Minnesota's craft breweries hit by one-two punch as taprooms close and keg sales tank

DULUTH – Minnesota breweries are worried they won't be able to duck a one-two punch to business.

Under Gov. Tim Walz's orders, all bars and restaurants will stop dine-in service starting Tuesday to curb the spread of coronavirus. For brewers, that means closing taprooms and losing out on sales from all the spots where their drafts are served.

"It's basically like a business triage at this point," said Laura Mullen, co-founder of Bent Paddle Brewing Co. She said the Duluth brewery has no current plans to lay off any of its 45 employees and will do whatever it can to avoid having to do so.

"We cannot rely on small businesses, or businesses in general, to pay everyone while they're not working," Mullen said. "Because we will run out of money."

As more people avoid trips to public places, instead opting to stock up on goods before holing away at home, liquor stores could reap the benefits — and possibly lessen the blow for brewers who sell to distributors.

"A brewer that is packaging their product in cans and bottles is experiencing a significant spike in those sales," said Mike Madigan, president of the Minnesota Beer Wholesalers Association. "A brewer that is selling their product at a taproom, just like any restaurant or bar, is likely experiencing a decline in sales."

Tony Chesak, executive director of the Minnesota Licensed Beverage Association, said he's heard that liquor stores are stocking up after seeing an uptick in sales the past two weeks, though "it's not like people are clearing out an entire aisle of vodka."

"The liquor stores are going to get some of the bar crowd because those folks won't be able to go out," said Chesak, who said it "sickens" him to think what effect these closures could have on small, family-run operations.

Some could have to make layoffs or let bills go unpaid. Bartenders who depend on tips won't see customers for almost two weeks. A chunk of breweries in the state only sell beer from their taprooms.

Lauren Bennett McGinty, executive director of the Minnesota Craft Brewers Guild, said her organization has been in contact with state leaders "regarding financial support measures for Minnesota's craft breweries as well as temporarily lifting several restrictions to give breweries the ability keep their businesses operational while serving their communities safely." That would include lifting the cap on growler sales, as well as other measures allowing breweries to sell directly to consumers.

"This is by far one of the most unnerving situations our industry has ever had to go through," Chesak said.

At Castle Danger Brewery in Two Harbors, taproom sales make up about 9% of this year's revenue to date. At Bent Paddle, that number is closer to 20%. And about one-third of what Wild State Cider in Duluth distributes goes on tap at bars and restaurants.

"Keg sales are going to be zero pretty soon," said Adam Ruhland, co-owner of Wild State.

Castle Danger gave all its full-time workers an extra week of paid time off, said Maddy Stewart, the brewery's marketing and events manager.

"This will impact our bottom line," Stewart said.

Some breweries will continue to sell cans or growlers to go from their taprooms. Others are looking into delivery options.

And, Stewart added, the response from the public has been supportive. Customers have chimed in on social media encouraging others to buy gift cards, merchandise or Minnesota craft beers from liquor stores.

"An extreme commitment to buying local," Mullen said, "would be wonderful right now."

Katie Galioto • 612-673-4478