Craft vs. COVID-19 – part 2: Entering the ‘State of Alert’ and waiting for bars to reopen

We’ve started a new series of blog posts discussing the ways in which Romanian craft breweries are tackling the current COVID-19 pandemic. Here’s hoping this series will be a short one. 

On May 15th, Romania’s government declared that the country’s ‘State of Emergency’ has been downgraded to ‘State of Alert’, resulting in an ease of the restrictions imposed as a result of the COVID-19 pandemic. People no longer need to carry a declaration of personal liability when leaving the house, yet they are still required to wear face masks in enclosed public spaces, as well as observe social distancing rules.

In the past month, most breweries have carried on as before, focusing on online sales, while also keeping themselves and their staff safe by only brewing as and if needed. However, we’ve continued to see new releases, and even some newcomers to the industry emerge in these troubled times. So we decided to ask the brewers, how have the past two months been for them?

‘They say that small companies are flexible and that it’s easy to take a decision… well, it’s true, we are flexible, and we adapted to the new conditions: online sales, promotions, social media presence, lots of energy spent, and so on.’ (Ionel Păsărică, Capra Noastră)

‘When the lockdown became official, it was time to open our online shop. With all this free time, it was easy to get it running in a few days. We postponed bottling to keep the beer in the fermenter, because beer remains fresher in fermenter than in bottles or kegs; the Czech breweries are used to doing up to 3 months of lagering. So instead of a minimum of 1 month, we kept some beers for 2-3 months at 1.5°C. We also stopped producing our IPAs and we currently don’t have any stock of Jos Pălăria or Drink Different (spoiler alert: this beer will come back with a new name). I don’t believe that sales will restart with a bang but we are ready just in case.’ (François-Xavier D’Hollander, One Beer Later)

‘We’ve discovered new clients, and they discovered us, which for us is superb, given the fact that we don’t have the same brand awareness as other producers. We sorted out our online sales, we’ve been creative. We came up with new recipes, a visual identity which is due to change soon, and most importantly, our greatest achievement if you will, we haven’t lost any staff.’ (Ernest Fazekas, Plan Beer)

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(photo credit: Plan Beer)

‘April was weaker than March in terms of sales, for two reasons. First of, in the first half of March we were still delivering to HoReCa. But in April, not only did those sales drop to zero, but we also had returns on the beers we previously delivered – so in fact, we had days with negative sales because we accepted to take our stock back from all our HoReCa partners who requested it. We were “lucky” enough to have had the foresight of having two shops of our own, from the beginning: one at the brewery, and another one in Sibiu, so that helped us partially absorb the returning stocks.” (Cosmin Șoaită, Bere Sibiu)

Yet Bere Sibiu weren’t the only ones to give their retail partners a helping hand. Craft breweries, bars and specialized shops are closely linked, and one would struggle to survive without the other. So when bars had to close down on March 15, many reached out to the brewers and asked if they could take their stocks back, and resell them via online platforms. It was a decision that made sense, in the light of bars not making any sales themselves, and breweries reducing their output during uncertain times. One such case was Mustața de Bere, who, although seemingly quiet on social media, have had much on their plate in the past couple of months.

‘We’re not a typical case because this period caught us just as we were relocating. We were planning to move [to our new brewery] in November, but we’re “taking advantage” of these murky times to get things done. We haven’t brewed anything since March 13, but we’ve made stocks to cover demand while we renovate and get approvals for the new location. In April, we sold more beer through our online partners than we hoped. The support was unexpected. […] It’s still a very difficult time. Our new rhythm would see us brewing 20% of what we brewed last year, which is pretty tragic. Yet we’re preparing to brew up to 35% of our previous volumes in the upcoming period.’ (Rareș Petre, Mustața de Bere)

May was supposed to be a very busy month for Ground Zero, who had several events in the works, yet had their plans turned upside down:

‘In the first month, we reacted to the emergency measures as they came out, not knowing how things would evolve. We quickly adjusted our sales outlets and launched our webshop, which we’ve worked on earlier. It’s been a difficult past two months, and we’re still only running at 20-30% of our previous capacity. The biggest inconvenience was the fact that we had already set up our production lines and the new team, ready to face the start of the season. We had plans for our 5 year anniversary, the 2 year anniversary of Hangar, as well as the 0 Mai mini-fest, yet we couldn’t go forward with any of these plans.’ (Alin Matache, Ground Zero)

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Last year, Ground Zero’s birthday was celebrated with good beer and a good crowd – here’s hoping that their 6th anniversary next year will make up for the lack of 2020’s lack of celebration (photo credit: Ground Zero Beer)

Beers aside, there’s another craft beverage we wanted to know more about, especially because it rarely gets any press: cider. So how have the past months been for this rather seasonal drink, that relies heavily on the HoReCa segment? We asked Alan Clark his views:

