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This isn’t the first time in his 26 years in the beer industry that Eric Wallace, cofounder and president of Left Hand Brewing Co. and former chairman of the Brewers Association Board of Directors, has had to deal with adverse business conditions. The late '90s and early '00s were a period of net contraction for craft beer, as tepid consumer reaction failed to deliver the growth that many over-leveraged breweries expected. Today, the pandemic poses a different sort of challenge—a widely felt social, health, and economic event that was as unexpected as it has been severe—but lessons learned from craft beer’s early period are still apropos.
In this special industry-focused episode, Wallace weaves through the operations issues facing the brewery, from the challenge and necessity of furloughing employees—“Furlough is not a moral issue. It’s surviving; it’s a requirement. If you’re going to survive, you have to cut your expenses to match whatever you’re lucky enough to have coming in.”—to the utter collapse in sales—“In March, [draft beer] sales dropped to $1700, from six figures. We’re a stout brewery, and we ended up getting shut down on the … day before St. Patrick’s Day.”)—Wallace discusses the government tools they’ve been able to secure, such as a loan through the Paycheck Protection Program, and the challenges of any kind of long-term planning. Retail scan data may suggest that beer sales are up in supermarkets, but that’s small consolation at best for breweries like Left Hand.
“I’ve read the IRI data, and I’m like, ‘Really? That’s what’s happening? Because it doesn’t feel like it,’” Wallace says.
The conversation also turns toward a macro view, as Wallace discusses the shared responsibility of everyone in the hospitality world to ensure the safety of customers and staff.
“To take the short-term view, right now with all the largesse that the government is raining on our heads, just because philosophically you disagree and your freedom is being imposed upon… that’s bullshit,” says Wallace. “I want to open as bad as anybody, but I also feel an obligation to be a responsible citizen, business owner, member of society.”
What will the future look like? Wallace and Left Hand are planning on two years of severely limited business, as the world grapples with the disease while working to find a vaccine. But that won’t be the end of it. Expect three to five years after that to “dig out,” pay off debt incurred in the survival process, and get back on any sort of sound economic footing. There is no quick bounce-back from this pandemic and its ripple effects throughout the economy. This episode is a sobering and honest look at the reality facing the world’s independent brewers.
This episode is brought to you by:
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This episode is brought to you by Brewers Publications, publishers of “Small Brewery Finance” by Maria Pearman, “How to Brew” by John Palmer, and the forthcoming “Historical Brewing Techniques” by Lars Marius Garshol. Established in 1986, Brewers Publications has published more than 50 books of enduring value for amateur and professional brewers alike. Visit BrewersPublications.com today to browse the complete catalog of books and ebooks.