For months, the pandemic has kept Vermont beermakers’ tap rooms closed and restaurant and bar sales in flux. Breweries large and small have had to find new ways to get their beer into buyers’ hands.
Some have tapped into new markets, upping the quantity of beer they send to out-of-state buyers thirsty for beer from one of the country’s fastest-growing brewing scenes. Others have looked for new ways to deliver beer to Vermonters themselves.
In the spring, Foam Brewers had planned to open a new restaurant attached to its Burlington brewery — on what ended up being the same day that Gov. Phil Scott announced Vermont’s stay-at-home order.
Before the pandemic, draft beer and cans sold at the brewery itself were “by far the biggest source of revenue” for Foam, said Jon Farmer, one of the brewery’s co-founders. “As soon as we couldn’t do that, we took a pretty big hit and kind of had to start thinking how we would adapt and flip our business model on its head.”
When the state allowed home alcohol deliveries in March, Foam began distributing beer door-to-door in Chittenden County. Those deliveries accounted for as much as 50% of the brewery’s sales during the spring, Farmer said. But since then, it has had to look beyond Vermont to stay afloat.
Before the pandemic, Foam had been part of a network of out-of-state distributors that sell to beer festivals in the New England area. Through the network, the brewery began filling wholesale orders to stores outside Vermont for the first time. It also set up an online portal where buyers in several states can order beer delivered to their doorsteps.
“Some weeks 90% of beer is sold from out our front door and local home delivery, and other weeks 80% is going to go to local distribution and out-of-state distribution,” Farmer said.
Some brewers look out of state
Other small Vermont-rooted breweries have also turned to sending beer outside the state.
Hinesburg-based Frost Beer Works has nearly doubled its beer sales outside Vermont, according to Garin Frost, the business owner. The brewery sold about 2,000 barrels of beer through out-of-state distributors in 2020, after moving roughly 1,000 barrels in 2019.
“They used to sell so much out of their taproom that we didn’t really get a whole lot of beer from them previously,” said Matt Schulman, owner of Sarene Craft Beer Distributors, which manages Frost’s distribution in several New England states. “But every draft they were able to give us this year wiped out of the markets we’ve sent it to.”
Frost has been growing production each year since it was founded in 2015, and last began building relationships with out-of-state distributors — a step that “put us in a reasonably good position” going into the pandemic, Garin Frost said.
He thinks that this year, some of that out-of-state growth is attributable directly to the pandemic. With fewer opportunities to sell out of Frost’s taproom — and fewer tourists visiting Vermont — the brewery has sent that excess beer out of state, and it has flown off shelves there.
“They could have sent us a whole lot more beer [in 2020], and New York drinkers or wherever we’re selling it would have eaten it up,” Schulman said.
But despite the brewery’s distributing success, profits have not always followed.
“From a profitability standpoint, there’s been a fair amount of impact because we did drop off some sales on-premise,” Frost said. Breweries tend to make higher margins on in-house sales than on wholesale orders, as they avoid packaging and shipping costs by selling out of their own facilities.
Larger Vermont brewers, too, have packaged and shipped more beer outside the state during the pandemic. Fiddlehead Brewing Company, which used to sell up to 80% of its beer annually in draft form — much of it sold on-site or to bars and restaurants — moved this year to canning its flagship IPA, and has likewise increased out-of-state distribution.
“Adding IPA cans to-off premise distribution out of state has helped us maintain growth,” said Matt Roth, Fiddlehead’s director of sales.
Can shortage emerges
One problem? As breweries package more beer in cans than in years past, while restaurant and in-house sales of draft and kegged beer remain diminished, the market has been struck by an aluminum can shortage.
Frost’s production numbers dipped slightly over the past two months, Garin Frost said, as its supplier reduced its can deliveries by 20%. Foam, too, has had to delay some deliveries due to the shortage, which has plagued brewers nationally.
“Kind of the only way we can stay afloat is to can beer right now,” Farmer said. “If we can’t can beer, we can’t make payroll and pay our bills.” Foam has been lucky, he said, as friends in the brewery scene have stepped in to provide more cans when orders have been delayed.
Though some breweries have expanded distribution, the industry as a whole has been hit hard by the pandemic, said Melissa Corbin, executive director of the Vermont Brewers Association. In particular, brewers who may not have had previous relationships with out-of-state distributors have struggled.
Vermont’s Economic Recovery Grants have nonetheless proven helpful to the state’s breweries. Across the industry, around 40% of breweries’ unmet financial need have been met by those grants, Corbin said.
For breweries that were founded as small establishments rooted in Vermont communities, the question of how to adapt distribution to the pandemic has at times pushed their business models into new areas.
“We very much started Foam with the intent of it being small, so that we could kind of sell everything out the front door,” Farmer said. “We wanted to have the freedom to constantly brew new beers, and it’s really hard to always be adding new brands if you’re a larger-distribution brewery. So it was a very intentional model that was meant to make the business viable with larger margins but smaller quantities from the get-go.”
Through it all, brewers are anxiously awaiting the day when they can fully reopen tap rooms and dining areas to eager customers.
“Our retail pub and the beer garden are adjacent to our production facility, so leaving those areas open was too high risk [during the pandemic]. It was unfortunate,” said Dan Fulham, owner of Middlebury’s Otter Creek Brewing. “We have a great outdoor space, and that’s great business, because you don’t have to share those margins with a distributor. … We’re looking forward to the day when we can reopen that to the public.”
