THE WAKKER WEEKLY
Issue #1532 – Posted on: 8-June-2020
BUSHWAKKER NEWS
The big day is almost here! After almost three months of dining area closure we are very excited to be re-opening on Monday, June 8th at 11:30 AM as part of the third phase in the Re-Open Saskatchewan Economic Plan. Because we will be very busy with our final preparations, we will not be offering takeout food services on June 5th and 6th but our OFFSALE WILL BE OPEN FROM NOON – 4:00 PM.
Upon re-opening we are permitted to only utilize 50% of our seating capacity. Fortunately, we have plenty of space available so we will be able to provide you with plenty of physical distancing seating comfort – especially when you consider we will also be opening our main floor banquet room for additional seating. We have no plans to re-open our basement clubroom at this time. Reservations will be accepted for any time and on any day so give us a call at 306-359-7276 to secure your table. Please note under current guidelines the maximum number of people which can be seated at the same table is limited to six. Larger reservations must occupy more than one table and maintain physical distancing between each table.
We ask all patrons to only enter the brewpub through our front doors and to use our north doors as the exit. Please follow the directional arrows on the floor in order to regulate safe traffic flow. Our new hours of operation will be Monday to Saturday from 11:30 AM until 9:00 PM. We will be closed on Sundays. And for all of the folks who have enjoyed our food and beer to go over the last few weeks, don’t worry because those takeout services will definitely continue. Our new regular menu will be a touch smaller but there will still be plenty of food items available to please almost everyone. The menu will also only be used once and will then be recycled. Your table will be quite uncluttered; no flashy single malt scotch, import beer or special event tent cards will be in your dining space. If you are interested in such information you can visit our website via your smartphone. Growler fills will resume. The server drink receiving area of the bar will be expanded to allow for more staff physical distancing. Your server and bartender as well as our kitchen team will all be donning masks, but don’t worry, they are all smiling underneath! We will also be sanitizing not only your table, but also your chairs before you are seated. Frequently touched surfaces within the brewpub will also receive enhanced sanitation. All this extra cleaning and physical distancing means your entire Bushwakker experience may be slightly extended but we remain committed to providing you with quality food, beer and service as efficiently and as safely as we can. We can’t wait to see you again!
NEWS FROM THE BREWERY! Head brewer, Michael Gaetz, reports our seasonally available BARON BOCK, DOUBLE HONEY IMPERIAL IRISH RED ALE, ARCTIC DARK MUNICH DUNKEL, TWO SON’S MILK STOUT and SWEET TART CHERRY DRY STOUT are currently on tap. There are also batches of CHINOOK ESB, BLOOD ORANGE BLONDE ALE and PREMIUM PALE ALE working their way through the brewery.
Our June Premium Wine Features are from the INVISIBULL WINERY in British Columbia. The red is a Malbec and the white is their Sauvignon Blanc. Both are $7.95 for a glass and $21.95 for a half litre.
Our GUEST TAP is currently pouring an IRISH STOUT from the O’Hara’s Brewery in Ireland. Next up is the SUMAC HAZY PALE ALE from Saskatoon’s High Key Brewing.
Our cheesecakes and Kentucky Bourbon Pecan Pies have seen unprecedented appreciation as of late. Last weekend’s Key Lime Cheesecake sold out on both days it was offered. Look for our LEMON MERINGUE CHEESECAKE upon our re-opening on Monday, June 8th!
Please continue to practice your safe social distancing practices and remain connected to one another and to us! In addition to this weekly newsletter we are very active on Facebook, Twitter and Instagram. Check in with us as we navigate this new chapter. Try to support local businesses whenever possible. Be vigilant in your resolve to protect yourselves which in turn will protect others.
Two litre bottles of Bushwakker Dungarvon Irish Red Ale, Cheryl’s Blonde Ale and Stubblejumper Pilsener are now available for home delivery with the help of fellow Regina craft brewers, Pile O’ Bones Brewing. To place your order, just visit www.saskbeerdelivery.ca Don’t forget all six Regina SLGA stores offer a selection of Bushwakker bottled beers.
Breweries Slightly More Optimistic, But Challenges Remain
By Bart Watson
COVID-19 has posed a set of unexpected and extreme challenges on America’s small hospitality businesses, including small and independent brewers. In our second impact survey, we found that many breweries were uncertain how long they could last in an environment where onsite sales were down sharply, distributed draught was non-existent, and the bump in off-premise sales was not enough to offset those losses for most breweries.
Nevertheless, over the past six weeks to a month, brewers have pivoted their business models, re-opened in line with local and state guidance, and found new innovative ways to keep their businesses afloat. Although we haven’t yet reached the three-month threshold we asked about in that survey, there has yet to be a massive surge in brewery closures. Yes, some breweries have closed, but to date, the vast majority of breweries have managed to stay in business.
With that in mind, we targeted our third impact survey at probing what has helped, what has hurt, and how breweries have seen their outlook change over the past month.
