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Craft Breweries In the Age of COVID-19Lock Icon

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Craft Brew in the time of Chaos 132475
Dylan Yelenich is director of production and packaging at Lost Forty Brewing in Little Rock. ( Karen E. Segrave)

Craft brewers in Arkansas, like a lot of businesses in the state, appeared to be on track to make 2020 a banner year, and then COVID-19 struck.

Since then, “It’s been a heck of a roller coaster ride,” said Jess McMullen, co-owner and co-manager of Flyway Brewing Co. of North Little Rock.

It’s a sentiment shared by others in the industry, many of which — like restaurants, tourism or the hospitality industry generally — derive exposure and revenue from customer visits to taprooms and on-site restaurants or pubs.

Before the pandemic, sales at Lost Forty Brewing of Little Rock, the biggest producer in the state, were “trending upwards,” said Albert Braunfisch, a partner in the business. “We were really seeing strong growth in all segments of the business.”

Those segments are, as they are for many craft breweries, taproom sales, sales of draft beer to bars, other restaurants or event venues and package sales to retailers like liquor or grocery stores.

At Lost Forty, taproom draft sales are down about 50% during the pandemic, though they’re slowly recovering, draft volume is down 66%, and package volume is up about 20% “as consumers are finding our product in liquor and gro-cery stores,” Braunfisch said. Overall, sales are generally flat, he said.

Nationwide, retail dollar sales of craft beer rose 6% last year, reaching $29.3 billion and accounting for more than 25% of the $116 billion U.S. beer market, according to the Brewers Association.

Craft Brew in the time of Chaos 132475
Andy Coates and Lacie Bray, the founders of Ozark Beer Co. in Rogers. ( Beth Hall)

Craft Brew in the time of Chaos 132475
Beer taps at Ozark Beer. ( Beth Hall)

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Brandon Mize pours grain into the milling auger at Lost Forty Brewing in Little Rock. ( Karen E. Segrave)

Diamond Bear Brewing Co. in North Little Rock is, at 20 years old, a veteran among craft brewers in Arkansas. Owner Russ Melton closed the restaurant March 19 but hopes to reopen it by the end of this month.

His wholesale sales of cans and kegs to restaurants and venues like Simmons Bank Arena are down 80% or 90%, but retail packaged sales, both to-go and to liquor and grocery stores, are “strong and growing,” he said, though they haven’t compensated completely for the decline in other sales.

In the craft beer world pre-pandemic, hard seltzer is a category that has grown significantly, and Diamond Bear sought to take advantage of that by introducing its own take on the category. Despite the pandemic, it sold out of its first offering, mango peach, and by July 4 had debuted three more.

Diamond Bear also worked with INEOS Composites in Jacksonville to make commercial hand sanitizer and took advantage of the business slowdown to remodel the restaurant.

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Leah Sunwall mashes grain into the wort, the liquid extracted from grain during the brewing process, at Lost Forty. ( Karen E. Segrave)

The year had started well for Ozark Beer Co. in Rogers, opened by Lacie Bray and her husband, Andy Coates, in 2013. “We’ve grown every single year since we’ve been open,” Coates, the production manager, said. “We were on clip to do a probably 20% to 25% increase in volume. We had some pretty well-laid plans, as most people did. Sales were trending in all the right places.”

Now, however, “overall we are probably about 50% down over last year” in terms of total sales, said Bray, Ozark Beer’s business manager. “Where we’ve been hit the hardest is definitely [wholesale sales to] the bars and restaurants. It’s just crazy how intertwined so many industries are with each other.”

The federal Paycheck Protection Program helped. Nevertheless, Ozark Beer has had to lay off 20% of its staff. “That has been the hardest thing, probably, through this all,” Bray said.

“We’ve been able to make enough money where we haven’t had to go to the bank and take on any more debt,” Coates said. “I would say it’s surviving versus thriving just because we’re able to pay all our bills and pay everyone’s salaries and everything like that.”

The decline in customer demand and traffic posed by the pandemic is one thing, Bray and Coates said, but there are other challenges as well. Shipping times and costs have risen. And recently, Ozark Beer was notified that tariffs are likely rising on the aluminum used for canning. (President Donald Trump announced earlier this month that he was reimposing a 10% tariff on aluminum from Canada.)

But Ozark Beer is planning a couple of initiatives to counteract the pandemic downturn. It will be expanding distribution to southwest Missouri and will be releasing a mixed 12-pack of its product in September.

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Lost Forty brewery in Little Rock brewed and packaged 16,000 barrels of beer in 2019. ( Karen E. Segrave)

Flyway Brewing, which opened in December 2014, saw about $850,000 in sales in its first full year, McMullen said, and “we were increasing by about 25% every year.”

But then the pandemic hit, so, McMullen said, they got “innovative and creative. We started looking at the opportunities that this crisis might provide for us and started doing creative food specials and canning small-batch beer and things that we’d never even considered before.”

That kept Flyway’s curbside sales strong during the months before it could reopen its restaurant. However, the week that the restaurant reopened was Flyway’s slowest for both curbside business and the “slowest sales week that we’ve had in three years,” McMullen said. “It was scary.”

So the Flyway team got creative again. “We decided to do what we called ‘tent city’ outside in the parking lot.” The company set up and tore down every day 18 10-by-10 tents, serving guests outdoors. “And it has been fantastic,” he said. “During that time our numbers have been what we were doing in the taproom and sometimes exceeded those numbers to where the loss of wholesale kegs is not quite as tough.”

Flyway also followed through on opening a new concept, the gastropub Brood & Barley just a block away. And with that and the company’s innovations, it expects to see sales rise this year, McMullen said.

As for what the world of craft beer brewing will look like after the pandemic, Lost Forty’s Braunfisch said a lot depends on its length and its impact on the consumer. But “we’re very optimistic … that Lost Forty will be able to pick up where it was before and continue to build on the growth that we’ve had in the first five years of our existence.”

And Melton, the industry veteran, said, “We’ll get through this thing.”

Craft Brew in the time of Chaos 132475
A server helps a customer at SQZBX in Hot Springs. ( Rachel Elmakiss)
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