Craft brewers are optimistic for 2022, with 76% expecting sales growth this year, according to a survey by Arryved POS.
Arryved CEO Loren Bendele presented the survey results during a virtual Collab Hour webinar for the Brewers Association (BA) Thursday.
Conducted last month, the survey sought responses from 300 brewery workers including front-of-house staff, brewers, sales and marketing team members and brewery owners. Some, but not all, were Arryved customers. Respondents were primarily from smaller breweries. The majority (61%) generated up to $1 million in annual revenue in 2021, 37% generated between $1 and $5 million, and 2% generated more than $5 million.
For those expecting sales growth this year, Bendele divided opportunity areas into three categories: on-premise sales, distribution and operations.
More than four-out-of-five respondents (84%) said taproom sales were the most profitable channel, “not just on a profit margin, but also generating the most profit for the brewery as a whole.”
“In the new normal made up of Zoom dates and grocery shopping by Amazon, this was somewhat of a surprise to us,” he continued. “But then we stopped and realized, people just love community, and drinking your favorite beer is great at home, but nothing beats hanging out in a taproom, socializing.”
Bendele credited two COVID-19-related adaptations for taproom sales growth.
The first was the addition of food sales, which some breweries brought on in 2020 and 2021 in response to COVID-19 regulations. Nearly half of respondents (45%) said they sell food at their taprooms, while 11% plan to in the future, including with their own in-house kitchens, or with food truck partnerships.
While food “isn’t the most profitable thing,” Bendele said the offerings help to keep people on-site longer, which could result in consumers buying one or two more beers during their visit.
The second was the use of QR codes. While many on-premise establishments adopted QR codes in place of physical menus at the start of the pandemic, the technology can also be used for at-the-table ordering and payments.
“We’ve definitely seen a lift through the data on our side with people buying more beer when they have the ability to order from their phone,” Bendele said. “We’ve seen revenue go up about an extra beer a person and then also tips going up for servers as well.”
Not only are tips higher from larger bill totals, but Bendele said tip percentages when paying at the table increase as well, due to the faster checkout process, as well as the ability to prompt higher tip amounts.
For those concerned that the virtual option takes away from the consumer experience, Bendele said it is important to distinguish between “hospitality and service.”
“Even if you’re using guest ordering and paying through the phone, we definitely don’t suggest you skimp out on the hospitality,” he said. “You still want to have servers that give people the option to order from the server directly. And, if nothing else, talk to your servers and have them be more like beer sommeliers and food sommeliers, engaging with guests on a human basis and not keeping people on their phones all the time.”
More than a third of respondents (38%) said they plan to continue to experiment with taproom engagement in 2022. Ways to do so include QR codes, as well as adding table service on the weekend, large group experiential options (such as food and beverage tastings), sales contests for staff, renting out taproom space for events and “stepping away from the sports bar atmosphere and focusing more on a beer atmosphere.”
While taprooms were reportedly the most profitable sales channel, there are limitations – including capacity, geography and hour constraints – which Bendele noted is why breweries still expect to expand their distribution footprints this year.
More than half of survey respondents (55%) said they use a distribution partner, while 44.8% self-distribute. As a brewery’s annual revenue increases, they are more likely to use a distribution partner, as just over half of respondents with an annual revenue of $1 million or less self-distributed last year, compared to those with an annual revenue of $1-$2 million (around 35% self-distributed) and $2-$5 million (less than 25%). No respondent with a reported annual revenue more than $5 million self-distributed.
“If you want to get to the higher numbers in revenue at some point you pretty much have to use the distributor,” Bendele said. “[And] what’s the most important is developing your relationship with your distributor and treating them as your salesforce and getting close to them and understanding what works for them.
“Don’t treat them as just someone that’s just handling that piece for you,” he continued. “By far the people that are most successful with distribution treat it like that. It’s a partnership. They’re selling other beer as well, so how can you make them more successful with your beer?”
To increase operational efficiencies for brewery growth this year, 73% of respondents said they plan to invest in technology. The majority of respondents (around 90%) said they would invest in a POS software this year, followed by accounting software (70%), marketing software (55%), inventory software (50%), production software (40%) and e-commerce technology (25%). Less than a quarter of respondents also included HR software and reservation software.
For the quarter of respondents (27%) that reported they will not invest in technology this year, Bendele explained that while some said they lack the money for an investment, or the need for resources in other areas, the majority “already invested substantially in the necessary tech in 2021.”
“Maximizing efficiency within your brewery through technology [is] a long-term solution to running a better brewery,” Bendele said. “Especially for a team wearing multiple hats or on a tight budget.”