I’ll start by thanking the more than 850 breweries that took some time to fill out the survey. If you want to read about those breweries, and what it suggests about potential survey bias (or lack thereof), please skip to the end.
Topline Summary
- Craft brewer sales continue to lag overall beer sales due to different business models, with revenue weaker than volume sales
- A majority of breweries are re-opening in states where they are able
- Breweries are rapidly shifting their business models, with delivery, either by the brewery team or third party, seeing the largest increase
- More than 80% of breweries indicate having received a PPP loan, though this is not making them universally more positive, suggesting they are only a partial measure
- In general, breweries are more optimistic than they were a month ago, but this varies widely by individual business circumstance
- While a majority of breweries remain confident their business will survive 2020, between 15-20% are unsure or actively pessimistic
Sales Volume and Revenue
In terms of volume growth, results are similar to what we found in early April, with a weighted estimate of total brewery sales down 30.5%. The median brewery respondent has sales that are down 50%. Note that while we had representative participation, the volume above 100,000 was far less than it is as a percentage of the full data set, so accounting for that would likely improve the total number, and I think it’s likely that if we use this survey to build a broader estimate, total craft is likely down more like 20-25%.
We also asked about revenue and found that the average revenue decline was slightly worse than the average volume decline. I don’t have revenue data, so it’s impossible to do a weighted average, but the non-weighted average revenue drop was 43.1%, versus the average volume drop of 40.6%.
Re-opening
One primary reason for increased optimism is that states are beginning to re-open, and in most states, we are seeing breweries be included in fairly early stages of re-opening, often in line with restaurants.
In states that have re-opened or are re-opening soon, 55.7% of breweries eligible to re-open indicate they have at least partially re-opened their brewery. 23.5% indicate they plan to re-open within the next few weeks, while 16.2% say they are still taking a wait-and-see approach.
Finally, 18.3% of breweries in states that have partially re-opened indicate that either they are in a city or county that has not re-opened or that their license type was not eligible for re-opening at the time they took the survey (this is rapidly changing, so it is possible the great work the guilds are doing moved some of these breweries into the re-opening category after they answered).
Sales Methods
To look at the changes in brewery business models, we asked breweries how they were selling beer before and how they are selling beer now. The table below shows these shifts.
| Sales Method | Before | Currently | Change |
| To Go | 86.2% | 94.4% | 8.2% |
| Via Delivery (Delivered by Brewery) | 2.9% | 33.4% | 30.5% |
| Via Delivery (Delivered by Third Party) | 3.5% | 7.2% | 3.8% |
| Delivery (Total) | 5.8% | 37.5% | 31.8% |
| Direct to Consumer (Shipping) | 7.6% | 12.4% | 4.8% |
| Distribution (Self or Partner) | 77.1% | 65.6% | -11.5% |
The biggest jump is in delivery, while the only channel that has dropped is distribution. The total delivery percentage isn’t additive, as some breweries are doing both brewery deliveries and third party deliveries. Combined with the jump in direct-to-consumer shipping, these numbers show how rapidly breweries have changed their business model.
The distribution drop is equally interesting, and points to the percentage of breweries that distribute draught only, and so have little to no reason to distribute with bars and restaurants shut down. As we’ll see, some brewers have also seen their stock keep units (SKUs) cut, which may be partially reflected in these figures.
SBA Support
In addition to sales, SBA loans, either through the PPP program or via the EIDL program have provided breweries with additional support. 84.9% of breweries indicated they had applied for a PPP Loan, with 50.4% applying for an emergency EIDL grant and 38.7% applying for an EIDL loan. Of breweries that applied for a PPP loan, 95.7% indicated they had received their funds, meaning that 81.2% of breweries who responded to this survey have received PPP loan funds.
Change in Attitude
Next, we asked brewers how their attitudes about the future of their brewery had changed over the past month. In general, breweries are getting more optimistic.
| Attitude About the Future | Percent |
| Much more optimistic | 10.2% |
| Somewhat more optimistic | 32.2% |
| Same | 33.6% |
| Somewhat more pessimistic | 16.7% |
| Much more pessimistic | 7.3% |
| Net Optimism | 18.4% |
It’s easy to overstate these changes. Yes, we saw an almost 20 point swing over the past month, brought on by PPP loans and better than expected sales. With that said, a majority of breweries feel similarly or worse about the future of their brewery than they did a month ago, so the findings are mixed.
