P.E.I. craft breweries seek relief as sales plummet during COVID-19

The craft beer industry in P.E.I. is suffering, with breweries reporting estimated sales losses ranging from 40 to 80 per cent.

P.E.I. has nine craft breweries of varying sizes. The oldest is the P.E.I. Brewing Co., owned by Kevin Murphy, who began craft brewing at the Lone Star Cafe 21 years ago. 

"We were going into 2020 planning for our best year ever, not only in the brewery business but also restaurants and hotels, and then COVID-19. Over a weekend it hit and now it will be our worst ever," Murphy told CBC News via email.

"We will get through it but it will take a few years to get back to pre-COVID sales levels. Our brewery is well established with great brands and the Gahan restaurants to support."

Jeff Squires is the president of the P.E.I. Brewing Co. and said over the first seven weeks of the pandemic, the company's sales were down 40 to 50 per cent. The brewery laid off 14 staffers in beer production, as well as others in its taproom, and closed a satellite location at the Factory Shops at North River. 

That's because all P.E.I. bars and restaurants were ordered to close March 17, closing down not only the breweries own taprooms or bars, but also shutting off their main source of income: kegs on tap in bars. 

'Huge negative impact '

Upstreet Brewing in Charlottetown said those draft sales were 40 per cent of the company's business. At Barnone in Rose Valley in central P.E.I., keg sales were 90 per cent of their business this time of year, said owner Don Campbell.

Then the province closed all 17 government-run liquor stores for five days in mid-March. It has since gradually reopened some of them.

Squires said the closures had "a huge negative impact early on — having some back online with reduced operations and buying restrictions is still affecting sales negatively."

Upstreet's marketing manager Marsha Gallant said its liquor store sales are half what they were this time last year. The company has had to lay off half of its staff. 

Government began allowing breweries and agency stores to offer delivery and curb-side pick-up March 21, which most of the brewers say has allowed them to re-hire staff and kept them busy — however, it is labour-intensive and not as lucrative.

It's amazing the money you save when you turn off the heat.— Alex Clark, Evermoore

"It's a bit of a roller-coaster to adapt and swing your business so quickly, and even now you question your decisions and actions," said Alex Clark, owner of Evermoore in Summerside. 

"Financially I'd say we are down 80 per cent. Generally we are [a] busy restaurant that sells our beer to our customers in the form of draft. The switch to home delivery and backdoor sales of cans and growlers has been a labour-intensive process, we are not set up for the type of volume of cans we have been moving and it's been a bit of a struggle to keep up."

Clark said he carries little overhead, however, and is small enough to be able to limit expenses to hold steady while the storm passes. 

"It's amazing the money you save when you turn off the heat. That being said I've had some very cold days canning beer in a dark brewery," Clark said via email.

"I feel as though when you get into small business you have to be realistic of the potential chance of failure at every turn, that's a risk I took and this pandemic is just another turn — way harder then any before."

'Drastic shift from draft to canned'

"The movement of buying local during this time has been very inspiring and we're seeing a tremendous amount of support from Islanders, and we've even had to hire some additional staff to help package beer and fill orders," said Copper Bottom Brewing co-owner Ashley Condon via email, adding restaurants have also been very supportive in carrying local product for takeout.

Both Copper Bottom, in Montague, and Upstreet have quickly created online marketplaces featuring other local products like grocery items, snacks and games.  

"The hope is to support other small businesses in the area while also utilizing our retail space in a safe and responsible manner," said Condon. 

Up at Moth Lane Brewing in Ellerslie, owner Eric Wagner said he has been selling growlers out of the door but doesn't have the staff to allow delivery in western P.E.I. He said he's been able to keep all four of his staffers and plans to hire back other regular staff this summer, although it will mean the company won't see a profit. He said he doesn't owe much on the business, and his family are grown and on their own so he doesn't support them. 

Moth Lane is planning to start bottling — Wagner said the process is expensive and labour-intensive, but thinks it will be increasingly necessary.

"We expect to see the continued drastic shift from draft to canned and bottled beer as people stay closer to home, along with the expected capacity restrictions at bars and restaurants," agreed Upstreet's Gallant.

At Barnone, Campbell set up an online schedule for customers to pick up their growlers on Thursdays in 15-minute intervals, so people would not have to meet one another. He now devotes his Saturdays to making deliveries instead of tending Barnone's booth at the Summerside Farmers Market. Still, his sales are down about 80 per cent. He laid off his only staff member. 

Cruel summer

Most of the breweries say they rely on tourists to buy lots of beer during the summer, when "every day is a holiday," Wagner said.

"That's a lot of pints we're not going to sell this summer." 

He said even when restaurants are permitted to reopen, it will only be to locals, and physical distancing will be in order, so he thinks orders for kegs will be down by at least two-thirds. 

"We'll keep chugging along," Wagner said, before musing "that'd make a good T-shirt!" 

Bogside Brewing in Montague has been open for less than a year, but owner David McGuire said the brewery has been able to remain open and is grateful to the province for allowing delivery, and to customers for ordering from them. 

"While the taproom closure did prevent us from adding staff, participating in Burger Love, and launching our new food partnership in the taproom with the Wheelhouse, we have started expanding our taproom offering with Wheelhouse takeout and we will be adding more staff in the next 30 days if the situation continues to progress positively," said McGuire in an email.

Seeking government help

P.E.I.'s craft beer industry is now seeking support from the provincial government. 

On April 15, the P.E.I. Craft Beer Alliance sent a letter to the P.E.I. Liquor Control Commission.

"Survival of the breweries on P.E.I. will be a question as we continue down this road. The imminent collapse of our tourist season that our industry relies so heavily upon is now adding to the stresses of trying to survive," Squires wrote on behalf of the group.

The group asked the province to:

• Eliminate the tax of 25 cents per litre of beer the brewers themselves sell or sell in kegs to licensees. This "no touch, no tax" policy is in place in New Brunswick.
• Allow breweries to mail product off-Island.
• Make delivery service permanent.
• Allow direct delivery of packaged goods to licensees and agency stores.
• Renew all licenses for manufacturers and waive licensing and marketing fees for 2020.

The liquor commission responded to CBC News via email this week and said it has agreed to waive and renew licensing fees from June 1, 2020 until May 31, 2021, at a cost to government of about $140,000. The commission also agreed to waiving marketing fees from April 1 to  May 11 and reinstate them only if "a reasonable number of our corporate stores are opened." Those fees are trickier because P.E.I. manufacturers already get a 50 per cent discount, and the commission has to be mindful of potential retribution from other manufacturers, as well as requirements of international trade agreements. 

Jared Murphy at Lone Oak Brewing Co. in Borden-Carleton said the two most important financial relief efforts for him as a craft brewer would be eliminating the tax on draft and the commitment to allow direct delivery of packaged (bottled or canned) products. 

A letter sent to the P.E.I. Craft Beer Alliance and shared with CBC reveals the commission did not commit to eliminating the tax on draft, but said it is "agreeable to investigating at a future date." Likewise, allowing direct delivery to bars and restaurants and thus eliminating the commission as middle man "will require further examination," the commission said. 

Deliveries by mail are the jurisdiction of the receiving province or state, the letter added. And the commission promised to assess the outcome of the temporary measure to allow home deliveries on P.E.I. before the current end date of Aug. 31. 

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