She said.......
It's about the beer
                                      He said........

Gina Miller            and                Bill Keeper
GINA-

Hey Bill,  

The craft beer industry was growing steadily before COVID-19. Thanks to the rise of taprooms —
allowing breweries of all sizes to generate consistent revenue — the category had found more
room to expand. For many of these businesses, distribution mattered less than the customers, likw
ua Bill, who walked into breweries and bought pints. What a difference a few months makes. The
on-premise industry has shut down under the threat of the coronavirus. Suddenly the financial
lifeblood of many breweries — their taprooms — has morphed into deadweight. How can the
industry survive? And what does the craft beer category look like on the other side of the
pandemic?  Frankly, I'm starting to worry as this thing continues to drag on and on.

Bill we both know that overwhelmingly the craft breweries that started up the last few years were
centered on the taproom model. And now they’re closed down. .How many more months will they
last?  Don't get me wrong, I do think that the vast majority of breweries will make it to reopening of
their tasting rooms to full capacity but how fast will consumers come back?  Even now with some
places open with limited capacity I know many serious beer lovers who simply will not go indoors.

If I could say one word to breweries that would help them it would be "adaptation. Craft brewers are
resilient and determined individuals that are continually adapting to the changing industry and
marketplace.  Now they have to double those efforts.

For many the answer seems to be canning then selling the cans not only at the brewery with
curbside pickups but also reaching out to retailers to carry their canned beer. Innovation also offers
shipping beer where possible. I understand that still will mean reduced revenue but it's revenue that
will sustain them and might be surprisingly strong.

As I see it, struggling breweries need to focus. Be lean, but not so lean that they can’t pivot. They
should have a  plan, but one they are ready to rip and start all over again at a moment’s notice
since things sometimes seem to change every day.  

Growth has been the goal for so many breweries over the years of rapid craft growth. Overnight
that goal for many seems to have disappeared  All I can say is that we beer lovers should buy local
beer. Pick up beer at a local brewery, get a delivery.  ,Stay the course.  Craft beer will prevail!  .

That's it from me, chug-a-lug, Bill.....see you next time!
BILL-  

Hello Gina -

Well said with a stirring finish, Gina.  I totally agree craft beer will prevail but there's a chance it
might not be in the exact form it was before Covid hit.  One thing you didn't mention is that
COVID- has changed consumer buying patterns at retail. Rather than lingering in liquor stores
while they look up Beer Advocate scores on their cell phones, many people now reach for
whatever’s well known. Money is tight, and time outside the house is still in some people's
opinions potentially unsafe.

Consumers still love craft beer, but are shopping for quality, consistency and value a little more
than prior to all this. Consumers were experimenting around a lot, with a lot of in and out among
different brands. Now that luxury might not exist.  I see this as a possible benefit to the bigger
players. National and regional brewers already boast brand-name recognition, plus the
distribution channels to dominate especially at retail.  All those small breweries who have turned
to canning might struggle nightly to get shelf space at the local store.

If spending power is down, I would expect breweries in a position to drive volume of more
competitively priced offerings to be at an advantage. I think local is still a strength if everything
else is apples to apples, but the days of $20 four-packs of cans may well be waning. A lot of
breweries have not been challenged to be careful about things like cost of goods sold, and
managing labor costs, as these are easily washed away by the margins of the taprooms and high
priced four-packs. Brewers who can’t adapt to pricing pressure will have a tough time surviving.  
Case in point I was in my local store yesterday and saw a two pack, yes two, of a vanilla bean
Russian Imperial Stout pint cans going for $16.99. They've been in the same spot on the shelf for
the last two and a half months.

Fortunately a number of states have recently changed their laws to allow craft breweries.  I see
this as most significant.  To deliver product directly to consumers was unimaginable before the
virus hit thanks to, in my opinion, archaic laws from Prohibition in many states.  Now delivery is a
lifeline and should remain on the books even when this all ends.  As beer drinkers we should
contact our state representatives for just that.  To place orders online and then the beer shows
up on their doorsteps not long afterwards is an incredible convenience for the consumer and a
cash flow boon to breweries. .

When, and we surely will, return to some kind of norml where people do want to go out on an
afternoon for fun with friends and family, taprooms will be there.  Those taprooms will then be
great venues to build brand loyalty and drive some great margins to the bottom line of breweries
around the country.  Prosperity as a long ago President once said, is just around the corner.

Here's looking at you, Gina
Round 109
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