CORONAVIRUS

Iowa craft breweries turn to less-profitable retail market during coronavirus

Shortage of aluminum cans among obstacles

Adam Elkin, lead brewer, fills a glass with two-year-old barrel-aged imperial stout at Iowa Brewing Company in Cedar Rap
Adam Elkin, lead brewer, fills a glass with two-year-old barrel-aged imperial stout at Iowa Brewing Company in Cedar Rapids on Wednesday, Jan. 27, 2021. Sales of beer in the brewery’s taproom have evaporated during the pandemic, so Iowa Brewing has had to focus more on its statewide distribution through grocery stores. (Rebecca F. Miller/The Gazette)
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A quick look inside Thew Brewing Co.’s taproom in Cedar Rapids’ Kingston Village neighborhood has one thing conspicuously missing — any bar chairs.

“It’s easier to keep tables six feet apart if there isn’t any bar seating,” said Haley Flenker, co-owner of Thew Brewing.

“The weirdest feeling to go into a bar and there not be any bar seating.”

A bar without chairs is among the many creative adaptations craft breweries in the Corridor have needed to make as the coronavirus drastically changes their business models.

Usually January and February are slow months anyway, said Craig Stephan, co-owner of Iowa Brewing Co. in Cedar Rapids. He’d usually just need to wait it out until St. Patrick’s Day

Now, he’s expecting to wait a lot longer.

Bars operating at reduced capacities during the pandemic have resulted in fewer keg sales.

“If they were ordering a keg a week, now they’re ordering a keg every four months,” Stephan said.

“They’re all off between 50 and 80 percent, and yet all your overhead remains the same. So it’s been difficult for everybody in our industry.”

Meanwhile breweries’ taprooms are seeing the same problems that the bars they sell to are facing.

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“We can’t promote gatherings,” Stephan said. “We can’t promote live music. We can’t promote any kind of party since March 15 last year.”

Big Grove Brewery in Iowa City has been relatively insulated because of its larger space, which can hold hundreds of people while still abiding by proper social distancing.

The building used to be a lumberyard.

A temporary “winter guard” barrier allows customers to sit outside while staying relatively warm, and the fully outdoor patio remains open for anyone willing to brace January weather.

“It’s been a big help,” said Danny Standley, Big Grove’s managing partner.

Big Grove hired almost 40 more employees since the pandemic started, Standley said, while adding new service including to-go Detroit-style pizzas on Wednesdays.

For those without that luxury, retail sales have been essential to staying in business.

Many breweries have sold their beers at Hy-Vee.

Iowa Brewing brewed a special beer that will age in whiskey barrels for a year before selling at two Cedar Rapids Hy-Vee locations.

Thew Brewing, similarly, is releasing two barrel-aged beers for Hy-Vee stores on Crosspark Road Hy-Vee in Coralville and on Johnson Avenue SW in Cedar Rapids.

It’s far from a perfect solution, though.

“Packaged beer in cans cost a whole lot more than the keg beer does,” Stephan said.

“Even though your sales may go up because people are buying more canned beers, your profitability goes down.”

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Instead of just having the cost of the beer going into the keg, can sales require a brewery to buy the can itself, the six-pack holder and labeling.

Once beer goes into a can, and if that can doesn’t sell, Kalona Brewing just has to destroy it, explained Lucas Gibson, the brewer’s production manager.

Glass growlers, on the other hand, can be filled, emptied and filled again.

“Before the pandemic, people would bring in a used growler and we’d fill it up on the tap line,” Gibson said.

“It’s a reusable packaging item and people collect growlers from different breweries.”

But Kalona Brewing isn’t sure whether Iowa’s COVID-19 restrictions allow brewers to refill used growlers — even if they’ve been sterilized by the brewery. And as customers accumulate used growlers they can’t reuse, many are shifting to buying from cans, Gibson said.

“We want to be able to know if we can take used growlers again or if we can exchange them and clean them up,” he said. “It’s hard to get a straight answer, so to play it safe, we’ve been giving everybody new stuff.”

Gov. Kim Reynolds never specifically prohibited growler refills and the Iowa Department of Inspections and Appeals says its FAQs about customer refills in restaurants don’t pertain to growlers. The department just recommends breweries sanitize the glass jugs before reuse.

A shortage of aluminum cans has further complicated the situation as well.

“Especially the last four or five months have been very difficult to acquire cans,” Stephan said.

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“In some cases, we craft brewers have had our orders canceled because they just can’t fill all their orders right now.”

Iowa Brewing usually buys its cans exclusively from U.S. companies, but it needed to look elsewhere during the pandemic.

After running out of cans for its Easy Eddy beer, Big Grove needed to fill and wrap cans intended for less popular beers with an Easy Eddy label to meet demand.

“We could either do this or we could just not put Easy Eddy out on the market,” Standley said.

When Thew Brewing accelerated its retail sales operations when the pandemic hit, it opted to sell its beer in glass bottles instead of cans. Flenker is thankful for that now.

“Canning lines are very expensive, and bottles we can do a little more easily in-house,” Flenker said.

“Going with bottles I think was a great bet.”

Even with that bet, the business model is far from ideal.

“We’ve all just been stumbling along trying to survive on 30 or 40 percent of what we were doing a year ago,” Stephan said.

Craft breweries said state and federal stimulus have helped for now.

Still, Flenker can’t wait to have seats at Thew Brewing’s bar again.

“We are looking forward to everyone being vaccinated and being back at 100 percent capacity,” Flenker said.

Comments: (319) 398-8394, john.steppe@thegazette.com; (319) 339-3157, erin.jordan@thegazette.com

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