‘The last two months were stressful because you never knew, from one week to the next, how far the pandemic would spread and when things might get back to relatively normal. For example, our ciders are available in some national supermarket chains. But it wasn’t clear whether people would feel comfortable enough to shop at supermarkets, or whether all or the majority of supplies would be home delivered. Neither was it clear what proportion of the population would have lower or no salary, and how this would impact buying behaviour and our sales. So you had to adapt your approach to a new situation, but the parameters of the new situation were never totally clear.’ (Alan Clark, Clark’s Cider)

There’s more going on in the background at a brewery, apart from making beer. Like Mustața de Bere, Kutuma have also been in the process of upgrading their brewery, so the pandemic found them in a bit of a financial pinch. The state has provided furlough for employees, as well as allowed more time for paying taxes. Yet we were curious to see whether breweries have seen any support from their partners, such as a cutback on rent, or retailers paying their outstanding beers.

‘We got a 50% rent reduction. As in, we paid 50% less for an empty terrace, an empty bar, and a brewery that runs at 20% of its capacity. We got extended payment terms from our creditors, but no discounts. Our collaborators [bars, restaurants, shops] used the crisis as an excuse to not pay us for their outstanding bills, including the ones from before the emergency ordinance. Great working environment! (Alin Matache, Ground Zero)

The majority of breweries are in the same boat, yet there are some who have been more fortunate:

‘We receive help from the state for our employees to be furloughed. Also, we are glad to have a landlord who accepts late payments. Regarding the shops, I was happy to have some quick and positive answers from pubs in Cluj, which have paid their bills even if our beers were still in their stock.’ (François-Xavier D’Hollander, One Beer Later)

Brewpubs have also had a hard time, given the fact that they have to conted with beer sales as well as the restaurant side of the operation.

‘In the past two months, while the restaurant and terrace have suspended their activity, we continued to brew beer to ensure that we have the necessary stocks for when we reopen. In the past two weeks we’ve started coming up with a strategy for resuming the activity on our terrace. We’ve also continued collaborating with supermarkets, but the percentage of beer sold through retail is smaller compared to what we had before with the HoReCa segment.’ (Klausen Burger)

Some brewpubs, like Turnul Berarilor, switched gears into food deliveries. Others, like Tom Beer, started bottling their beers, and selling in other cities.

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Until you can visit them in Oradea, you can find Tom Beer by the bottle in several locations in Zalău (photo credit: Tom Beer)

Meanwhile, Clinica de Bere found themselves having to temporary close down a massive operation that includes a restaurant as well as a hotel. And even though they did direct beer deliveries locally, it’s put a financial strain on the business that may be difficult to mitigate. Having their beers available in online shops did help, but perhaps the most important lifeline have been hypermarkets, which ensured a steady volume of sales and income. But not everyone shares in their love for supermarkets:

‘The orders in supermarkets came less often and the sales have dropped. This can improve our cash flow when we will receive the payments, but they are not enough to sustain our activity.’ (François-Xavier D’Hollander, One Beer Later)

‘Supermarkets helped maintain a big chunk of our sales, and we also enjoyed getting a new contract. Still, delivering craft beer to a supermarket is not an easy process, and retailers actually tried making new demands, knowing that we’re in a tight spot. Our objective is making sure that our beer reaches our consumers in good conditions, and we were hoping retailers would understand that. Yet they seem more interested in 50 bani discounts.’ (Alin Matache, Ground Zero)

‘Having our ciders listed at national supermarket chains definitely helped us, because they carried on selling similar volumes of cider to 2019. Obviously our sales to HoReCa disappeared, but for us we managed to compensate by increasing our sales for home delivery.’ (Alan Clark, Clark’s Cider)

Some breweries have been very understanding of their retail colleagues, especially those who rely on a small, local market, where getting along with your partners is paramount:

‘We’ve been very careful not to compete with small shop partners, which make home deliveries. In fact, we believe that for those who order several beers along with other products it’s better to do so through our partners, which justifies the delivery cost per cart […]. It’s true that, short term, this hasn’t been the most advantageous course of action for us, but you can’t maintain long term partners when you’re each only after your own interests. Which is why, in terms of timing, we didn’t start our home deliveries from day one, but rather, we let our partners do it. […] When it comes to paying bills, we have an excellent relationship with our clients, and those who could, made the effort to pay. As for those who didn’t have the means, well, you can’t get blood from a stone, no matter how hard you squeeze.’ (Cosmin Șoaită, Bere Sibiu)

After the state of emergency ended on May 15th, we’ve seen several bars and craft beer shops, such as The Beer Institute and the Bereta Taproom & Bottleshop, open to the public. There are, however, tight restrictions in place, such as take-away only, maximum two customers inside, card-only payments, and mandatory masks. We’ve also seen new places open up, such as the Cluj branch of Stația RomBeer, or the new bottle shop and growler station chain, Casa Berarilor Artizani, with three venues, one in Bucharest, one in Constanța, and one in Baia Mare. Meanwhile, the Aftăr Stube bar in Brașov has acquired a UV sterilizing lamp, which they plan to use regularly when they reopen.