Why are breweries more optimistic? The number one reason is PPP loans, followed by the imminent re-opening of states and then better than expected sales. The results below are presented as a percent of those who stated they were more optimistic, as well as in terms of the total sample. So for example, for PPP loans, 63% of breweries who are more optimistic indicated receiving their loan was a reason why, but that group (more optimistic because of PPP loan) is only 27% of the total brewery sample.
| Reason for Optimism | Percent of Group | Percent of Total |
| Received PPP loan | 63.0% | 26.7% |
| State re-opened or re-opening soon | 56.3% | 23.8% |
| Sales better than expected | 49.5% | 20.9% |
| New sales channels | 34.5% | 14.6% |
| Saw cost decreases (renegotiated rent, etc.) | 17.9% | 7.6% |
The number one reason for pessimism is continued slow or declining sales, followed by the challenges of re-opening in a world of capacity restrictions.
| Reason for Pessimism | Percent of Group | Percent of Total |
| Sales worse than expected and/or declining | 68.4% | 16.5% |
| Capacity restrictions more challenging than expected | 50.7% | 12.2% |
| Have not been able to reopen | 42.6% | 10.2% |
| Costs increasing | 42.6% | 10.2% |
| Been unable to rehire workers | 19.1% | 4.6% |
| Distributor dropped SKUs | 10.5% | 2.5% |
| Did not receive PPP loan | 8.1% | 2.0% |
The Rest of 2020
The final question we asked was a re-framing of a question we asked last time, about how breweries viewed the future of their business. “Given what you know right now, how confident are you that your brewery will still be in business at the end of 2020?” The results are in the table below, both in total and broken out by business model.
| Confidence through 2020 | All | Brewpub | Taproom | Micro | Regional |
| Very confident | 54.9% | 48.3% | 55.1% | 57.7% | 69.6% |
| Somewhat confident | 27.8% | 33.3% | 27.2% | 24.4% | 23.9% |
| Unsure | 11.6% | 12.6% | 12.0% | 10.9% | 6.5% |
| Somewhat pessimistic | 3.4% | 2.4% | 3.0% | 6.0% | 0.0% |
| Very pessimistic | 2.3% | 3.4% | 2.7% | 1.0% | 0.0% |
Depending on whether you’re a pint half full or pint half empty kind of person, these can be interpreted multiple ways. On the positive side, almost 83% of breweries are somewhat or very confident they will make it through 2020. The flip is that 17% are unsure if not actively pessimistic. Given the number of active craft brewers, if this sample is representative, that’s 1,400 breweries, with more than 450 somewhat or very pessimistic.
Summary
In a community of more than 7,000 companies and 8,000 brewing locations with different business models spread across a variety of locations, there is wide variation in how brewers view the market right now. Sales are down for most brewers, with half seeing their sales down 50% or more. Faced with these challenges, brewers have pivoted their models, applied for PPP loans, and cut costs as able. These new sales channels and government support have helped to turn their attitudes in a somewhat more positive direction, but it is understandably a mixed picture.
The comments show a set of owners working as hard as they can to save their businesses, but with uncertainties about capacity restrictions, whether customers will return, revisions to the PPP and forgiveness conditions, new costs from cleaning on top of existing bills, not to mention future public health concerns.
Sample Characteristics
We received 869 total responses (removing duplicates), of which 859 were fully identifiable (some didn’t include name, so we couldn’t match). The sample covers 3.4 million barrels of 2019 craft production. So both the company count and barrelage total are well above 10% of the total data set. There is always the risk with these types of surveys for survey bias – that breweries in better or worse standing were more likely to fill it out – or for geographic or business model biases that shift the results. With that said, as with the last survey, the results appear to be broadly representative. We received responses from 49 states plus D.C. and no region stands out as being highly over or underrepresented.
On business model, as with last time, brewpubs are slightly underrepresented, with taprooms overrepresented. I do not have any expectation that is introducing major bias, and many of the findings above are broken out by type which would control for many issues. Brewpubs are around 35% of total craft breweries and 6% of total craft volume, but are only 25% of the breweries and 6% of the volume in this sample (so we got fewer, but larger brewpubs). Taprooms made up 46% of the sample, versus closer to 35% of total craft breweries. The references to weighted figures make adjustments for these representation issues (and the much smaller discrepancies in regionals/micros).
TIME OUT – Do You Drink?
Lady: Do you drink?
Man: Yes
Lady: How much a day?
Man: Three 6-packs
Lady: How much per 6 pack
Man: about $10.00
Lady: And how long have you been drinking?
Man: 15 years
Lady: So one 6-pack cost $10.00 and you have 3 packs a day which puts your spending each month at $900. In one year, it would be $10,800 correct?
Man: Correct
Lady: If in 1 year you spend $10,800 not accounting for inflation, the past 15 years puts your spending at $162,000 correct?
Man: Correct
Lady: Do you know that if you hadn’t drank, that money could have been put in a step-up interest savings account and after accounting for compound interest for the past 15 years, you could have now bought a Ferrari?
Man: Do you drink?
Lady: No
Man: Where’s your frickin’ Ferrari then?
Preparing the Room. Rayna and Kristy have been busy rearranging our main pub area as well as our Arizona Room private banquet area in order to provide you with plenty of physical distancing space in compliance with the 50% seating capacity restriction.
