The effects of the COVID-19 pandemic continue to rock all facets of the craft brewing industry.
The Brewers Association (BA) ended 2020 with an operational net loss of $3.5 million, according to its 2020 stewardship report, which the organization released today.
“No one was immune to hardship in 2020, including the Brewers Association,” president and CEO Bob Pease wrote in a note opening the report. “With the cancellation of all of our in-person events, representing a revenue reduction of nearly 70%, we reduced our workforce by 40% and recast our budgets to best position the association to support our members during unprecedented uncertainty.”
The BA, the national not-for-profit trade group that represents the nation’s small and independent craft brewers, was forced to cancel the in-person portions of all four of its signature events in 2020 due to the pandemic: the Craft Brewers Conference (CBC), World Beer Cup and BrewExpo America; SAVOR; Homebrew Con; and the Great American Beer Festival.
In 2019, events were the BA’s largest revenue source, totaling $16,173,153. In 2020, event revenue declined 89.5%, to $1,702,215. Advertising and sponsorship revenue totaled $1,982,023 in 2020, a 57.3% decline compared to the $4,648,272 generated in 2019.
Due to the cancellation of in-person events, pre-planned, applicable event sponsorships were refunded. The organization’s pivot to virtual events created other opportunities for sponsorships.
“The BA staff worked hard to shift 2020 events to online so our members could still connect virtually and access educational content,” a BA spokesperson said. “We’re thankful for the continued support from our sponsors who helped make those virtual events happen.”
Membership fees were the BA’s largest revenue source in 2020 at $4,853,358, a decline of 5.7% compared to 2019 ($5,148,687).
“During the pandemic, to ensure breweries were not missing important updates because of financial barriers, we offered temporary membership free of charge, and extended many expiring members, or offered monthly payment options,” a BA spokesperson told Brewbound. “Even in a challenging year for our members, we saw a high rate of member retention and renewal.”
Membership in the BA’s core craft breweries declined 1%, but the organization saw larger declines in allied trade and brewery-in-planning memberships.
The organization’s total revenue declined 64.9%, to $9.7 million, in 2020. At present, the BA is forecasting 2021 revenue at $12.2 million with virtual models in place for all events. If CBC is able to take place live, the number could change, a BA spokesperson said.
The BA cut its salary and benefits spending by 16.8% — from $7,727,006 in 2019 to $6,424,857 in 2020 — through two rounds of layoffs in April 2020 and June 2020. The cuts, which amounted to the loss of 40% of the staff, affected notable BA employees such as former craft beer program director Julia Herz, state brewers guilds manager Acacia Coast, American Homebrewers Association director Gary Glass and event director Kathryn Porter Drapeau.
Salary and benefits were the organization’s largest expense in 2020 and 2019.
In addition to reducing salary expenses, the BA also slashed its spending in several other categories:
- Event operations were cut by 91.%, to $487,740;
- Sales and marketing was cut by 65.9%, to $790,152;
- Outside services were cut by 62.2%, to $1,879,566.
The BA’s donations and grants were cut from just more than $1 million in 2019 to $34,492. The bulk of 2019 donations and grants funded the American Brewing History Initiative through the Smithsonian Institution, a three-year program that concluded.
Total expenses were cut in half (50.9%), but the BA’s operational net was in the red by $3,580,733. By comparison, the BA ended 2019 with a surplus of $639,970.
“While there are signs of a potential end to the health and economic crisis, the challenges of 2020 will likely continue into some, if not all, of 2021,” Pease wrote. “The Brewers Association will continue to work tirelessly to promote, protect and advance the interests of you, our members, and the craft brewing community at large.”
The pandemic continues to hinder the BA’s biggest source of revenue, events, this year. In January, the organization announced it would postpone and move the Craft Brewers Conference (CBC) from late March 2021 in San Diego to September 2021 in Denver. Attendance at the event, which normally draws nearly 15,000 people from across the globe, is expected to be cut in half and capped at between 6,000 and 7,000 attendees. Registration will open on May 4, according to an email from the BA to potential attendees earlier this week.
“We will have a host of health measures in place to keep attendees comfortable and safe,” the email read. “And we will have a super flexible cancellation policy if your plans change after you register.”
An earlier version of the CBC website’s FAQ section said attendees could be expected to provide proof of vaccination, but that has since changed after an update to the site on April 12.
“Currently, our plan is to not require proof of vaccination,” the site reads. “However, we strongly encourage all attendees and exhibitors to speak with their doctors and get the vaccine if they are eligible.”
Last week, the BA announced the cancellation of the public, in-person portion of the Great American Beer Festival (GABF). The festival’s beer competition will go forward, with winners announced during an awards ceremony at CBC.
SAVOR, the BA’s annual beer and food pairing event in Washington, D.C., is canceled in 2021. HomebrewCon, the American Homebrewers Association’s annual conference and social event, is slated to take place virtually June 17-19.
This story was updated on April 16 at 12:20 p.m. ET to include additional information provided by the Brewers Association.