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If you can’t come to the bar, then draft beer will come to you – one way or another (photo credit: Bereta Taproom & Bottleshop)

Several days ago, the HORA Association (representatives of local hotels and restaurants) had a meeting with the Prime Minister, and received the news that terraces will officially open on June 1st under strict safety conditions, followed by restaurants resuming partial indoor activity from June 15th. If all goes well, all HoReCa venues are expected to reopen by July 1st, however, this is strictly dependent on whether the number of COVID-19 cases will continue to drop over the course of the following weeks. So how are brewers preparing to match a potential increase in demand, as things are poised to return to some degree of normality?

‘Right now, we’ve picked up our raw ingredients orders from suppliers, and restarted production at an increased level, so that we have fresh beer ready for when HoReCa locations open again. Our Hangar taproom is prepared for customers, we’re currently selling beers to-go at the brewery gate, but we’re still waiting for the official opening in order to serve beer on the premises. We’ll take all necessary measures to protect any customer paying us a visit.’ (Alin Matache, Ground Zero

‘We believe that any increase in beer consumption will be gradual, which is why we try to reach as many people directly, especially as they are more likely to do so at home to begin with, among small groups of friends. Apart from our two shops, we’re probably the first brewery in Romania to have a phone app [Android only], which makes ordering our beers very easy. […] We’ve only just started direct sales, to ensure that when people are allowed to socialize in groups of 4 or 5, our partners won’t end up in the situation where they don’t have the necessary stocks. […] As for beer production, it’s following its natural course: we’re constantly analyzing our sales trends, and we only brew when we estimate that our current stocks will only last us one month.’ (Cosmin Șoaită, Bere Sibiu)

‘We’ve started brewing again and we’re ready to resume deliveries to bars and terraces, we’ve already spoken to half out HoReCa clients. We’ll definitely pick up on our Friday evening guided tours, with live music, and for starters we’ll keep them on the terrace set up in the brewery courtyard, and once the official measures will allow it, we’ll allow access in our taproom.’ (Paul Olău, Bers Nova)

‘We don’t know what our demand will be, nobody can make any prognostics, and it’s difficult when you have 6 permanent beer styles to be prepared for supplying all of them. We don’t know what quantities we’ll be dealing with, who’s opening up again and who’s likely to go bankrupt, we don’t know what the retailers are up to, we don’t know if we’ll all make it through this season. The real crisis is only just starting.’ (Zsolt Tătar, Kutuma)

As eager as everyone is to enjoy a beer on the terrace with friends, there’s still some level of wariness regarding whether we will be able to do so safely. In a small survey we ran last week, with 146 respondents, 38.4% of people said they wouldn’t have gone out for a beer if bars had reopened on May 16, 54.1% said that they’re likely to go out for a beer less than before the pandemic in the following weeks. Respondents also said that the most important safety measures they’re looking to see implemented in bars are reducing capacity to ensure social distancing (60.3%), regularly disinfecting surfaces (21.2%) and staff wearing gloves and masks (18.5%). And yet, just 43.2% of them think that bars will successfully implement safety measures, while 50.7% of them said that they would go out for a beer if they had to wear masks and gloves themselves.

Yet even with bars reopening with safety measures in place, there’s no certainty that the HoReCa industry will manage to bounce back before the season is over. And this is something playing on the minds of both brewers and publicans:

‘One of the bar owners I was speaking to these days confessed that he can’t afford to open the terrace alone, which – given the measures going around – would have to be reduced by half to implement social distancing and having only 3 people per table, which will represent just 25% of his venue’s exterior capacity. Also, if the furlough won’t be granted [after June 1st], he’s worried that he won’t be able to keep all his employees.’ (Paul Olău, Bers Nova)

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With social distancing measures in place, it’s unlikely we’ll see scenes like this any time soon (photo credit: Casa TIFF)

We have uncertain times ahead, and it may be difficult to gauge what to prepare for. As it stands, there are still some grey areas that the government needs to make a decision on, such as whether it will continue to grant furlough, or whether it will become the employer’s responsibility. It’s debated that it could be extended up to July 1st if needed, but that remains to be discussed. Yet what would help brewers most, in order to get over this period?

