VTDigger posts regular coronavirus updates on this page. You can also subscribe here for daily coronavirus news. Please send your Covid-19 questions to coronavirus@vtdigger.org
Distillers, winemakers and brewers say they are already suffering from the business shutdowns caused by the coronavirus and worry a summer of continued social distancing could make it hard to survive.
During a virtual roundtable discussion hosted by Rep. Peter Welch, D-Vt., representatives from spirits, wine, beer and hard cider producers expressed frustration with the Small Business Administration’s Paycheck Protection Program and said they expect revenue losses during the summer.
“As a restaurant we need to be able to survive — as well as all the other restaurants — in order to supply all of the beer, wine and cider and everything that our colleagues are producing,” said Elise Pecor, who manages Vermont Pub & Brewery, which has been operating in Burlington since the late 1980s.
Even as Gov. Phil Scott has begun to slowly reopen the state’s economy, many in the service industry are expecting social distancing to continue over the coming months, and a customer base that is wary of large gatherings. This week, White House coronavirus response coordinator Dr. Deborah Birx said social distancing will continue through the summer months.
Pecor, who furloughed 41 employees soon after Scott declared a “Stay Home, Stay Safe” order, said she is expecting tourism to be “zero to none this summer,” the season she said she normally makes the most money.
“The reality of going back to business as usual after the order is lifted, is very, very grim. I don’t believe we will go back to business as usual,” Pecor said.
Ken Albert, who founded Shelburne Vineyard in 1998, said he is expecting a 60% loss in revenue during the 2020 summer and that the Paycheck Protection Program will be of no help because it only covers eight weeks of payroll.
“We’re obviously not going to experience the crowds of visitors from out of state. We’ll see some but it will obviously be reduced,” he said.
Albert said he is also trying to prepare to reopen for business by trying to procure enough personal protective equipment (PPE) to keep both his staff and any customers safe.
“One of the concerns we have is keeping our employees safe as well as any visitor that comes to us safe,” Albert said. “I don’t want to open it up and have someone not have a face mask or the right gloves or the proper shield someplace.”
Nationally and in Vermont small distilled spirit operations have been hit particularly hard, with the American Craft Spirits Association predicting that 67% of the 2,000 small craft producers in the U.S. could go out of business in the next three months.
Ironically, the dire forecast for small spirit producers comes as, across the country, sales of alcoholic beverages have spiked significantly during the Covid-19 crisis. However the trend varies greatly from producer to producer with some seeing sales soar, while others have seen a dramatic drop, according to Nielsen data.
Jeremy Elliott, co-owner of Smugglers’ Notch Distillery and president of the Vermont Distilled Spirits Council, told Welch that if small spirit producers are going to survive it is imperative that the federal excise tax for the first 100,000 proof gallons is permanently set at $2.70 per proof gallon — a tariff change that was made in the Craft Beverage Modernization portion of the Tax Cuts and Jobs Act of 2017 and that applied to calendar years 2018 and 2019.
“The folks that do make it through this time, we’re not going to be able to make it unless there is a permanent reduction,” he said of the need to keep the excise tax at $2.70.
Elliott added that the Paycheck Protection Program is problematic in the industry, particularly because of the narrow coverage window.
Elliott advocated that Welch and Congress expand the coverage period to a 12- or 16-week period that would help brewers, distillers and the service industry keep employees on payroll throughout the summer — when many businesses add additional staff.
“We run a seasonal business,” Elliott said. “In the summertime we may be doing five markets a day — which is all the part-time employees. If we limit this to just an eight-week period, then we’re not getting any further forward.”
Elliott also said that Scott’s executive order allowing alcohol delivery could be a lifeline for businesses, but that he did not feel enough alcohol producers were taking advantage of it.
“That may be the course of action for who knows — six months, 12 months. I don’t think that many of us as distilled spirits members have taken advantage of that, but that’s an opportunity for us to keep our businesses going,” he said.
Mark Ray, the owner of Stowe Cider, concurred with Elliott about the importance of direct to consumer delivery, but added that the permit price of $330 may be too expensive for some outfits and that it should be reduced.
Ray added that he believes it is necessary for state officials to communicate with business owners about possible guidelines or restrictions for the summer so that they can prepare strategies to attract customers.
“Right now the state is slowly opening back up in the next 2-3 weeks. How do we prepare for that if we’re not getting any inside look into what some of the restrictions or guidelines are going to be,” Ray said.
“I think some folks might put an emphasis on socially distant outdoor seating if that is going to be feasible or some sort of contact free sales opportunities at their place of business,” he said.
Welch told the more than 50 participants listening in to the discussion that there is a “good deal of uncertainty ahead” and that when the state does begin to reopen the virus will still be present.
“More pain awaits because if you open up it doesn’t mean people come back, it’s going to take awhile for people to feel comfortable in settings where there are a lot of people,” he said.
Find more than 500 local businesses offering curbside pickup, new hours and phone orders in VTDigger’s business directory.
