Coronavirus Diaries (4/10): The Start of the Long Slog
In this ongoing series, I have been posting the reflections of brewers and cidermakers as they deal with the unfolding COVID-19 coronavirus. Below are reflections from Lisa Allen of Heater Allen, Van Havig of Gigantic, Adam Milne of Old Town, Ben Parsons of Baerlic, Matt Van Wyk of Alesong, and Nat West of Reverend Nat's Hard Cider.
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As usual, I am going to turn this over to the brewers and cidermakers. As you can tell, I’ve been soliciting them less often as we enter the long-slog phase of this crisis. Expect updates to come about every couple weeks from here until … well, that’s really the million-dollar question isn’t it?
Government Support
According to estimates, the economy is going to decline 25-40% this quarter, and governments at the state and federal level are trying to offer help. Brewers have had mixed success accessing this.
Adam Milne, Old Town Brewing: “Trying to get a Payment Protection Program loan has been a complete nightmare. We have loans and accounts with Wells Fargo and US Bank. I had been in touch with both banks weeks prior trying to be as prepared as humanly possible. The Treasury Secretary had announced the loan would go live Friday, April 3. So I stayed up until midnight Thursday with no luck. I set the alarm for 4am Friday and spent the entire day hitting the refresh button on both banks’ websites, contacting every other bank I could, and searching the internet for any information I could find.”
“There was no prioritization or focus on who would be getting these loans. It was simply first-come-first-served and if you luckily were with the right bank. The entire launch seemed like Black Friday at Best Buy. After waking up at 4am Saturday, there was still no news. I had already been rejected by a few other banks because I didn’t have a current banking relationship with them. As I type this, we are still awaiting news from our two current banks. While we were able to apply Saturday afternoon at US Bank’s online initial in-take form, we aren’t sure when we will be contacted to complete the rest of the loan application. Our company and employee’s future is in the hands of these big banks. The powerless feeling and gravity of not getting the loan has been incredibly unsettling.”
Photo: Huck Bales
Van Havig, Gigantic Brewing: We just got approved to be on the Workshare program, in which Oregon Unemployment Insurance covers 20%-40% of my employee's time. That allows me to keep my brewers and office people three days a week. The benefit to them is that they get more income at 60% full pay and 40% unemployment than they would on 100% unemployment—and they get to get out of the house three days a week. For Gigantic, it means that Ben and I won't have to deliver beer six days a week, plus get everything else done around here. We may even be able to increase delivery a little bit. The State benefits by reducing its unemployment expenditures on Gigantic by 60%. It's a win-win-win. It's definitely more expense for us than furloughing everyone, but with the success of delivery, we can pass that extra revenue along to our employees. If sales continue as they are, we can scrape by without spending reserves. And that would be a major victory as far as I'm concerned.”
Ben Parsons, Baerlic Brewing: “I have applied for lines of credit, SBA Disaster Loans, deferments, skip pays, loss of business insurance claims, PPP Loans, Prosper Portland grants, and SBA disaster grants over the last few weeks. I have yet to receive a response to a majority of it. Of those I have gotten a response, the answer was no. My insurance claim was denied. My Small business grant was denied. I guess there are enough other businesses more f***ed than me.”
Ben Parsons (PHOTO: Mark Graves/Oregonian)
The SBA Paycheck Protection Loan/Grant/WTF?—our biggest Hail Mary from the federal government—has the best ability to help us and our furloughed employees. But it is riddled with chaos, uncertainty and some unidentified easter eggs that worry me. If approved, we can borrow up to 2.5 times our monthly payroll and use it for lease payments, payroll and utilities. Some or all of the loan will be forgiven if we can retain all employees over the 8 weeks after receiving the loan. But, how do I retain employees when I can't operate my retail taprooms due to a government mandated shutdown? I could just pay my furloughed front-of-house employees for not working, right? But what do I tell my employees that are still working? Some employees have to work for their money and others don't? And if I fumble any of the nuances of the fine print that isn't even written yet, then I have to pay it all back in 2 years with interest. The very idea that the this bill was penned to help those hardest hit from this is a f***ing joke.”
