How the economy looks through the eyes of a craft brewer
The pandemic continues to cause all kinds of chaos for the beer industry, affecting everything from keg sales to shipping and receiving, but a few signs point to the economy moving toward normalization.
Bobby Dykstra, director of national accounts for Boulevard Brewing Co. and vice president of sales for parent company Duvel Moortgat USA, just got the latest numbers on the beer industry and shared some insight. He’s the top local executive at Boulevard, reporting to Seraf Smedt, president of Duvel Moortgat USA.
“Everything seems to change almost weekly, and it’s hard to determine what’s next, where it will hit and when,” Dykstra said. “A lot of it is logistics, just getting product across the country, whether it’s raw materials, things we need for packaging and really everything. There are a lot more curveballs than there used to be, so we have increased lead times. We have to commit to things a lot earlier than we used to do.”
Freight costs nationwide have increased every month in 2021 so far. The freight industry is dealing with a lack of available drivers, increasing fuel costs and surging demand for goods.
One industry product in high demand is the aluminum can, as craft brewers who once sold all their beer in-house turned to packaging to make sales. That makes cans challenging to buy, let alone ship.
The good news, though, is that keg sales have started to return after virtually disappearing during the pandemic. With people sheltering in place during the height of the pandemic, they weren’t eating out or going to bars, which are known in the industry as on-premise sales. Instead, they bought packaged beer from stores, known as off-premise sales. That trend began inverting this spring as people started to return to restaurants and bars.
“Nationwide, now you have on-premise craft beer sales up 87%, and you have off-premise sales down 18%, so it’s nice to see some of the on-premise sales coming back,” Dykstra said. “We’ve been seeing things start to normalize as restaurants, bars and stadiums reopened and our retailers started getting their business back. But we’re also keeping a lot of the off-premise momentum we built last year as well. A real driver has been seltzers, which are up 18% on a national level. Here at Boulevard, we’re beating that trend and growing our share of the industry.”
Despite the positive signs, Boulevard remains cautiously optimistic. July sales industrywide show on-premise sales starting another decline as the pandemic spikes again.
“Things have been slowing for the beer industry in July, and early August seems about the same,” Dykstra said. “We hope that rebounds, but we can see consumers are being cautious again, and with some new safety policies in place, everyone is adjusting to that again.”
‘Turning more sharply’
The market’s constant shifting puts a huge responsibility on brewing, packaging and logistics to stay flexible as consumers change their buying habits. They have to figure out how much beer to keg and how much to package.
“We absolutely have to watch all of our package types and all of our brew schedules because it does seem to be turning more sharply than it has in the past,” Dykstra said. “We have to be cautious. But our team has just done an unbelievable job doing just that, and we’re very lucky to have them on board steering the ship with production and logistics.”
Boulevard’s Tours and Recreation Center is reflecting changes in consumer habits. After posting strong numbers of guests for May, June and July, especially on weekends, it’s seeing August slow a bit after Kansas City passed an indoor mask mandate.
“We expect to see a dip with that, with people being a little more cautious,” said Julie Weeks, Boulevard’s vice president of communications and culture. “We went into the summer with the mindset that the safety of our employees and guests was the most important. So if we need to put restrictions on capacity, we certainly will do that to make sure that we’re providing a safe experience for everyone.”
Boulevard started reintroducing tours back into its daily routine in June, to huge demand. This included some changes to the tours — having smaller groups and requiring masks everywhere, unless people are actively eating or drinking.
Read the full article.