Coronavirus Diaries (5/4): Old Town and Gigantic
In this ongoing series, I have been posting the reflections of brewers and cidermakers as they deal with the unfolding COVID-19 coronavirus. In today’s post (part two of two), we have the reflections of Adam Milne (Old Town Brewing, a small Portland-based brewery dependent on two restaurants and Van Havig (Gigantic, a Portland-based packaging brewery with one existing taproom and another in planning.
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In past editions of Coronavirus Diaries, I’ve broken the responses up into categories. For this edition, I’m posting the stories as they came to me. Each brewery’s experience has gone from a more universal response to individual ones, and reading the full reports intact makes them more coherent. If you have any interest in the beer industry (or any industry), I strongly urge you to read these. They are detailed and full of insightful information I honestly haven’t seen reported anywhere in the traditional press. Thanks again to Adam and Van for taking the time.
Adam Milne, Old Town
A major focus the past few week has been trying to get the Paycheck Protection Program (PPP) loan to save our business. We want to bring our great team back and also obtain funds to cover rent and utilities for 8 weeks. This is such a lifeline. The entire process has been incredibly revealing. Anyone trying to get a PPP loan has probably heard the phrase: “we will only lend to businesses we have existing relationships with.” I thought Old Town was in good shape. We had a large SBA loan with Wells Fargo that built our brewery and pub. We never missed a payment in 10 years. We also had a number of bank accounts, equipment loan, and a line of credit with US Bank. Before COVID-19 I would have thought big banks had more influence to get things done. I was quite wrong.
US Bank was incredibly slow to move and Wells Fargo mailed us four rejection letters on the same day. I still have no idea why Wells Fargo rejected us and it is impossible to speak to a human that could answer the question. I reached out to our contact at Wells’ SBA lending. She emailed me back stating she had no access to the system, gave me a generic email address and wished me the “best of luck.” Our attorney then sent an email and never got a response.
After contacting every business person and bank I could think of, there seemed to be little I could do. Our company was stuck with our existing big banks who didn’t seem to care. Meanwhile I was reading about Ruth’s Chris, The Lakers, and Shake Shack. I was so angry and did my fair share of yelling at my computer. I can relate to Van Havig’s post and have not been the best person to be around the last few weeks. I feel bad my family had to put up with me.
In the end it was a small community bank, Oregon Pacific Bank, that came through. I couldn’t be more grateful and have now moved all of our business accounts to the small local bank. During the new business setup process someone called for a “new account orientation.” The bank representative gave me her personal cell number and said to call day, nights, or weekends if we ever needed anything. I about fell over!
Van Havig, Gigantic
It’s May Day today. I used to always try to take this day off. I used to encourage other brewers to play hooky with me. Oh well.
That about sums up my attitude these days: oh well. I've reached a point of resignation with this whole thing. I never thought that it would be over “quickly”—by which I mean in a couple months. I've now come to completely accept that this is our life until Fall of 2021 most likely. Could be next spring, could be spring 2022. Was it Churchill who said, “this is not the beginning of the end, but rather the end of the beginning?” I’m accepting that.
That said, we’re in a position at Gigantic that if things continue as they are at this time, we can soldier on indefinitely. That's a great feeling. I can keep my brewers, bookkeeper/marketeer, and sales manager on at 60% work and 40% unemployment through Workshare for as long as current revenue holds up. And revenue is surprisingly good—we’re down in overall revenue only about 40%.
In an unbridled expression of hope, we’re actually still moving forward with our new taproom on Glisan and 70th. Seating will be limited initially (actually there may not be any inside seating initially), but we’re going to start with to-go sales anyway. All the other tenants are in as well—we’re hoping to make it a bright spot of new to-go sales in a brave new world. It’s nice to have something hopeful.
But I’m still me, so I still see all the negatives as well. I am very concerned about what is going to happen when the economy “opens up” again. At that point, I'm not sure delivery works anymore. It currently works because A) there is a lot less traffic and 2) everyone is (or should be) home to accept delivery. Traffic makes this all inefficient, and people need to actually be home to receive beer because we're required by law to check to make sure people are of age. Also, once people can go out again, bar and restaurant capacity will be half of what it was. Some quick math indicates that the draft market may be only half the size that it was pre-COVID. This is a big problem because delivery sales are direct-to-consumer—making them very good for small breweries in terms of revenue-per-barrel—but draft is much lower revenue-per-barrel. Will draft sales at half our previous level be able to replace delivery revenues? It might actually be worse for small breweries for whom delivery has been a success so far. It’s impossible to know.
Frankly, one thing I've seen in the brewery boom of the last 8 years is breweries being successful despite themselves. For a good 6 or 7 years, it was difficult to fail at this if you did anything right. Many new brewers are dreamers (bless them, honestly) who saw this as a way to have a business that wasn’t the rat race, or maybe the ultimate creative expression of their genius. In the last decade, few people have really wanted to talk about the fact that breweries are businesses, not dreams. But now we’re going to find out who realizes that breweries have been nothing but businesses since at least the early 17th century.
Breweries are going to live and die through the next one to two years not based on how juicy their newest hazy beer is, but rather based on their managers’/owners’ ability to actually run a business. The Stoics would love this. Now is the time for people’s actions to count. Now is the time for businesses to realize that their decisions matter, and that they can only control what they can control. Those that make it through these troubled times will emerge as better-run businesses. That actually fills me with hope. We’ll all need to be better to make it to 2023, and that will help us make it to 2030 and beyond. It’s time to find your adult trousers, put them on, and get to work. Head down, good decisions, keep going. That’s the mantra.