Beer Taste Test

At a typical small brewery, the money is made in the tasting room.It’s not in the distribution or the to-go sales, but in serving beer to people who take a seat in a large communal area and have a drink or two. But since the start of the coronavirus pandemic, breweries are not allowed to have their tasting rooms open. They can only sell their beer either for pick up or delivery. The exception is for breweries with an on-site kitchen, such as MacLeod Ale Brewing Co. in Van Nuys, one of the few in the San Fernando Valley with that capability. “Being relegated to selling just beer-to-go is not sustainable,” Jennifer Febre, co-owner of MacLeod, told the Business Journal.Prior to the pandemic, breweries without a kitchen could partner with food trucks to serve up meals to the patrons having a beer in their tasting rooms. While the state of California health orders allows breweries to use a third-party food vendor, L.A. County has a much stricter regulation and prohibits the use of food trucks and other vendors to satisfy the food requirement. Barbara Ferrer, director of the county’s Public Health Department, said during a Sept. 16 briefing on the coronavirus that the reason for the county’s stricter regulation is for it to manage the number of opportunities for people to  possibly transmit the virus. “The intent here was really to have limited reopenings, knowing that in fact bars are often places where there can be a lot of contact with people who are not wearing their face covering and are in fact intermingling,” Ferrer said. “I appreciate how hard it is for everyone to figure out what is allowed and why it is allowed. Our primary goal right now is to get community transmission rates down low so we can get into tier 2 and work on opportunities to reopen sectors.” But brewery owners interviewed by the Business Journal all used the word “unfair” to describe the situation they find themselves in, including Derrick Olson, a co-founder with his cousin Bryan Olson of 8One8 Brewing Co. in Canoga Park. “You’re basically creating a situation where breweries are not going to be able to survive this,” Olson said. “(Food service) is the only way they can turn enough revenue to continue to employ people. It takes a lot of work to make beer.”8One8 batched its first kegs of beer nearly five years ago but has only had its tasting room open for two years. The Olsons have had to reconfigure the business due to COVID-19. They invested about $200,000 in equipment to can their beers. The pair had no intention of going the canning route, certainly not as a small brewer, Derrick Olson said. “We were forced to do it now and make it happen,” he added. “That has been one of the major ways we have been able to survive.”Having cans of beer available has helped with getting outside sales, primarily from liquor stores, as all the draft beer accounts, such as bars and restaurants, are shut down. “The margins are very low (in canning), but at least it’s movement,” Derrick Olson said. “We can buy materials and keep the team brewing. We can keep our sales force driving and delivering. We could eke it out with that.”Todd Tisdell, an owner of Pocock Brewing Co. in Santa Clarita, also does not have a kitchen on site. Although allowed to sell for takeout, the brewery’s taproom sales are down by 70 percent, Tisdell said. The brewery opened more than four years ago in a space in an industrial park on Avenue Tibbits.In addition to pickup sales, Pocock is developing a delivery service through its website, in which people would order beer online and have it delivered that evening. The only other option available to it pushing its beer into liquor stores, Tisdell said.“We are doing a good job at that, but the tasting room was where the bread was buttered,” he added. “Without that, it has been pretty painful.” Grim statisticsNumbers compiled by the Los Angeles County Brewers Guild back up the pain that brewery owners are feeling. According to Frances Cannon, the guild’s executive director, a poll taken this summer of nearly half of the 93 member breweries found that about 40 percent are self-reporting they are on the ropes financially. “They are projecting they may not see the end of the year if on-site consumption is not reinstated in the next few weeks to a month or a month and a half,” Cannon said. A second poll taken this month asked member to divulge anonymously what revenue they are bringing in compared to a year ago. Relatively established breweries with steady followings are taking in approximately $2,000 a week whereas a year ago at this time they would bring in between $15,000 to $25,000 per week, Cannon said. Smaller breweries, those open for three years or less that make up a big chunk of guild members, are reporting they are bringing in less than $1,000 a week. Typically, a smaller brewery brings in between $6,000 and $10,000 a week in sales, she added. “They are definitely feeling the pinch when you consider that our industry is a manufacturing industry with retail attached to it,” Cannon said. MacLeod opened its kitchen to begin serving pizza in June 2019. The decision has saved the brewery, said Febre, who operates the business with her husband, Alastair Boase.The pizza business began to take off thanks to online ordering and delivery services such as Grubhub. But even then, revenue was still down about 30 percent, Febre said. Then in the second week of August, the kitchen shut down when an employee tested positive for the virus. With only to-go beer sales, revenue dived by 90 percent for the week. One day that week the business brought in just $250, Febre said. “That was a real opportunity to put myself in the other breweries’ shoes and see what it’s like to sell just cans of beer to go,” she added. “And it wasn’t pretty.”Pocock’s Tisdell admitted that Febre and Boase understand the plight of the rest of breweries in the county. “They get it,” Tisdell said. “They are trying to be as active as they can to help straighten this thing out.” Lobbying effortThe brewers guild has been in contact with the members and staff at the L.A. County Board of Supervisors to work out something so the county can align itself with the state regulation on food vendors and breweries.“The board of directors of the guild has been working hard to work with any politician who will listen and try to help us,” Febre said. The frustration at the situation comes through in Tisdell’s voice as he states how COVID-19 doesn’t know the difference between a person sitting on a restaurant patio having food and a beer versus someone having food and a beer on a brewery’s patio.“We don’t understand why it’s OK for one and not for the other,” Tisdell added. “It is very unfair … because restaurants are able to utilize the food component and we are not,” said Derrick Olson of 8One8.Cannon, of the guild, said the trade group has targeted the five county supervisors for communications from its members and supporters to roll back the current restrictions and align with the state. The members are still waiting on the regulations they must adhere to when the retail economy reopens, Cannon said. “Until we see the language that specifically calls out our industry, we have all trained ourselves to not get our hopes up and hold our breath until actual documentation is out there,” she added. One thing the board of supervisors did for the breweries at its Sept. 15 meeting was to approve a $10 million grant program for those businesses. But while Cannon said the guild was appreciative of the effort, that money will go toward other small businesses along with the breweries that have county restrictions placed on them that are harsher than what the state allows. The guild did have a phone call on Sept. 16 with the staff of Supervisor Janice Hahn, who proposed the grant program, to find out more about the details of the program but those were still pending, Cannon said.What the supervisor’s staff was able to relate was that the county would give out grants between $5,000 and $25,000. Those payments would be just a drop in the bucket for breweries and it was the hope of the guild that the funding will come in on the higher end of that range, she added. “When you factor in labor, production costs, raw materials, expenses and rent, $5,000 doesn’t likely cover the rent for many breweries,” Cannon said. “You are seeing only temporary relief for maybe a few weeks and not really months.”