Name: Tapped out: COVID-19 puts Iowa's breweries in vise, could force closures
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Tapped out: COVID-19 puts Iowa's breweries in vise, could force closures

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Des Moines RegisterView CommentsPIVO Brewery owners Craig and Sara Neuzil were on the cusp of a major decision about a year ago: Should they add a canning line to their brewhouse or build an events space on the property?The cost was about the same, and they eventually decided to build the event center. They wanted to cater to the community in Calmar, and after all, their business is based on people gathering together for a drink.The Neuzils secured a loan and built the space for about $500,000. It was finished in time to host exactly one event, on March 13. Three days later, Iowa Gov. Kim Reynolds in response to the novel coronavirus outbreak.Losing revenue from the event space hurts, and without a canning line, PIVO can’t sell canned beer to local retailers, one of the few revenue streams still available during a pandemic.&nbsp;“We gambled with the wrong option there,” Sara Neuzil said. “... The idea that events would be outlawed was not even a possibility.”&nbsp;&nbsp;The new reality of Iowa’s craft breweries approaches Armageddon. Closed restaurants and bars leave virtually no demand for keg and draught sales. Taprooms, which sometimes represent the largest chunk of a brewery’s revenue, are shuttered, too, forcing layoffs or furloughs of staff members.&nbsp;To keep workers on the payroll, breweries have applied for federal and state assistance. At least one has temporarily halted production, while others have kept skeleton crews on to keep brewing.&nbsp;&nbsp;Before the pandemic,&nbsp;Iowa's craft beer landscape had thrived. In about five years, craft breweries in Iowa jumped from around 60 breweries to more than 100 last year, creating hundreds of jobs and millions in economic impact.&nbsp;&nbsp;Breweries are left with limited options to make money: offering customers curbside beer pickup or carryout, beer delivery or relying on sales of cans, bottles and six-packs at grocery and liquor stores.The Neuzils, who don’t collect salaries, have laid off all their part-time staff, leaving only their brewer on board. Their family has helped with a donation and, luckily, their creditors have been&nbsp;lenient on collection.PIVO is still brewing, and it's spending the weekend&nbsp; not just in northeast Iowa but all the way down to the Des Moines metro — about 200 miles from Calmar, a three-hour uninterrupted drive. They have no delivery vehicle, so the family minivan will have to do.“We’ve got to do whatever we can to keep the cash flow going to keep the lights on,” Craig Neuzil said.Last week, the national Brewers Association released the results of in which 46% of breweries said they could continue operating for one to three months more. An additional 25% of breweries estimated they could keep going for three to six months.&nbsp;Nearly 13% can’t make it more than four weeks, the survey said. Without the relaxation of social-distancing measures or an injection of governmental aid, the association expects thousands of breweries across the country to close.J. Wilson, the minister of Iowa beer for the Iowa Brewers Guild, said the survey translates “pretty well to what we’re seeing in Iowa.” He called COVID-19 a “gut punch” to the industry.“The longer this goes on, the more danger there is for everybody,” he said, adding that the financial strain could get “a lot worse” if social distancing lasts two more months.&nbsp;&nbsp;&nbsp;&nbsp;Iowa brewery owners agreed.&nbsp;“I do have fears that there will be some that don’t make it through,” said Dave Morgan, the founder of Singlespeed Brewing Co.The Waterloo-Cedar Falls brewery lost 60% of its sales because it had to close its taprooms. It also lost its keg sales, leaving Singlespeed only 20% of its usual business: the cans and bottles it sells to retailers and customers at its taprooms. That really only limits the bleeding, Morgan said.&nbsp;Morgan temporarily laid off most of his staff.Jon Crook, the CEO of Carroll Brewing, furloughed everyone, including himself. He shut down the brewery in Carroll, even leaving some lager in the tanks.He saw the pandemic coming in February and made sure his customers had enough canned beer on hand. Crook thinks his brewery can rely on outside can sales for the time being, but he wondered how much longer other breweries could make it.“It became a much simpler deal for us to put everyone on furlough and concentrate on outside can buyers,” he said.&nbsp;In the Brewers Association survey, breweries identified one overarching component helping them survive: government assistance, including Small Business Administration forgivable loans, SBA disaster loans and increased unemployment provisions.&nbsp;Breweries have also applied for funds from the , which was included in the CARES Act passed by Congress last month. The loans allow&nbsp;businesses to keep their staff on the payroll for at least two months, even if the workers have nothing to do.&nbsp;John Martin, founder of Confluence Brewing Co.