Many Minnesota Craft Breweries Weeks Away from Closing

UNDATED -- Many craft breweries, like so many other small businesses that were forced to shut down or alter their business model, are on the brink of closing for good. And, they say a change in state law is a lifeline they need to stay afloat.

Minnesota Craft Brewers Guild Executive Director Lauren Bennett McGinty says we have just under 200 craft breweries in the state and according to a recent poll about 15 percent of them may have to close within the next month.  Another 30 percent may have to close in the next three months.

She says, with all taprooms closed, they're losing a lot of revenue.

As you get bigger with your Surley's or Summits or your Schell's they probably don't rely as much on that, but that's still a huge chunk of their business -- about one-third.  When you get to smaller breweries it's anywhere from 50 percent to almost 100 percent in some cases.

McGinty says Minnesota law only allows breweries to sell growlers and crowlers for off-sale. They want state lawmakers to change the law so they can also sell four-packs and six-packs of 12-ounce cans.

McGinty says while liquor stores have seen big increases in sales, macro beer sales are mostly up while microbrews are down.

She says another big part of their business model is distributing their beer to bars and restaurants.

Draft sales for breweries are huge.  We've found that most breweries are now sitting on inventories of kegs.  It's over 50 percent of them just have kegs that were meant for orders to bars and restaurants to be able to sell on draft to their customers that are now not being used at all.

McGinty says microbrews have a shorter shelf life than macro brews, so some of that beer has to be dumped down the drain when it goes bad.

McGinty says a recent financial impact survey got responses from 44 of the state's nearly 200 breweries, which reported over $9 million in losses. She says it's likely that figure is closer to $26 million. She says breweries typically have a lot of debt because the equipment needed to start-up is so expensive.

The craft brewing industry in Minnesota employs about 4,500 people, but over half of them have been laid off.

Pantown Brewing co-owner Marty Czech says they're doing ok. He says changes to laws regarding the sizes of off sale containers really wouldn't benefit them in the short term. They were positioned in a way that the closing of bars and restaurants didn't have a big impact on their sales. They also implemented delivery and carryout sales quickly and efficiently and fans have utilized these services.

Beaver Island Brewing co-owner Nick Barth says they went from producing 13,000 gallons of beer per month to a little under 7,0900 gallons.  Growler sales in the taproom are up 40 percent year over year, but the taproom as a whole is down 87 percent.  He says the money they are collecting is not enough to cover their expenses and they are operating at a loss.

Barth says a nationwide survey put out by the Brewer's Association projected that up to 40 percent of the breweries across the country will be forced to close when this is all said and done.  He says they are doing everything in their power to make sure they are not one of them.

The Minnesota Craft Brewers Guild expects we won't be back to 100 percent normal for a very long time, even when they are allowed to open their taprooms for customers.