In many states, bars and restaurants were among the first businesses forced to alter their operations to keep people from gathering in large groups. Since then, shutdowns have expanded to other non-essential businesses, such as hair and nail salons, clothing stores and gyms.
The beer industry has been deemed essential under guidelines from the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA), something the heads of beer trade associations worked to secure.
“For the first two weeks or so, one of the things that we were all working on together was the whole notion of making sure that the regular — at least the off-premise — channels were serviced, and that means getting our industry included as what was defined as essential,” National Beer Wholesalers Association (NBWA) president and CEO Craig Purser said during last week’s Brewbound Brew Talks Virtual event.
The essential business designation has enabled breweries nationwide to remain open and sell beer to-go from taprooms and into the three-tier system. However, the loss of on-premise service, at least for the country’s nearly 6,000 brewpub and taproom brewers, has been “in a word, devastating,” Brewers Association (BA) president and CEO Bob Pease added.
“If this goes two months, four months, six months, then there’s going to be a significant toll,” he said.
Beer’s designation as a food product keeps it an essential item in both manufacturing and retail. The BA is “obviously fully supportive,” Pease wrote in an email to Brewbound.
“This makes complete sense: 1. Beer plays a critical role in the financial viability of grocery and other retail; 2. This is not the time to pick winners and losers among foods (if beer is not essential, what about chocolate, salty snacks, sugary soft drinks, etc.?); and 3. If beer becomes unavailable, we’ll see a new black market develop quickly,” Pease wrote.
In Mexico, the federal government declared the beer industry non-essential on March 31 and ordered all operations to cease through the end of April. Anheuser-Busch InBev’s Grupo Modelo and Heineken N.V. both announced they would suspend their operations in compliance. However, Constellation Brands, which produces and sells Corona, Modelo and Pacifico for the U.S. market, announced it would not cease production but would follow all social-distancing guidelines at its breweries, such as checking employees’ temperatures upon arrival and staggering shifts.
In the U.S., states have taken different approaches. Pennsylvania Gov. Tom Wolf ordered that all “non-life-sustaining businesses” close their physical locations on March 21. Breweries and other beverage manufacturing companies were considered life-sustaining and permitted to remain open. Wine and liquor stores, which are state-owned, were forced to close, but beer distributors, which sell directly to consumers in the state, were permitted to remain open.
Nevada Gov. Steve Sisolak set guidelines on March 12 outlining which businesses were essential and which were not, but breweries, wineries, pubs and bars fell on the non-essential side of the line.
Brewpubs with full kitchens can continue to operate for takeout or delivery only, but only a quarter of Nevada’s craft breweries serve full menus, Nevada Craft Brewers Association president Matt Johnson told Brewbound.
“We understand that the governor had to make a tough decision,” he said. “We hope that he will look at how other states have treated our industry so that we get people back to work as soon as possible.”
Johnson estimated that the state’s craft beer industry employs about 5,000 people. He is also the co-founder IMBĪB, which has brewery and taproom locations in Reno and Sparks, Nevada. IMBĪB’s locations operate with snack bar licenses, so they are not included as essential businesses.
Nevada breweries, however, are permitted to keep brewing and selling beer for distribution. The state’s liquor stores are non-essential and closed, but grocery stores sell beer. Johnson said that craft breweries can offer safe locations for beer purchasing to cull crowds at grocery stores.
“We know that alcohol sales at grocery stores have increased significantly during this time, and so we think we can actually help spread people out if we were able to stay open and do safe curbside or home delivery, rather than funneling people into a grocery store,” he said.
The state’s craft beer industry is relatively underdeveloped, compared to the rest of the country. In 2018, the most recent year for which BA data is available, Nevada’s then 43 breweries produced 71,869 barrels, which ranked 40th nationally. Self-distribution is not an option, so Nevada craft breweries rely on distributors and must compete with out-of-state brands for attention. All this has left Silver State craft brewers without political capital.
The Nevada Craft Brewers Association, which has an all-volunteer board of directors, plans to restart conversation with the state government about its members’ non-essential business status, Johnson said.
“We could be keeping people working right now, rather than having more people going on unemployment, and we could do it safely,” he said.
The BA has counseled guilds in states where local governments have hampered brewers’ operating ability, such as in Nevada and in New Jersey, where breweries were briefly barred from making home deliveries. In these situations, the BA leans on CISA’s essential business definition.
“The Homeland Security guidance was extremely helpful to our cause here and was shared with state guilds for their use in situations where states needed persuading,” Pease wrote.
Pease pointed to an instance in Denver where a local government order would have forced breweries and other alcoholic beverage retailers to close. In a panic, shoppers flocked to stores to stock up, violating social distancing norms and proving that people very much want to buy beer in these times.
“While brewers clearly qualify as essential within the context of the current pandemic from a governmental/regulatory perspective, they also continue to play an important role in holding communities together and providing a semblance of normalcy in very uncertain times,” Pease wrote.