&nbsp;in Des Moines, applied to the program, and Confluence was approved, allowing him to keep his staff of 38 paid. He called it a “godsend.”&nbsp;“Our people have taken good care of us, and we want to take good care of them,” he said.&nbsp;Morgan, of Singlespeed,&nbsp;eventually gained approval for a&nbsp;loan, too, allowing him to bring 28 employees back on. The company&nbsp;has also applied for an Economic Injury Disaster Loan from the SBA, but he hasn’t heard a response on that.&nbsp;State help has yet to materialize. With more than 25 employees, Singlespeed is too big to qualify for the Iowa Economic Development Authority.&nbsp;“The state of Iowa has essentially done nothing for businesses of our nature,” Morgan said.The brewers guild, however, hosted a virtual in late March, that will raise about $20,000, Wilson said. Together, breweries have laid off about 900 employees in total.&nbsp;Speaking with the Register last week, Dave Winslow, owner of Jackson Street Brewing in Sioux City, said he hadn’t received federal assistance for his brewery yet. He’s been working more than ever, helping with to-go beer orders and labeling beer cans.&nbsp;The brewery is open only four days a week now, and part-time servers are working one shift a week to help fill to-go orders.&nbsp;Winslow thinks he can keep going for a few months. He’s the only full-time employee, and he doesn’t owe anything on loans. He has a small staff, and he’s not making large rent payments.&nbsp;But summer travelers, ones on their way to mountains out West or South Dakota’s Black Hills, are a big part of his business, and he's unsure people will vacation like they normally do.“The toughest part is just not knowing what the summer is going to be like,” Winslow said.Nowadays, a table sits beneath a tent outside Confluence Brewing, the site of a dead drop so obvious that it wouldn’t make it into the worst spy movie.&nbsp;When a customer arrives to pick up beer, they park in the lot outside, call the brewery and read off their credit card number to pay for the beer. Then an employee comes out, puts the beer on the table, waves at the customer and goes back inside so the customer can grab the beer.Half of Confluence’s sales are usually draught beer to bars and restaurants, but the curbside sales out of the taproom have done well, keeping pace with last April. Martin credits the brewery’s fans and the fact that Confluence has released some of its “heavy hitters” recently, including Extinction Event, its constantly evolving New England IPA.&nbsp;“We appreciate the fan base so much,” Martin said.&nbsp;While not as far-reaching as the PIVO delivery, Singlespeed delivers Wednesday through Sunday to different areas near the Waterloo-Cedar Falls area depending on the day. In Des Moines, Exile Brewing Company is delivering.&nbsp;Want a beer? Here's of Iowa breweries taking carryout orders.&nbsp;Morgan said nearby residents are enjoying the delivery — and Singlespeed will keep delivering — but income-wise, it’s only a “drop in the bucket.” The brewery isn’t built to operate without the taproom revenue.&nbsp;“We’re not super interested in taking on more debt, but we’re also not going to quit on this business model,” he said.In Decorah, the pandemic has forced&nbsp;Toppling Goliath Brewing Company its heralded release events, switching to curbside pickup and loosening restrictions on who is allowed to pick up the beer.&nbsp;More:Like Confluence, other breweries have seen their customers step up. Winslow said he’s seen customers he doesn’t recognize.&nbsp;Wilson said Iowans in need of beer should get some — or gift cards or merchandise – from their local brewery.&nbsp;“They need cash flow right now to stay afloat, to get through this,” he said.&nbsp;PIVO’s owners are thankful for their customers in the Des Moines area, who&nbsp;make the long delivery trips worth it.&nbsp;&nbsp;&nbsp;It wasn’t something PIVO did before the pandemic, but a friend suggested it, almost jokingly, Sara Neuzil said. She and her husband finally got some good news during the week: approval for the Paycheck Protection Program, allowing them to bring back two employees.&nbsp;“You just have to wait it out,” Craig Neuzil said. “Once we do reopen, the customers are still going to be there.”&nbsp;Austin Cannon covers the city of Des Moines for the Register. Reach him at awcannon@registermedia.com or 515-284-8398. Your subscription makes work like this possible. Subscribe today at . View Comments

Des Moines RegisterView CommentsPIVO Brewery owners Craig and Sara Neuzil were on the cusp of a major decision about a year ago: Should they add a canning line to their brewhouse or build an events space on the property?The cost was about the same, and they eventually decided to build the event center. They wanted to cater to the community in Calmar, and after all, their business is based on people gathering together for a drink.The Neuzils secured a loan and built the space for about $500,000. It was finished in time to host exactly one event, on March 13. Three days later, Iowa Gov. Kim...

Tapped out: COVID-19 puts Iowa's breweries in vise, could force closures

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