For breweries, coronavirus means hard times — and one silver lining

Sick of coronavirus-related shortages? Take heart and grab a stein — a tsunami of San Diego beer is on the horizon.

Beer once destined for now-shuttered restaurants and taverns is now being bottled and canned, then re-routed to supermarkets and bottle shops.

“They’ll be so stocked, it will blow your mind,” said Tomme Arthur, brewmaster and part-owner of The Lost Abbey/Port Brewing in San Marcos.

This, though, may be the only silver lining on the storm clouds over this industry. Many breweries have laid off staff. Brewery restaurants, brewpubs and tasting rooms are empty — either closed indefinitely or reduced to filling take-out and delivery orders. Breweries that only a month ago needed multiple shifts to keep pace with demand, now limp along with skeleton staffs.

“We’re conservatively looking at a 35-percent decline in revenue with the loss of our tasting rooms,” said Peter Zien, co-owner of Miramar-based AleSmith. “We’ve had to shift our business model.”

While this pandemic is disrupting breweries around the world, the 155 in San Diego County may be among the hardest hit. Only Pennsylvania produces more beer than California, with San Diego County annually contributing just over 1.1 million barrels, roughly one-third of the Golden State’s 3.4 million barrels.

That’s 34.1 million gallons of local beer.

Brewers were already stressed by fierce competition in a crowded market. Since February, two local breweries — Rock Bottom La Jolla and Papa Marce’s Cerveceria in Carlsbad — have closed, while Melvin, a Wyoming-based brewery, abandoned its East Village outpost.

California’s 1,050 breweries, most of them small operations that rely on neighborhood support, are bracing for more losses.

“Craft brewing is a very low margin business,” said Leia Bailey, associate executive director of the California Craft Brewers Association. “Most of them make 90 percent of their business through their tasting rooms.

“A handful of breweries have already told they are not going to be able to open their doors after this ends. They’ve already blown through their reserves.”

Zien agreed. “There’s quite a few breweries talking about going out,” he said.

Survival strategies

Last week, Tomme Arthur made a series of tough decisions.

He halted Lost Abbey/Port’s brewing operations, to focus on packaging the gallons already in bright tanks, the final step in the brewing process.

A much-anticipated new line of beers, Tiny Bubbles? It’s on hiatus.

Arthur closed three tasting rooms and halted work on a fourth, an East Village establishment originally heading for a fall 2020 grand opening.

And he furloughed 34 employees.

“We had to get staffing down to as manageable a level as possible,” Arthur said. “We had to have as small a skeleton crew as we could.”

Lost Abbey/Port didn’t just subtract jobs, products and ventures. It also added home delivery of beer in North County. This week, that service was expanded to cover San Diego. Orders can be placed online at shop.lostabbey.com.

Brewing has resumed on a modest scale, and Arthur is urging beer fans to take this opportunity to stock up on high-alcohol brews suitable for storing. That way, self-quarantined consumers can turn to their well-supplied beer cellars.

“If it is strong — anything north of 10 percent is the rule of thumb — and bottle conditioned, it should age well,” he said. “It’s one of those things if everybody went to their online portal and added one $10, $15, $30 bottle of beer, that’s a huge win for the breweries.”

Prominent local breweries — Ballast Point, Modern Times, Thorn and others — are taking online orders for pickup or, like Mike Hess Brewing in North Park, offering curbside beer to go. Stone, the county’s largest brewery, and Karl Strauss, the oldest, both use DoorDash and other delivery services to send six-packs, cans and prepared meals directly to residences.

Karl Strauss, though, has furloughed an unspecified number of employees. Stone has closed a tap room in Shanghai, ending its 2-year-old operation in China.

“We faced challenges over the past year with dramatically increased tariffs, and now the Coronavirus,” Greg Koch, Stone’s executive chairman, said in a statement reported by BrewBound, an industry publication. “Both factors had a significant impact on our ability to further invest in the market as planned.”

At AleSmith, owner Zien hopes to make up for the loss of draft beer revenue with enticing online offers — “We have some pretty good deals right now,” he said. To avoid layoffs, he’s reduced employees’ hours and transferred taproom employees to jobs inside the brewery.

Different breweries have different strategies, but Zien argues there should be a common goal: the survival of San Diego’s beer culture.

“I think when this is all over,” he said, “we’re going to be stronger and better for all this. We in the San Diego brewing community often talk about the camaraderie, how well look out for each other. Now is the time to prove it.”

Simple, bygone pleasures

San Diego beer is big business. In 2018, the last year for which we have accurate figures, county breweries took in revenues of $848 million and employed almost 6,500. Counting suppliers, brewing equipment manufacturers and other affiliated enterprises, the industry boasted an economic impact of $1.2 billion.

One of those downstream businesses is Brown Bag Beverage, a Chula Vista-based distributor of craft beer.

“About 70 percent of our business is on-premise keg sales,” said Susie Baggs, the company’s owner. “We were mostly in restaurants and bars.”

Last week, she furloughed five sales people and three drivers.

“Right now,” Baggs said, “it’s just me and one driver.”

This beverage, though, is not merely an economic engine. Beer is also a social lubricant, often enjoyed with friends and co-workers, a status now being undermined by social distancing.

In the 1990s, Mary Anne and Horace Bixby joined QUAFF, the Quality Ale and Fermentation Fraternity, a large San Diego homebrewers club. While “Bix” could be quiet and reserved, he flourished in this group, making friends at the monthly meetings, swapping growlers of homebrew, trading tips on hops and malts.

“Once Horace got into a hobby,” Mary Anne said, “he got in all the way.”

Although Horace died in 2015, Mary Anne has continued to be an active member of the club.

“All the things that QUAFF does, that’s a big part of my social outlet,” she said. “Not having that is no fun anymore.”

QUAFF’s March meeting was held Tuesday night. Members “attended” virtually, using the online program Zoom.

Mary Anne Bixby, now 73, is glad the club is moving forward. But...

“It’s not the same as meeting up at, say, Burning Beard in El Cajon to have a beer with friends,” she said.

In the pre-coronavirus era, many simple pleasures were taken for granted. Earlier this month, Peter and Vicky Zien celebrated their anniversary by dining out at a restaurant.

“We had to wait for a table,” Peter marveled. “That seems like a million years ago.”

Note: An earlier version of this story incorrectly reported that Stone had furloughed some employees. In fact, the Escondido-based brewery had not furloughed any staff as of Friday, March 27.