The Unprecedented Impact of COVID-19 on the Craft Beer Industry

The COVID-19 pandemic brought widespread disruption to many industries, and the craft beer sector was no exception.

What began more than four years ago has led to a realization in the craft beer biz that is still being felt today.

And here are several ways that that unprecedented event changed the craft beer industry as we know it today…

Decline in On-Premise Sales

Before the pandemic, many craft breweries derived a large portion of their revenue from on-site consumption. Taprooms, brewpubs, and beer festivals were booming. With COVID-19 restrictions shutting down bars, restaurants, and large events, craft breweries lost one of their primary revenue streams. According to the Brewers Association, US craft beer sales fell by approximately 9% in 2020, marking the first decline in over a decade.

Most US breweries were forced to at least temporarily close their taprooms, leading to significant revenue loss. For small-scale, community-based breweries, this was particularly devastating, as they lacked the distribution networks or financial reserves to weather the sudden drop in sales.

Shift to Off-Premise Sales and Direct-to-Consumer Models

With the closure of taprooms, breweries had to pivot quickly to off-premise sales, such as retail outlets and home delivery to stay alive. The pandemic fueled a rise in demand for packaged beer (cans and bottles), which became the go-to option for consumers confined to their homes. Many breweries that traditionally relied on draft beer had to invest in packaging equipment to meet this new demand.

Additionally, direct-to-consumer sales via online platforms became a lifeline for many craft breweries. Breweries that quickly adapted their websites for e-commerce and home delivery were better positioned to weather the pandemic, with many implementing curbside pick-up and local delivery services.

Some states relaxed regulations around alcohol delivery, making it easier for breweries to sell directly to customers, a trend that could have long-lasting effects on the industry.

Supply Chain Disruptions

The pandemic caused widespread disruptions in supply chains across multiple sectors, and craft breweries were no exception. Breweries faced shortages of ingredients like hops, malt, and even aluminum cans, which were in higher demand due to the rise in off-premise sales. Logistics challenges also made it difficult to secure consistent deliveries.

Breweries that relied on international ingredients or equipment experienced further delays due to travel restrictions and border closures. This forced some brewers to alter recipes or source materials locally, which in some cases led to a creative renaissance but also created additional hurdles for maintaining consistency in production.

Labor Challenges

The craft beer industry, like many others, experienced labor challenges during the pandemic. Staff layoffs became common, particularly for positions tied to on-premise consumption, read: taprooms, bars, pubs and restaurants). Some breweries also had to furlough production workers as well, due to reduced demand or supply chain issues.

The mental and emotional toll of working during a global pandemic also impacted the workforce, further complicating staffing and production processes.

Long-Term Craft Beer Industry Shifts

The lasting impact of the pandemic on the craft beer industry remains to be seen, but several trends that emerged during the pandemic may have staying power.

Definitely one of the most impactful is the shift toward e-commerce and direct-to-consumer sales is becoming a permanent fixture of the beer industry, allowing small breweries to reach a wider audience.

Bottom Line

More than 1 million people have died from COVID-19 in the US since the virus first emerged in Wuhan, China in December 2019 and it’s still out there, albeit in less deadly permutations.

But clearly the COVID-19 pandemic created unique challenges for the craft beer industry, disrupting traditional business models and forcing breweries to adapt in real time.

And while the shift away from on-premise consumption continues to be felt to differing degrees many breweries, those that embraced new sales channels, invested in e-commerce, and fostered community relationships found ways to survive and even thrive.

And those that didn’t are no longer around…