While alcohol sales soar, Lexington’s ‘eerily quiet’ craft breweries suffer

Ethereal Brewing usually makes beer two or three times a week, but the only thing it brewed in April was its signature Baba Yaga stout, a popular, pricier release that comes out every January and never fails to sell out.

The weekend events surrounding that release, and its many variants, attracted hundreds of visitors to the venue earlier this year. Customers sat shoulder to shoulder, and stranger to stranger, a scene that currently seems more like a fairy tale than reality during the COVID-19 pandemic.

Regulars haven’t stopped pouring in to support their favorite establishment, but every other facet of the business — how much beer is brewed, how often ingredients are being purchased, how quickly beer is being moved — has been “disappointing,” said Andrew Bishop, co-founder of Ethereal, located at 1224 Manchester St in Lexington’s buzzing distillery district.

The dismay goes beyond raw financial figures for an industry that prides itself on social bonding as much as the parade of flavors it produces.

“You can see in everybody’s eyes that they’d love to stick around and drink beer or eat while sitting down in an actual seat, but people are making do and trying to find the bright side of things,” Bishop said. “That people are willing to spend about 40 minutes in their car to come across town to buy a six-pack from us to keep us around means a lot. We’ve got a lot of really good customers over the last five years that have given us a little bit of hope to get through all of this.”

While business has been “a little better” than initially expected, it’s difficult to see how Ethereal can continue on-going operations if heavy social-distancing measures stay in effect into 2021, Bishop said.

In a poll of more than 500 breweries by Brewers Association, a national advocacy group, 45.8 percent of respondents said they would have to close within the next 1-3 months if the current economic conditions remained in effect. More than 80 percent believe they would have to close within the next six months.

“We’ve been very smart financially and we are able to weather some of the storm, but we’re not set up for this long term,” Bishop said. “Eventually there would be an end date for Ethereal.”

Staying afloat

Beer is still flowing and finding its way into the homes of dedicated patrons, but barren taprooms are taking their toll.

Derek Selznick, executive director for the non-profit advocacy group Kentucky Guild of Brewers, says craft breweries in Kentucky experiencing “best-case situations” have seen their sales drop about 30 percent during the COVID-19 pandemic, according to a survey of its members. There are some establishments continuing to operate, in some capacity, despite sales being down 95 percent.

Breweries, locally and across the country, are struggling while retail alcohol sales nationwide have swelled. In Kentucky, through March of this year, year-to-date beer wholesale taxes are up 8.1 percent while wine and distilled spirits wholesale taxes are each up more than 10 percent.

The revenue drop-off for breweries is directly attributable to an abundance of empty seats that would typically be filled with warm bodies, cold ones in hand. Breweries in the state have continued to serve customers through other means — including canning and deliveries — but the profit margin on those methods of sale are thinner compared to sales in the taproom, for which rent must still be paid regardless of how few people are walking inside.

“Even if people are breaking even on sales, they’re doing it by selling 175 percent of the volume because it’s different when you’re selling a growler, a crowler or a six-pack at a time versus a pint at the time,” Selznick said. “That’s really where the pain point has been.”

Off-premise sales — those done at retail locations like Liquor Barn and Walmart — are an advantage that larger operations like Country Boy Brewing (436 Chair Ave.) and West Sixth Brewing (501 W. Sixth St.) have over smaller breweries that don’t have pre-existing distribution partnerships. Other breweries in the city have canning machines on site but still need to get beer to customers via direct delivery or require them to come to their venue for pick-up; having one’s cans near the bread aisle is always powerful, but especially now.

Jonathan Blue, managing director of Liquor Barn’s owner, said in mid-April that alcohol delivery was up 800 percent over the same period last year. But the top sellers were Kendall Jackson wines and Tito’s vodka, not beer.

Country Boy originated in Lexington but moved production to a larger Georgetown facility in 2017. It continues to operate both locations but has scaled back production during the pandemic.

“It’s really weird to walk out at 4 o’clock on Thursday or Friday and come out here and it be eerily quiet,” said Daniel “D.H.” Harrison, a co-founder of Country Boy. “It’s never been like that since we’ve opened. ...

“We’re not grasping at straws, ‘cause we have direction, but we need a crystal ball ’cause we don’t know what it’s going to look like.”

The pandemic, and subsequent measures to contain it, arrived at a time when many breweries were preparing for the NCAA men’s basketball tournament. Rock House Brewing (119 Luigart Ct) for the first time was set to partner with local Buffalo Wild Wings locations to sell its beer to hoops-crazed diners.

“That was a bummer,” said Billy Hacker, co-owner of Rock House. He described business as “surprisingly good” in a conversation with the Herald-Leader earlier this month, citing its rotating experimental offerings as a difference-maker; an easy-to-drink, 4.9-percent Key Lime Pie Gose offered as part of an on-going pie series was especially popular.

Small breweries that are still producing new product are doing so in limited runs, in part to drum up business and maintain the spirit of “freshness” or “hipness” inherent to the craft beer scene. Mirror Twin Brewing multiple times over the last month has released about a dozen limited-run beers; a Butterfinger-flavored porter whose name — “Carole Baskin Did It” — was inspired by the Netflix hit “Tiger King,” sold out so quickly earlier this month that it was brewed again, this time with buying limits put into effect.

Within hours of its second release, it sold out again.

“The times are not ideal but we’re all trying to make lemonade out of lemons,” Hacker said.

Bad beer

According to the Wall Street Journal, the beer industry as a whole faces a possible loss of up to $1 billion because of unused beer, the bulk of which was prepared for March Madness and St. Patrick’s Day events that were canceled. Selznick says expired product is “very infrequently” an issue for Kentucky breweries, but it’s something KGB is monitoring “very closely at the moment.”

One way drinkers can prevent spoilage is by socializing while practicing safe social-distance measures. Country Boy, Ethereal and Rock House — in addition to Alltech’s Lexington Brewing & Distilling Company (401 Cross St), Pivot Brewing (1400 Delaware Ave) and Wise Bird Cider (1170 Manchester St) — will represent the city in “No Derby No Problem,” a virtual beer festival organized by the Kentucky Guild of Brewers and scheduled for Saturday, when the Kentucky Derby was originally supposed to run. For $5, beer fans can join in a live wrap-around event from taprooms across the state and drink with one another while remaining at home. Proceeds will go to KGB and its support of breweries.

KGB hopes people will (safely) patronize as many local breweries as possible on Saturday and return home with a healthy supply of suds to sip during the event. With no clear return date on the horizon for events that encourage large gatherings of people, beer fans who want to be part of a crowd will for now have to settle for a beerfest brought to you by binary code.

“The best thing you can do to help our brewing industry right now is go directly to a brewery and buy some beer to go,” Selznick said.

How to order

The Kentucky Guild of Brewers on its website has a page listing hours of operation and ordering information for all of its members. All of Lexington’s breweries are members. Go to kygbrewers.org/beertogo to view the list.

This story was originally published April 30, 2020 at 6:00 AM.

Josh Moore

Lexington Herald-Leader

Josh Moore covers the University of Kentucky football team for the Lexington Herald-Leader, where he’s been employed since 2009. Moore, a Martin County native, graduated from UK with a B.A. in Integrated Strategic Communication and English in 2013. He’s a fan of the NBA, Power Rangers and Pokémon. Support my work with a digital subscription