Q&A: Nevada Craft Brewers Association president on industry’s hazy future
RENO, Nev. — In early 2020, Matt Johnson and Jason Green, co-founders of IMBIB Custom Brews in Reno, were planning to invest in a canning line to meet the growing popularity of canned beer.
That idea, however, was crushed by COVID-19.
“Because of the uncertainty of the industry, we had to put that plan on hold,” said Johnson, noting that adding a canning line would cost between $50,000 and $100,000. “Even though it probably would have helped us sell a lot more beer, we just couldn’t risk spending the money on it with so much uncertainty.”
It’s a cruel irony for small brewers like IMBIB that had plans to roll out canning lines in 2020, considering that since the pandemic closed and slapped restrictions on restaurants and bars, the sale of pre-packaged canned beer has boomed.
With draft beer left untapped for most of late spring and early summer, beers bound for kegs were being canned and sold in record-breaking volumes. In fact, canned beer has made up 67% of total beer sales since COVID, according to the National Beer Wholesalers Association (NBWA).
For comparison, canned beer accounted for 60% of all beer sales in 2019, per the NBWA.
To take a closer look at how COVID is shaking up craft beer, the NNBW recently spoke with Johnson, who is also president of the Nevada Craft Brewers Association, about revenue impacts, industry trends and the outlook heading into the holidays and beyond.
Q: How has revenue for IMBIB been impacted by the pandemic?
Johnson: I think we’re probably down 40% of our normal revenue. A big part of that is due to the lack of distribution of beer. But, certainly, direct-to-consumer sales have fallen off as well.
Q: Have you added any revenue streams during this crisis?
Johnson: We just recently started doing direct-to-consumer shipping to a select few states. That model has a ton of potential, but the legality of it is a little bit gray for breweries, depending on which state you’re in. So, we haven’t been able to make it a huge priority.
Q: What’s the outlook for your business heading into the holidays?
Johnson: We’re optimistic. This tends to be our busiest season — October to March. If we’re able to stay open for regular business, I think we’ll be great. If not, and we have to move to a curbside model … it’s really tough to know. We’re preparing to potentially go curbside based on trends of positive case rates and hospitalization rates in Washoe County and throughout the state. We’re just assuming at some point, we’re going to have to shut our doors again.
Q: Pre-COVID, what kind of sales boost did you typically see during that October-March period?
Johnson: We generally are selling, on a weekly average, about a 20% increase in sales during those months. We didn’t expect that when we opened the brewery, but what we learned very quickly was that people in the warmer months would rather be outside than sitting inside having a beer. So, you actually see a little bit less foot traffic in a brewery during those warmer months.
Q: If bars are shut down and you have to rely on curbside pickup only again during your busy season, what’s the best-case scenario for sales?
Johnson: I think the best case would be that we hit about 70% of our normal revenue during those months. Because the to-go products tend to be cheaper and there’s less gratuity involved, that means our employees are not going to receive the tips they normally receive. I think 70% would be good, but it could certainly be less than that, as well.
Q: This year, has the industry faced supply chain issues during all of this?
Johnson: The brewing industry first faced a Co2 shortage. For a short time there, it was difficult to actually get a hold of Co2 in quantities that people needed. And that’s a big challenge for modern breweries — we’re dependent on Co2 for a lot of things. That didn’t impact us directly in a significant way, but there were a couple of cases where we had to wait a little longer than we wanted to get Co2.
And there’s been a nationwide can shortage as well, in part due to the demand for cans, because it went way up, and manufacturers were not prepared to supply. And I think also in part due to some of the tariffs that have been put on aluminum. Those two things combined created a challenge for breweries. So, we ran into a situation where we ran out of our “crowler” cans, which was our only real packaged product for curbside pickup. So we were desperately going to other breweries, trying to buy small quantities from them to keep enough cans in stock before we could actually order more.
Q: Do you see the demand for canned beer continuing to grow in the craft beer market?
Johnson: There’s no question that canned beer seems to be the most sought-after format. We’re expecting the demand for pre-packaged canned beer to continue so we’re actively working on how we can raise the capital and go down that path. Hopefully, next spring we may be able to start doing that in our own facility.
Q: In general, where do you see the craft brewing industry going from here?
Johnson: We didn’t see the mass brewery closures that had been predicted at the beginning of the pandemic. We’ve certainly seen breweries close and there’s been some examples locally, but not nearly what was projected. I actually think, unfortunately, come next year, we’re going to see more brewery closures, and probably some consolidation, where breweries are being bought up or are merging to try to stay alive.
Beyond that, I think it’s clear there are some new pathways for breweries, and that’s all about direct-to-consumer sales. Many states don’t have laws that address things like home delivery for shipping direct-to-consumer. Those have been things that have helped breweries around the country during this. I think that’s going to be critical for our survival going forward, in part because people see the convenience of that direct-to-consumer model. Some people would rather have a beer delivered to their door than have to go out and get it.
Editor’s Note: This interview has been lightly edited for length and clarity.
From a national standpoint, research shows the embrace of digital commerce is a whole decade ahead of schedule thanks to the pandemic. We spoke with the Retail Association of Nevada, Downtown Reno Partnership and the Reno+Sparks Chamber of Commerce to give local context to the growth of online retail.