Craft vs. COVID-19 – part 3: facing new challenges during peak beer season

We’ve started a series of blog posts discussing the ways in which Romanian craft breweries are tackling the current COVID-19 pandemic. We hoped that this would be a short series – over half a year later, it seems that’s no longer the case.

It’s been almost 8 months since Romania entered lockdown (March 25th). Six months since the State of Emergency was downgraded to State of Alert (May 15th). Two and a half months since bars and restaurants were allowed to open indoors (September 1st). One month and 1 week since bars started closing indoors (October 7th for Bucharest). One week since further restrictions were set in place regarding operating hours for bars and restaurants (November 9th).

Looking at the past 6 months from the HoReCa point of view, the highlight was definitely terraces being allowed to reopen starting June 1st. From the start, the safety measures set in place altered our entire outdoor drinking experience. Sanitizing your hands, wearing a mask when going to the bathroom and observing social distancing, in groups of up to 6 people, became the new norm. Many bars and restaurants replaced physical menus with QR codes. Some even banned ordering beer at the bar. It was all very new and foreign, but it was better than not drinking out at all. And many of us hoped that they would be just temporary measures.

For a while, it really did feel like this summer would see at least some return to normality. True, Haze Fest was cancelled, and all the major craft beer festivals announced they will have no editions this year. But we still had our fair share of craft beer events.

In Timișoara, the Local Food&Drinks Gathering (organized by the Food & Community restaurant) had 4 editions, combining local breweries, arts and crafts stands, food trucks and live DJ sets – pretty much a downsized craft beer festival. In Bucharest, Fabrica Grivița organized several events ranging from beer launches, outdoor movie nights, live music and stand-up comedy, and even a craft beer get-together featuring 4 breweries. Bers Nova hosted several outdoor parties at their brewery, with a focus on craft beer and live music. Bere Noah were a regular presence at the local fairs organized in Târgu Mureș. And let’s not forget about MercatoComunale, where craft beer stands became a staple of their terrace this summer – and that’s only a few examples that come to mind.

There may have been fewer craft beer events this year, but that didn’t mean the pandemic completely ruined the festival vibe (photo credit: Clandestin Beer)

As the weather warmed up, we also started warming up to the way the pandemic dictates the way we drink. And the breweries themselves were there to remind us that Covid-19 will not be the end of craft beer.

Against all odds, 2020 still saw new craft breweries make an appearance on the market, with three stand-alone breweries opened just in the past 6 months: Rock & Beer, Clusa and Cibis Beer. We’ve also had 3 new gypsy brewers join us in the past six months: Takezo Art, Low Frequency Brews and Doi Flacăi. Meanwhile, Anagram, OneTwo, Player One and (finally) Wicked Barrel joined the big boys club, all four leaving their gypsy brewing days behind and starting making beer at their own breweries.

There’s also been some curious developments, with Ground Zero‘s former brewer Răzvan Matache opening not just his own taproom, Ironic, in July, but also (most ironically) starting brewing with the very guys he took under his wing many moons ago: Bereta. Speaking of which, Hop Hooligans also saw their dream come true as they opened their own taproom back in September.

We were thrilled to see that the number of sour beers brewed this year has increased, and although we’ll add the figures up in the yearly review, it already looks like their number has doubled since 2019. Barrel aging also grew as a trend, and it was nice to see that, in spite of all the challenges, collaborations between breweries still happened. Some breweries also used this time to increase their output, with Bere Noah upgrading to a larger brewhouse, while others found new ways to stand out on the market, such as Bere Sibiu, who released the first Eco-certified craft beer in Romania.

There has also been an increase in shops selling craft beer in the past 6 months, although Beer’s Point draft beer van is by far the most innovative concept we’ve seen on the local market (photo credit: Beer’s Point)

On the surface, things looked pretty much peachy looking at the past 6 months. But the signs that everything was not going well in the beer world began revealing themselves quite early on.

On July 16th, the Brewers of Romania Association released an official statement showing that the overall beer consumption has dropped by 10% since first pandemic control measures started being enforced back in March, compared to last year. The figure was changed to 7% in a subsequent announcement during their annual conference, held on October 21st, but that didn’t detract from the fact that there has been a significant drop in the local market.