“This will not help my employees. Under Oregon unemployment, furloughed employees make a percentage of their total wages including tips. My payroll doesn't include tips, so therefore the loan doesn't factor in tips. So I either pay my furloughed employees more than their hourly—which I cannot afford to do—or pay them less than what their unemployment is currently.”
“This will not help my business. It will help businesses that are far less affected than businesses like ours. I would guess that companies that are not currently affected—but fear that they may be in the coming months—will attack these loans so as to get some free cash infusion into their businesses for future use. If they actually need it in the future.”
Activities Around the Brewery
Lisa and Rick Allen. Photo: Heater Allen
Lisa Allen, Heater Allen: “For the last two weeks we having been adjusting to the new normal. Last week we canned a lot of beer (for us anyway) and we have two more canning dates scheduled for the end of the month. We sent more beer than usual to our distributor in California, made a trip up to Washington, and even sold some Pils cans to Tavour (a company that ships beer across the nation). Selling to an outfit like Tavour is something we've been approached about but have never done because we didn't have enough beer and were worried about our beer traveling far and wide to get to a consumer. Now with excess Pils on our hands it seems to be a much better option than dumping a batch. One of the benefits we are noticing as a relatively well known brewery is that we have been seeing decent sales to grocery stores and bottle shops. I feel we are lucky that before this all happened we had packaged beer as an option, even though a lot of our business was draft we never solely relied on it.”
Source: Alesong
Matt Van Wyk, Alesong: “At Alesong we’re still plugging along. We’re encouraged by several things. A few customers here and their come in daily for beer to go and we’ve seen an increase in beers to ship in Oregon and beer orders that we deliver in town. We’ve tried to get creative with offering free shipping and club pricing and also putting together limited vintage bottle packs. A recent “Bourbon barrel aged pack” sold out in two days. While our number of orders is fairly small, the price point of our beer offers a nice amount of revenue compared to the same number of taproom customers ordering a glass here or there. So certainly we are not selling more, but people are supporting our brand with extra bottle sales. The other encouraging thing is we seem to be able to get the government supported money that’s out there. Having an existing SBA loan seemed to help with that. This will help us continue to keep our full staff employed until we can get through this.”
Adam Milne: “These new times provide some unexpected opportunities. With direct to consumer sales picking up, Andrew and I had a new idea. We had always dreamt about canning our Shanghai’d IPA and flagship Pilsner, our pub top-sellers and our most award-winning beers. Unfortunately the numbers never penciled out. With mobile canning costs and the costs of distributing the beer (distributor and retailer margins), it would be challenging to sell those beers to our distributor with enough profit for everyone… that would result in a fair price to the consumer. This idea came just last week and we decided to quickly pull the trigger. Our previous beer in-process meant for draft was now going to be canned fresh and ready to be send out.”
Ben Parsons: “As for the current state of our business, we are holding on. Enough revenue is coming in to cover the very pared down costs and to help us stockpile some cash. Again, I can't reiterate enough how our self-distribution model has allowed us the agility to pivot. In the wake of the Brewers Association numbers that came out recently, I am personally torn between my optimism for our business coming at the failing of other breweries. The industry has never been about competition per se. It's always been about community, collegiality and friendship and now it's about survival.”
Home Delivery
One of the major sources of revenue for draft-reliant businesses has been home delivery. Nat West of Reverend Nat’s has been very active on this front (also delivering for Old Town), and offered a detailed account of how this has impacted his cidery.
Nat West, Reverend Nat’s: “For Reverend Nat's, the story of the coronavirus has been the story of the launch of a new business. Since we started our home-delivery program, it has occupied nearly 100% of my time. A couple weeks ago, I joked with Adam from Old Town that this feels like starting a new business. But it's not a joke. I used to spend the majority of every day in meetings and emails, pushing along projects and keeping steady the business heartbeat. Every week, I visited accounts, built new sales relationships, and reinforced existing ones. I checked in with my staff, I brainstormed new products, and I generally had a flexible weekly schedule.”
