08/06/2020 - 15:45

Craft brewers ride out COVID their own way

08/06/2020 - 15:45

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While COVID-19 affected on-premises sales at craft breweries, it reinforced the emerging ‘buy-local’ trend and fast-tracked efforts to grow sales.

Craft brewers ride out COVID their own way
Reece Wheadon and Pia Poynton say there has been a trend towards local beer. Photos: Gabriel Oliveira

While COVID-19 affected on-premises sales at craft breweries, it reinforced the emerging ‘buy-local’ trend and fast-tracked efforts to grow sales.

Local craft brewers have spent the better part of 2020 getting their product into bottle shops, as restrictions in response to COVID-19 turned off the pipeline to pubs.

WA Brewers Association president Andrew Scade said all keg sales to hotels, pubs, and small bars stopped when hospitality venues closed on March 23.

“Every brewery would be selling kegs, and some of them wholly rely on kegs,” Mr Scade told Business News.

“Others can rely on bottling or canning their beer, in which case they were still able to sell into off-premises bottle shops.”

(click here to view a PDF version of the full special report)

Mr Scade said bottle shop trade had remained reasonably strong, but breweries were not able to make up for the lack of on-premises sales.

“The way I heard it was that there was a fair bit of panic buying at the start, and then Easter wasn’t too bad for people and then it went back to quieter levels after that, so it hasn’t been super strong,” he said.

“People [producers] still aren’t getting the revenue they were when they could sell kegs into pubs, and bottles or cans into bottle shops.”

West Leederville-based brewpub Nowhereman Brewing Co owner and co-founder, Reece Wheadon, said the pandemic arrived just as the business was moving towards canning its beers.

Nowhereman had finalised its cans’ artwork and branding last October, having tested packaging quality for the past year, and put the final touches to a move into bottle shops in 2020.

Without its own canning facility, Nowhereman instead had pre-arranged bookings with mobile canner Wiley Canning Co for some of its products, Mr Wheadon said.

“That worked really well because we had those forward days booked, whereas other people were waiting,” he said.

“It blew out to about eight to 10 weeks’ waiting time to get the mobile canning line in.

“We were just lucky to have a few pre-existing dates we could fall back on and just change our product mix.”

Coincidentally and conveniently, Nowhereman also had changed its distribution model from direct to third party, making it easier for bottle shops to carry its stock.

“We had all these things that we put in place, gearing up for a big six months,” Mr Wheadon said.

“It probably still hasn’t been as big off-premises, but it’s been in line with what we are trying to achieve.”

Before COVID-19, Blasta Brewing Company, which opened in 2018, produced 80 per cent of its beer for kegs and 20 per cent to be packaged, according to venue manager Joshua Morgan.

“Through COVID, it was about 95 per cent in packaged; we were very lucky to have our own canning line,” Mr Morgan told Business News.

“Basically we are able to can as we need, instead of having to rely on a mobile canning line like all the other small breweries are having to do.”

Blasta sold its beers online through a delivery app, and turned a section of its premises into a corner shop.

The brewpub recently expanded its production capacity, lifting its ranking on the BNiQ breweries list from 10th to third in the past two years.

“Just before Christmas we got three new 7,000-litre tanks, which almost doubled our capacity to brew,” Mr Morgan said.

Western Australia’s biggest brewery according to BNiQ, Gage Roads Brewing Company, posted to the ASX in late March with mixed results.

Gage Roads said while production was operating at 80 per cent higher than average to meet a surge in demand for packaged product, it had also lost sales at Optus Stadium at the beginning of the AFL season and couldn’t sell beer on tap.

Further down the list, South Fremantle Brewing is ranked as the 25th largest brewery on BNiQ. Mark Cornish, Eamonn Barnes and three friends established it in 2016.

Mr Cornish told Business News the business was happy being a ‘gypsy’ brewer at the moment, using other people’s equipment to produce their cans and kegs, before looking at a fixed address.

