The Independent Brewers Association is putting pressure on the government to help breweries deal with the fallout from the COVID-19 pandemic
IBA chair Peter Philip wrote to the federal government asking for a ‘survival package’ for breweries this week.
The package asks for short-term excise relief and emergency funding in addition to the other measures in the IBA’s budget submission earlier this year, which include increasing the small brewery excise rebate to $350,000.
It comes as the Prime Minister’s ban this morning on pubs, clubs and restaurants offering services to more than 100 people at a time, comes into effect.
IBA chair Peter Philip said that a resource page for members had been developed for essential information and current advice.
“Things are changing by the minute so we’re scrambling to keep that updated,” he told Brews News.
“But early indications are that over the next 6 months, breweries could lose between 30 and 50 per cent of their revenue and if that transpires we will probably lose half of the breweries in the industry.
“Breweries are not highly profitable, and with a loss of taproom revenue, that is often the most profitable part of your business and many breweries won’t survive without that, unless we get consumers behind us.
“So the main thing at the moment is mainting consumer confidence in brewery taprooms.”
Short term survival
As part of the proposed survival package, the IBA has suggested a number of measures to alleviate the financial burden of COVID-19 on breweries.
With excise making up 45 per cent of the cost of beer, the IBA said cutting this was the most “targeted” way that the government can provide assistance that scales with the size of the brewery business.
It has suggested a six-month suspension of excise payments for breweries under 20 million litres would help small breweries that are most at risk, which the IBA estimated would cost $35 million or an average payment of $11,200 per FTE employed by small independent brewers.
The organisation has also suggested a business survival grant. They want the government to provide access to a one-time grant of up to $50,000 and interest-free loans of up to $500,000 to assist small brewers to keep their doors open and staff employed.
In addition to these short-term initiatives, the IBA has made budget submissions asking for small brewer’s excise rebate to be increased to $350,000 in the 2020 budget.
“Most of our members are highly dependent on taprooms for revenue and cash flow, and we’re already seeing that reduced to max 100 patrons,” Philip said.
According to the IBA, revenue from urban taprooms can account for 20-40 per cent of brewery revenues.
However in rural areas, brewpub operations can account for 80-100 per cent of turnover.
“This has the potential to be completely devastating to our industry. We’ve got this triple whammy of our taprooms being severely limited, then that means that our pub trade is going to be severely limited, that’s going to put people under financial pressure to pay their bills.
“Retail is the one potential shining light that we have and later this week you’re gonna see the IBA coming out with a campaign with the Crafty Pint, which will be called Keeping Local Alive, and that will be a consumer campaign working with the trade to promote people to buy local.”
The IBA’s short term advice to brewers is ensuring all cleaning processes were ramped up.
“The advice we’re giving is that breweries need to enact rigorous sanitation and disinfection protocols,” Philip said.
“Any brewery taproom, tables should be fully scrubbed and disinfected in between customers, and very rigorous processes on bars to maintain sanitation and disinfection
“Virtually all the breweries I’ve talked to have stopped doing growler fills, some breweries have chosen to close their taprooms but I think that’s the minority at the moment.”
The IBA is asking brewers to get in touch with their local representatives, and have written a letter detailing the survival package. Read it now.