“But every day for the last three weeks (has it really only been three weeks?) has looked exactly the same: Wake up, exercise, eat. Haul a pallet from the cidery to my garage (we are doing delivery fulfillment from my home garage) and work with Adam on getting more beer. Starting at noon, I run a routing program every two hours for each of my four drivers from until about 6 o'clock, interspersed with customer service via social media, programming improvements to our routing system, and other marketing projects. I usually end each evening with a short delivery route myself. I find myself managing a logistics and direct-to-consumer company, a very different business than I've had for the last eight years where change was slow, everything was the distributor's fault, and it was extremely rare to see the direct impact of my daily actions.”
“Is this the new normal? Will customers demand same-day home delivery of beer and cider after things go "back to normal"? Haven't we been heading this way for the last few years with services like DoorDash and Drizly? The more time goes by, the more I think this delivery program will live for many months. Do we really believe that customers will flock to bars and taprooms the day they're allowed to reopen? Won't customers have continued concerns about transmission for those who haven't had Covid-19, even if new cases are low? When will we get a vaccine, which is likely the only real way to get back to normal? Will the vaccine prove effective against a coronavirus which mutates regularly?”
Adam Milne: “These new times call for new business ideas. We had planned to release our 2nd Haze of our Lives release, “Perfect Secret” with a new Soap Opera video episode . However, after the COVID-19 outbreak and social distancing, we didn’t know what we would do. With our packaged sales picking up we decided to launch the beer with a new twist. We were going to take pre-orders and deliver the newly hatched beer right off the canning line… like the old days of fresh milk delivered. Back years ago we tried to deliver beer on bikes and came up with “The Modern Milkman” campaign. Home delivery didn’t catch on and didn’t have quite the appeal or need as it does today. We decided to bring the Modern Milkman idea back because we thought people would have new appreciation for how incredible it would be to get super fresh beer delivered. This also would be something the big breweries would have a tough time executing and would highlight an advantage of buying local craft beer.”
Last Thoughts
Even though these are long posts, I have to cut some material, usually the human side comments and personal details. I did want to pass along a couple, here, however. They may say as much as the accounts of day-to-day activities do.
Lisa Allen: “For me on a personal level, I'm amazed at how many people seem to think this is all just a joke--maybe it's just a smaller town phenomenon, but I see very little people wearing masks around town and still having gatherings without maintaining social distancing. For something that may ruin businesses and put us into a depression I sure wish people would be more serious about it.”
Van Havig: So there's been an unexpected silver lining to doing beer deliveries during the COVID-19 pandemic—the old Portland that I first moved to and fell in love with in 1988 is back. Let me be clear, this is not the going to Zefiro Portland of the mid 90's, or the houses are still cheap mid to late 90's. This is the empty, forgotten, isolated Portland of 1988-’92.”
“Well before many of this fine city's current residents moved here, and even before many of the newest generation of hipsters was even born, Portland felt like a kind of time warp of Americana. Outside of some downtown rejuvenation in the 80's, the rest of Portland was still stuck in the 60's and 70's, and it never really came out of the 1981-82 recession like the rest of the country. I grew up in Southern California suburbs, and when I first moved to Portland to go to college, I remember thinking that Portland looked a lot like the Southern Minnesota small town of 1400 people in which my Grandma lived. And compared to the greater LA megalopolis, it almost felt devoid of people. I can recall driving up Grand north of Morrison on a summer Saturday evening and having the entire road to myself. There's actually more traffic right now than there was then.”
Adam Milne “Our beer & cider partnership with Reverend Nat has been one of the surprising joys over the last three weeks. Together we are moving more beer than I would have expected. Nat and I meetup a few times a week and do the ‘beer exchange.’ Then off we go. No time for a much needed pint together. That will come later.”