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,

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 a billion dollars and supported 8,435 jobs. Sadly, COVID-19 rules took away the industry’s lifeline — on-site sales — reducing profitability.

Generally, craft breweries can only sell growlers and crawlers. However, as I wrote in April last year, during the pandemic, consumers preferred buying 12- to 16-ounce containers. These are typically only allowed in liquor stores. These rules denied brewers a mechanism for recouping lost on-site sales.