Sonoma County breweries have been able to navigate COVID between federal aid and loyal followers

Unlike their brethren in the wine industry, local craft brewers were more hamstrung when the coronavirus started to take its toll on the economy last spring.

Most craft breweries make the bulk of their money selling directly from taprooms, while bigger players such as Petaluma-based Lagunitas Brewing dominate retail shelves.

Once taprooms shut in mid-March of 2020 as public health officials sought to stop the spread of COVID-19, brewers were left scrambling on how to keep in business.

That included Barrel Brothers Brewing Co. in Windsor, where co-founder and brewmaster Wesley Deal also saw an opportunity for his business located in a nondescript industrial park on the city’s west side.

“We started to realize that we have all this taproom real estate that we're paying rent on and it just really isn't doing anything for us, especially as our business was shifting more toward a production focus, because that was the only way we could sell beer,” said Deal, a 30-year-old who also is in the process of obtaining a master’s degree in business administration at the University of Southern California.

Deal ripped out half of the taproom to put in two large grain silos so the brewery could save on malt costs buying bulk. The 10,000 pounds of storage capacity allowed the brewery to save as much as 40% on malt. He then added a large piece of vacuum distillation equipment that allowed the brewery to make a new line of nonalcoholic beers that have become popular. The leftover alcohol then was used for a new canned cocktail line that features such flavors as orange blossom lemon drop and makrut lime cosmo, part of an emerging “beyond beer” category that is growing.

“It is challenging for a lot of people that have just been brewers their whole career to have infrastructure built out to just make beer where it's hard to shift,” Deal said. “That's the interesting thing for me coming from more of a food science background and having the ability to experiment and meet new people and share concepts … going back to that innovation thing. I think it's just such a cool way to kind of align your business.”

Other North Bay brewers were forced to adjust during the past 18 months as they grappled with restrictions with on-site consumption. Sonoma County has more than two dozen breweries. St. Florian’s Brewery in Windsor closed right before the pandemic and another, No Quarter Brewing, also in Windsor, shut two months ago as it noted in a Facebook post that “we have not been able to recover financially to meet the demands of management.” The latter business has said it will launch a crowdfunding campaign to find a new spot.

“There was a huge channel shift,” said Bart Watson, chief economist for the Brewers Association, which represents independent breweries in the United States. “Consumers drank about the same amount of beer.”

Breweries could not sell on site nor ship kegs to taprooms and bars. Thus, they focused on increasing retail sales and selling cans directly to consumers, whether for pickup or delivery. Some also started using e-commerce business – a channel that has been vital to local wineries –to help them make up revenue as it’s more profitable selling directly to consumers.

“The demand never went away,” Watson said.

The number of breweries in the country actually has increased. At the end of 2020, the U.S. had 8,884 breweries, a 4.5% increase from 2019. Small breweries benefited enormously from an estimated $1 billion in federal aid between the Paycheck Protection Program and the bailout fund for restaurants, Watson said.

Going forward, some of the new pivots will be part of business plans for breweries especially on the ability to sell online. Russian River Brewing Co. in January sold its coveted Pliny the Younger special release within minutes. Such online sales now account for almost 10% of the brewery’s total revenue, said Natalie Cilurzo, co-owner of the brewery.

Both Moonlight Brewing Co. and HenHouse Brewing Co. in Santa Rosa have also been able to ship directly to consumers’ homes, though such sales are limited to only California consumers. That option is more difficult than with wine because beer is more perishable and packages need to be shipped for delivery within one day, which has higher costs to keep the beer cold.

The California Craft Beer Association is pushing for SB 620, legislation next year that would help codify online shipping orders for beer and give the breweries in other states the ability to ship beer to California. The eventual goal with the measure is to get to parity with what wineries now can do in being able to ship to 46 states that includes California, said Lori Ajax, executive director for the group.

“We don’t want to lose any of that ability at this point after COVID,” Ajax said.

Deal of Barrel Brothers — a relatively small brewery that should produce 7,000 barrels of beer this year — is excited about the opportunities to reach consumers directly, especially for the nonalcoholic beer that can be shipped without restrictions. The alcohol-free beer is less than 5% of the brewery’s production, but the potential is tantalizing. “It represents a monster opportunity,” Deal said. “It’s just a matter of finding a way where it makes sense.”

Challenges persist, though. As breweries are attracting more customers back to their location, they still have to deal with supply chain issues, especially a shortage of aluminum cans due to increased demand and limited production capacity. Wolf House Brewing Co. in Cloverdale would like to put its Therapy Session India pale ale and Gold Canyon blonde lager into cans to grow its retail business but will have to wait until the can market stabilizes, said co-owner Dwayne Moran.

“Cans are just so unstable,” Moran said. “If there are some, they are basically crumbs you are scrambling over.”

Still there is optimism, especially as local breweries have been able to expand seating capacity outside with parklets and other patio areas that have allowed more risk-averse patrons to enjoy their brews. That’s been the case for the new operators of Cuver, a new brewery in the old St. Florian’s space that will have its grand opening on Oct. 2. The new brewery will specialize in Belgian beers such as a golden abbey ale and farmhouse ale as half of the ownership group is a Belgian family who have been who home brewing for years. They believe there is an opportunity to carve out a niche in a region known for its hoppy IPAs.

“We were really used to high-quality and local craft brews in Belgium, and we started brewing those,” said Hendrik Verspecht, the brewmaster who has a background in biochemistry. His fiancee’s family is the other part of the ownership group.

The brewery will carry at least one IPA on tap so there will be variety for all customers who visit as the crew is readying the outdoor patio for additional visitors for its kickoff event, Verspecht said.

“We're pursuing our American dream and contributing to the beautiful melting pot that is Sonoma County,” he added.

You can reach Staff Writer Bill Swindell at 521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.