Two thirds of Texas craft breweries say their businesses will not survive until the end of the year under their state’s current operating restrictions, according to a survey conducted by the Texas Craft Brewers Guild (TCBG).
“Texas has already seen craft breweries permanently close because of the pandemic and ensuing economic crisis,” TCBG executive director Charles Vallhonrat said in a press release. “The outlook from here is even worse.”
Last month, Texas Gov. Greg Abbott rolled back the reopening of bars in the Lone Star State, forcing all establishments that draw 51% or more of their sales from alcoholic beverages to close for onsite service. Abbott’s order included sales of beer to-go, as well as beer sold by distributing breweries to wholesalers, which forced many breweries to cease on-premise sales.
The ramifications have been vast. Faced with the closure of its brewpub, Houston-based Saint Arnold Brewing was forced to consider laying off 75 employees.
Without the ability to sell beer on-site and to-go sales not strong enough to make up the loss, Silber Brewing Company in Boerne, Texas, closed its doors for good last week.
“This is a tough time to be a craft brewery, especially a brand new craft brewery. Unfortunately, our to-go sales during both closures have not been enough to sustain us,” founders James and Hannah Silber wrote on social media. “After months of consideration, we have decided to close Silber Brewing Company. We simply do not have the resources to continue this journey.”
One third of survey respondents told the TCBG “they’ll be forced to close in the next three months without some change to the current shutdown or new economic relief options,” according to the release. TCBG noted that Silber Brewing is the sixth brewery in the state that has closed since the pandemic began.
“This is the real world consequence of playing politics and a casual indifference to shuttering one category of businesses while the rest of the state remains open,” TCBG wrote on social media. “This is not just the loss of a brewery, but a livelihood and a dream.”
Texas craft breweries have furloughed or laid off 36% of their staff on average, the survey found. Last year, Lone Star State breweries created more than 31,000 jobs and generated $5 billion in economic impact, according to TCBG.
Under Abbott’s June 26 executive order, restaurants and other licensed establishments that earn fewer than 51% of their gross receipts from the sale of alcoholic beverages can offer onsite dining at 50% capacity. Vallhonrat called that order unfair to breweries.
“His 51% executive order is crushing Texas breweries, and for no good reason,” Vallhonrat added in the release. “Before he inexplicably closed taprooms down for a second time, they were operating under the same health, safety and social distancing guidelines as restaurants and other businesses that the governor has allowed to remain open. We’re just asking for consistency and fairness.”
During the state’s first stay-at-home order, both restaurants and bars (which Texas considers most breweries to be) had to close for on-premise dining and drinking. That order ended April 30, and restaurants were permitted to open on May 1 for onsite dining at 25% capacity. Bars and breweries were permitted to open for on-premise service on May 22 at 25% occupancy; outdoor areas were not subject to capacity limits.
The June 26 bar shutdown allows breweries to sell beer to-go, but “many have reported a substantial decrease in traffic compared to the first shutdown, as this time customers looking to enjoy a beer can simply go down the street for a drink at a restaurant who is permitted to stay open instead,” TCBG said in the release.
Texas breweries have seen their revenue decline nearly 55% from last year, TCBG reported. One fifth of survey respondents said their revenue has declined by 80% or more.
The Lone Star state was the last in the nation to grant craft breweries the ability to sell beer to-go from their taprooms last September, which has been a tenuous lifeline since the pandemic began.
“Unfortunately, that business model is not sustainable for most breweries, large and small, with the smallest breweries impacted the most due to their dependence on their community-centric taproom model,” Josh Hare, TCBG board chair and founder of Austin-based Hops and Grain Brewing, said in the release. “It’s had a decimating effect on the industry. While restaurants and virtually every other type of business across the state remain open, small craft breweries find themselves struggling to survive and make their communities aware that they need their support now more than ever.”
Last year, Texas’ 341 craft breweries produced 1.18 million barrels of beer, which ranked the state eighth in the country by volume, according to not-for-profit trade group the Brewers Association. However, the Texas craft beer market remains underdeveloped relative to the state’s legal-drinking-age (LDA) population. Texas ranks 47th in breweries per capita and 33rd in gallons per LDA adult. The pandemic-related economic fallout could have lasting effects on the state’s beer industry.
To support its members, the TCBG is asking consumers to purchase beer to-go directly from breweries, select locally made beer when shopping at grocery stores, order locally made beer with takeout from restaurants, buy gift cards and merchandise from local craft breweries and share support for local breweries online by using #SaveTexasBreweries.
“Texans, if you want your local breweries to still be in business on the other side of this second shutdown, please continue to vote with your dollar and buy local, small and independent beer,’ Vallhonrat said.