‘More clarity would be beneficial for sure. When the business environment is unpredictable like this, it’s impossible to make plans. For example, regarding the craft beer (and cider) festivals: we don’t know if there will be any this year. There will surely be none in June, and probably July, and maybe even all summer. A greater “buy local” movement coming out of the lockdown would be particularly beneficial regarding cider, since more than 90% of consumption in Romania of (products called) cider, is imported from Bulgaria, Czech Republic, and some other countries.’ (Alan Clark, Clark’s Cider)

‘A reduced VAT rate would be the best thing. We’re not looking for government pity, and we don’t think that the “buy local” slogans will have a real impact on sales figures in a small city like Sibiu. Craft beer remains a niche, luxury product, and we don’t see how the same handful of people, who are now under their own share of financial pressure, will significantly increase sales.’ (Cosmin Șoaită, Bere Sibiu)

‘I think that people have started to be more aware about where the products they’re buying are coming from, yet more visibility never hurts. […] In terms of fiscal measures, it would help to have craft beer classified  as a food product, and reducing the VAT to 5%.’ (Paul Olău, Bers Nova)

‘It’s clear to me that the Romanian government doesn’t know what’s best (or has other interests), if meeting in a church to kiss various things is better than meeting at a terrace, where you you’re not kissing the table. I have a lot on my chest when it comes to the church. Speaking of which, I wonder if Daniel [Patriarch of the Romanian Orthodox Church] is a craft beer lover, maybe he can put a good word in for us with the government and get the terraces to open sooner.’ (Ionel Păsărică, Capra Noastră)

‘The state can’t help a company whose main activity is beer production […] Our fans are the ones who help us most, as well as local patriots, and even business owners who understand the way the current situation is affecting us all. We’re all supporting each other.’ (Zsolt Tătar, Kutuma)

We were also curious to find out how the Brewers of Romania Association are approaching the situation, even though they only have one local craft brewery among their members. We’ve already seen that, on April 30th, they wrote an open letter urging the Prime Minister to bear the HoReCa sector in mind when drafting out any financial measures. But how big has the impact on the brewing industry been so far, and how long do they think the local industry would take to recover? So on May 14th, we attended an online press conference held by the Concordia Employers’ Confederation, aiming to shed a light on the future of Romania’s economy. One of the speakers was Dan Robinson, president of the Brewers Association:

‘I think at a sector level it’s true to say that beer in 2020 will likely see a large decline in consumption. There have been a lot of stories about how much retail sales have shot up and have compensated for the loss of the HoReCa and hospitality business. That hasn’t happened in the latest numbers we have from the Association. We’re seeing double digit declines overall at a market level. And of course, it’s a heavily seasonal business. So the timing of the HoReCa reopening […] is absolutely critical. And I should also point out, if we’re looking at the long term, we don’t know exactly how many, but we think there will be a high percentage of HoReCa outlets that don’t open at all, and also maybe some that reopen and then quickly close, due to mainly cash flow issues. It’s a very uncertain environment, and there are also lots of craft brewers in Romania that rely heavily on HoReCa. And the longer that this continues, the more pressure there will be on those businesses, which is of course not something we want to see. […] What I can say is that beer has been a part of Romanian life for a long time, and therefore we aim to be part of Romania for many years to come.’ (Dan Robinson, Brewers of Romania Association)

Even if we don’t know what the future holds, there’s no denying that we are all, brewers and drinkers alike, hoping for a positive outcome, and that we’re still making plans.

‘I’d like to focus on a more correct partnership relationship with our collaborators. And we’re going to try and make a small craft beer festival in Brașov. Done right. Without fees. We could take all the organizing expenses here in Brașov on ourselves. The brewers would just need to come and sell their beers without having to worry about paying us anything. Also, maybe this kind of understanding exists among other brewers, and maybe they can facilitate doing something similar in the towns and cities where they brew beers, and where they have the community close. That’s what I’d like, seeing more well intentioned people.’ (Rareș Petre, Mustața de Bere)

‘We’d like to restart our parties, which bring all these awesome people together, yet it wouldn’t be possible to do so until we’ll feel safe among crowds. We used to feed on the community feedback for the beers in our ExperimentALE range, and we miss that. We’re planning a new launch, and maybe replacing one of the beers from our core range.’ (Alin Matache, Ground Zero)

‘I don’t think that this will be the end. A lot of water will flow down the Someș river before things to go back to the way they were. And as the saying goes, things weren’t the way they were supposed to be back then, let alone now. Those who will find solutions to reach their clients directly, without middlemen, and find new markets, will be the ones who will manage to get through this. Not the strong, or the large, just the ones who are quick to adapt to demand and a tighter finance circuit. Whether we’re capable of that or not, the following months will tell.’ (Zsolt Tătar, Kutuma)

Until then, we’ll leave you with a photo to remind you of the good old days when pubs were open, pubs we’ll hopefully return to soon. Stay safe!

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photo credit: Hangar by Ground Zero

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