of it?

KB: I have not had any discussions with any members regarding breweries closing their doors permanently due to this crisis. I am encouraged by the tenacity, innovation and the fight I see from our members to open up new revenue streams and actively pursue opportunities that are keeping their doors open. The move to home delivery and the production of hand sanitizer are great examples of the resiliency of our members.

WB: What do you think your biggest takeaway from this experience will be?

KB: The level of engagement and collaboration that is taking place between our members, our government, the associations representing the beverage alcohol manufacturing industry, and the Liquor Control Board.

The Business Technical Advisory Panel, formed at the request of the Attorney General to review current liquor policies in Spring 2018, has remained together and has been critical to representing a collective voice to government and policy makers. Instead of each association approaching the government with member concerns and feedback, the BTAP team fields calls throughout the week to collect various issues, then presents these to the government as one. This allows government and the LDB to respond effectively and efficiently. Policy changes that would otherwise take months are being turned around in days. It is my hope that this positive momentum and transparent communication lines between industry and government is the legacy that remains from this crisis as we rebuild the industry.