He said the brewery benefitted from the model during the pandemic, as it did not have many overheads.

“Being light-footed in that gypsy brewing model, we could weather it a bit better,” Mr Cornish said.

He said South Fremantle Brewing also made the decision to stop production in early March, before venues shut, after seeing what was happening overseas, and put all of the kegged beer into cans.

“We increased our canning volumes and were able to supply more bottle shops, and sent our first pallet across the Nullarbor,” Mr Cornish said.

“There was lots of support from the bottle shops, they obviously saw what was happening, they knew everyone needed support, so a lot of them started stocking their shelves with more local [product].”

Mr Cornish said the brewery’s beers were sold in between 15 and 20 bottle shops, mainly in South Fremantle, and found its bottle shop sales had increased during COVID-19.

Later this year, South Fremantle Brewing’s product will feature in a mixed pack of local craft beers to be sold in bottle shops under the auspices of the WA Brewers Association.

Containers for Change

Another change facing the beer industry this year is the introduction of WA’s container deposit scheme, in October.

The scheme requires producers to pay for the cost of recycling their packaged products, which brewers can either pass on to their customers or pay themselves.

Mr Cornish welcomed the move and said the company would absorb the extra cost.

“Because of the small-batch style, we kind of sit high on the shelves anyway, pricing wise, we will try and absorb it,” he said.

Nowhereman’s Mr Wheadon, who was recently appointed to the board of WA Return Recycle Renew, which is implementing the container deposit scheme, said his brewery was not in a position to absorb the cost.

“The costs associated with canning are high and it would be impossible to absorb that,” Mr Wheadon told Business News.

“Excise goes up every six months, and obviously we have to pass that on to the consumer as well, so we see it in a similar vein so everyone is paying a similar amount, it’s an even playing field.

“For us, it doesn’t impact our competitiveness in the market; it’s just a bit of corporate social responsibility.”

Trends

Nowhereman Brewing Co business development manager and freelance beer writer Pia Poynton said the industry had been talking about sour beers for a few years and take-up seemed to be gaining traction.

“Sours are an interesting trend that will stay, particularly given our climate,” Ms Poynton told Business News.

She said one of the most exciting trends was the move towards consuming local beer.

“People were so in love with any craft beer coming from the [United] States, and then I feel like it’s kind of done this 360 where people have gone, ‘All that American craft beer is great, but look what’s being made in our own backyard’, so all the fridges are now local,” Ms Poynton said.

More space was being given to smaller players as well, she said.

“I’ve been doing this a long time and you used to walk into a bottle shop and talk to someone about their craft beer fridge and it was two rows of Matilda Bay, two rows of James Squire and then maybe it would be [Little] Creatures or Gage Roads,” Ms Poynton said.

“I was in a bottle shop yesterday [Scarborough Cellars] and they were like, ‘Yep, these are my WA doors’, so I think that’s a more positive trend.”

Forging ahead

The surge in craft beer in WA isn’t slowing, with website Craft Beer Reviewer recording 84 breweries in WA in May 2020, up from 77 in July 2019.

Running with Thieves was planning on opening a 400-capacity brewery, distillery and restaurant in July at the former Southlanes site in South Fremantle.

Managing director Scott Douglas said the venue would be able to produce just less than 1 million litres of beer and 300,000L of spirits a year, meaning it would rank around fifth on the BNiQ list, when the venue was operational.

Due to COVID-19, Mr Douglas said the brewer had changed plans and could open with a pop-up food offering in the summer.

“There are still a lot of risks for us out there,” Mr Douglas told Business News.

“They [the government] are easing restrictions at the moment, but if that changes and they go back to where we were, that could be the end of us if we make that additional investment in that front of house.”

Swan Valley’s Bailey Brewing Company and Shelter Brewing Co in Busselton planned to open later this year and told Business News they were going ahead.

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