Breweries themselves were not exempt from challenges, and these past 6 months saw an unprecedented development: the first Romanian craft breweries to close down. In June, we received word that Bere Cazino in Constanta closed after almost 4 years of being on the market, and although they never made an official announcement, it’s worth mentioning that the decision to shut down was not caused by the pandemic. But a few months later, on October 18, it really was the pandemic that made its first victim: Perfektum announced that their brewery will be closing down, after almost 5 years since they began the project.

Clearly there was trouble brewing in spite all the new beers, new breweries and expansions we’ve seen lately. So a few days ago, we spoke to 17 breweries to get a better understanding of how the past 6 months really went down.

For starters, we asked brewers how much has they estimate their beer production has dropped this year, compared to 2019.

It’s important to note that some of the breweries who took part in the survey did not experience a drop in production because they were gypsy brewers in 2019, while others only opened this year; those breweries are not featured in this chart.

In terms of tackling the challenges brought on by the pandemic, the most common measures implemented were:

The question allowed multiple choices

It goes without saying that the vast majority of breweries experienced a drop in sales and production this year. Yet the terraces reopening on June 1st seemed like a lifeline, promising to help brewers make up for the sales lost during lockdown. Here’s how their sales increased since June 1st, compared to the first half of the year:

But even with terraces reopening on June 1st, the drop in overall draft beer sales has taken a noticeable hit compared to last year:

It’s clear that craft breweries relied on their HoReCa partners in terms of sales, but bars and restaurants also relied on breweries’ support when they were forced to close. When we asked breweries if their HoReCa partners have been in touch asking to return the beers (a very common practice this year), 58.8% said they accepted their beers back, while 11.8% said that they haven’t been contacted, but they offered to take stock back anyway. 23.5% said they haven’t been contacted and they haven’t offered to take beers back either, and only 5.9% said that bars and restaurants asked them to take beers back, but they refused.

One must bear in mind that the relationship between breweries and HoReCa isn’t always sunshine and rainbows. When we asked breweries if bars and restaurant paid their bills within the standard 30 days time-frame, only 11.8% said yes. 52.9% said that their bills were paid after 30 days, and 35% said that they have outstanding bills since before the State of Emergency went into effect. When we asked breweries if they continued their collaboration with the bars and restaurants that failed to pay their bills in time, the answers were fairly evenly matched: 47% said that they continued selling beers to them, while 41.2% said they stopped their supply.

‘We continued collaborating with bars and restaurants that didn’t pay us in time, but we’ve stopped delivering beers until they pay their overdue bills.’

‘We managed to build a stronger relationship with some partners, but we also cut ties with those who weren’t trustworthy.’

‘The arrogance of some bar owners and brewers has disappeared, and we hope that after the pandemic the market will be adjusted by the competition.’

‘We started taking steps towards setting up the [brewery name] Credit Bank.’

(Names not disclosed in order to protect the innocent.)

Consumer preferences have also changed in the past 6 months, as revealed by a separate questionnaire with 134 respondents. For example, in a survey published back in May, 54.1% of respondents said they would go out drinking less in the weeks following May 16th, while 39% said they would go out just as frequently.

Figures obtained in the past week are far more grim: 91% of survey participants said that they went out less in the past 6 months, while only 6% said they kept the same frequency.

In our survey published on May 15, 56.8% of respondents said they don’t think bars and restaurants will manage to implement the required health and safety measures. Yet many establishments managed to not only implement them, but also provide customers with a friendly and welcoming environment (photo credit: Kutuma at Jaxx)

On the plus side, only 17.9% of respondents said that they drank less craft beer since the start of the year. 38.8% said they’ve consumed more craft beer in the past 6 months, while 43.3% said that their consumption remained the same.

Out of the 91 people who said they bought more beer in the past 6 months, the reasons given were as follows:

The question allowed multiple choices

Meanwhile, the 47 respondents who said they bought less beer had the following main reasons:

The question allowed multiple choices

In terms of where people preferred buying beer from in the past 6 months, 38.1% bought craft beer online, 20.1% preferred buying straight from the producers, 23.1% bought it from specialized physical shops, 9% bought it from bars and restaurants, with another 9% buying it from supermarkets.

