Minnesota craft brewery sales down 18% in 2020

A new study released by the University of Minnesota Extension details how COVID-19 impacted craft breweries in 2020. According to the report, when it came to business and profitability:

Based on Extension’s assumptions and the craft brewer survey, Minnesota’s economy lost $186.6 million in economic activity from brewers due to COVID-19; 1,050 jobs were affected.

Craft breweries rely heavily on on-site sales, with survey respondents reporting 73 percent of sales made via their physical location.

Survey results show an 18 percent drop in sales across all breweries and a decrease in employment of 10 percent due to COVID-19 restrictions.

More than one-third (37 percent) of breweries did not make capital expenditure investments in 2020. The handful of breweries that made investments focused them on responding to COVID-19.

Many breweries changed their operational model in the face of declining on-site sales and increased demand for off-site sales. These changes came at a cost, which many breweries absorbed into their margins.

The Minnesota brewery industry makes significant contributions to the state economy. In 2019, the Minnesota brewery industry generated $1.0 billion in economic activity and supported 8,435 jobs in the state.

The COVID-19 restrictions were especially tough on breweries as they heavily on-site sales and existing regulation provided them with little flexibility when it comes to packaging for off-site sales.

Generally, craft breweries are limited to only selling growlers and crawlers. but as I wrote in April last year, during the pandemic, consumers expressed a preference for 12 to 16-ounce containers that are only sold in liquor stores. Craft breweries, therefore, had little opportunity to make up for lost on-site sales decline. Additionally, large breweries are not even allowed to sell growlers or crowlers after they reach a certain limit of production.

This is certainly one of the areas where we have seen the failure of overregulation. Customers were not only denied choice, but business owners and workers also lost income and jobs. One thing that policy makers need to ensure is the removal of such rules in post-COVID Minnesota.