Nimble thinking driven by the Covid-19 pandemic will remain vital for breweries as New Zealand comes out of lockdown and consider what they have learned from the experience.
The Covid-19 lockdown meant bars, restaurants and bottle shops were shut for almost two months and restrictions were placed on supermarket shopping. The government allowed online sales of beer under the essential service forcing breweries to adapt to online selling, a side of the business many had ignored or neglected.
But the lockdown and the economic crunch proved a blessing in disguise for many as it forced them to invest in IT and rethink all aspects of business.
Auckland-based Epic Beer had an online store but it served little purpose until lockdown hit. Owner Luke Nicholas says it accounted for only 2 per cent of revenue before lockdown. “We sold more t-shirts than beer through the online store.”
Online sales “exploded” during the eight weeks of level 4 and level 3 and held up surprisingly well since bars and bottle stores reopened in late-May.
“Basically it looks like it will turn into 5 per cent of sales so we do have some growth there,” Nicholas said.
He reckoned half the online orders were from new customers unaware they could buy beer online until lockdown.
The online store will focus on 24-pack cases in the future – a deliberate ploy to make sure they don’t cannibalise sales through other channels.
“We have an unspoken agreement with our customers – the retailers and bottle stores – that we won’t compete with them in six-packs and singles. We want to create an ecosystem that works for everyone,” Luke said.
“We don’t want to undercut them but we now have an offering for those who want a 24-pack of the latest hazy at a slightly discounted rate.
“Online is not going to be our core business but we definitely sell more beer than t shirts now.”
The other lifesaver was their kegs-to-cases deal. With bars closed there was no outlet for keg beer for two months and he credits former NZ Hops boss Doug Donelan for the idea.
“I was wondering what I was going do 600 kegs and nowhere to sell them,” he said.
“Doug said `why don’t you bottle it?’ He said they used to do it sometimes when he worked at Malt Shovel in Sydney. And I was like ‘d’oh, why didn’t I think of that?’”
Kegs of their flagship Armageddon and Pale Ale were pumped back into a bottle filler and run through the bottling machine as normal.
“We did whatever could to make sure oxygen pick up was minimal,” he explained.
Nicholas also tasted each batch for freshness and transparently advised customers to drink it within three months to ensure freshness. The 24-packs of Armageddon cost $75 and sold out in days.
Nicholas says the necessities caused by lockdown drove him to re-examine all aspects of his business, many of which became apparent as his core team of seven were forced to take on new tasks and were forced to find solutions.
“Every time we got a challenge, it changed the way we did business,” he said.
“This experience has made our business better – we had to be more efficient in order to survive. We’re going to be better because of hardship.”
Gisborne-based Sunshine Brewery is another where the lessons of lockdown will prove vital.
Sunshine is one of New Zealand’s oldest craft breweries and over the past five years they’ve rebranded, got a new brewkit, relocated the brewery and hired a new brewer – but say they had neglected their online channels and taken their local market for granted.
“Our online sales increased dramatically and although It showed us how clunky our online store was, we found a way to make it work,” said co-owner Martin Jakicevich.
“We are still getting substantial sales and will continue to target online sales for repeats and growth in total.
“We found that online is now our biggest outlet for seasonal bottle beers, which traditionally are hard to get into retail stores, this gives us confidence to look at bottling more of them.”
Jakicevich said the brewery discovered new local drinkers through their online store and home delivery.
“After 30 years we thought our local visibility and penetration was good but have been pleasantly surprised how many new drinkers popped up needing home deliveries,” Martin said.
“We are experiencing a noticeably higher level of retail sales in Gisborne both through the taproom and local liquor retailers.
“We feel that more people were dragged in by our ability and willingness to service them over the dark days and have stayed loyal customers.
“It just shows how important it is to continue to market to our local market. I have had a reasonable amount of comment from people saying they used to be Steinlager or Tui drinkers but after drinking our beer they couldn’t go back now.
“In all dark times people convert to religion, our religion just happens to be craft beer.”
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