We were curious to see how much brand loyalty played a part in the purchase decision, and our findings are as follows:

When asked which breweries they preferred buying beer from, it’s also worth mentioning that only 17.2% of respondents said they preferred buying beer just from craft breweries in their area, while 70.1% opted for a mix of local and producers from the rest of the country.

Yet the customer support did not go unnoticed by the brewers:

‘We were surprised by the orders people made straight from our FB page, from the town where we’re based in. We sold most of our beer locally and we enjoyed interacting with them.’ (Double Drop Crew)

‘We’ve discovered many loyal customers [in the past 6 months]. Without them, we would not have made it, and we are forever grateful to them.’ (Hophead Brewing)

If there’s one thing both breweries and drinkers have in common, it’s that they’ve both felt the lack of craft beer festivals this year. 71.6% of the drinkers in our survey said they missed going to festivals, while only 14.2% said they didn’t (the remaining 14.2% said they didn’t attend craft beer festivals in general). Meanwhile, 70.6% of the breweries in our survey said that, financially speaking, they missed attending festivals, while 29.4% said they didn’t.

Of course, it wasn’t just the lack of festivals that took a financial toll on breweries. Many of them faced challenges due to the drop in sales, but also the lack of support provided by the state. Of course, this isn’t to say that the government officials were oblivious to their struggles, and several measures have been implemented to help small businesses, including breweries. Among the most recent ones, as announced by the Minister of Public Finances (Florin Cîțu) in an online press conference on October 21st, are:

  • The sector is exempt from paying the specific tax in 2020;
  • Grants offered through the IMM Invest program (which have so far helped over 20.000 small companies);
  • Local authorities being offered an extension on tax reductions;
  • The postponement on tax payments has been extended until December 25th, with no penalties applied to late payers;
  • VAT refund with subsequent control has been extended until January 25th;
  • The measures set in place to aid furloughed employees will be in effect until the end of the year.

The last point on the list needs to be elaborated a bit more, given the fact that Romanian craft breweries have very few employees, and some don’t have any at all. However, they were all impacted by the restrictions set in place in the year, and production slowing down meant there was fewer work for both the brewers, as well as their staff. So we were curious to see how many of them applied for the State of Emergency Certificate (TYPE 1), which would provide their furloughed employees with allowances of up to 75% of their gross salary. Out of the 17 breweries we spoke to, the figures were:

These figures are also quite similar to the answers we received when we asked brewers if they received any aid from the owners when it comes to paying rent on the brewery space: 41.2% said that they received no aid, but they didn’t need it either. 35.5% said that no aid was provided, although it was needed, while 23.5% were lucky enough to have understanding landlords.

Even though 73.2% of the respondents in our consumer survey said that they will continue making online beer purchases just as often in the following 6 months, breweries are not as optimistic about their own online sales. When we asked the breweries who sell beers online directly if they think they will survive the next 6 months based just on online sales from their own platforms (whether webshop or FB page), only 16.7% said yes, and an overwhelming 83.3% said they won’t.

Yet there is still a glimmer of hope for the craft beer scene in the following 6 months. 70.6% of the breweries we spoke to feel optimistic about getting through winter, and even though 52.9% have a worst-case-scenario plan set in place, 23.5% said they don’t think they’ll need one.

Consumers also have faith that good things will come to pass, with 61.9% thinking that the majority of breweries will continue to stay afloat, and only 14.2% thinking that the majority will close (23.9% of respondents said they don’t know what might happen).

To wrap things up, here’s some food for thought from the brewers:

‘We have 6 months ahead of us that will be difficult from all points of view. I’m curious whether any microbreweries will be making any profits.’
(Mustața de Bere)

‘The following period will be very difficult compared to spring because the only good month in terms of sales (December) already looks like it will be compromised. Things could be bleak up until April.’ (Bere Sibiu)

‘The lack of support from the state will make our work much more difficult, but I believe that consumer awareness that us little guys will die without them might just see us through the next period.’ (Hophead Brewing)

‘Chin up! Beer was born a long time ago, and no crisis, no war has made it disappear. Beer will always be around […].’ (Bere Noah)

Cheers!

Throwback to happier and simpler times, to give y’all hope for the future. Hang in there! (photo credit: Visuin)

More in this series:

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