Long Blue Cat Brewery in Londonderry did not rely heavily on wholesale draft beer before the COVID-19 shutdowns. Rather, co-owner Jason Knight said about 80 to 85 percent of their revenue came from taproom sales.
But a pivot to more canned beer sales out of the brewery has helped keep the business going. Can sales have gone up by 40 to 60 percent, he said.
“That’s been going really well. Better than I thought,” Knight said.
He said taproom sales brought in about $60,000 in revenue each month before dine-in service stopped. Currently, can sales at about 40 different stores are bringing in about $15,000 monthly.
Knight said just the can sales out of the brewery, which offers curbside pickup, has been enough to keep rent and utilities paid, and keep some employees on the payroll.
“It’s able to keep us afloat,” Knight said.
Still, sales are down overall by about 50 percent, he said.
Not being too heavily leveraged in the wholesale market has likely spared Long Blue Cat a lot of headaches, as breweries who rely on draft sales to restaurants have reeled from the sudden disappearance of that revenue source.
Knight had intended to increase their keg sales. He bought a bunch of tap handles and kegs and started landing a few restaurant accounts, such as the Copper Door. But the brewery only had about seven or eight kegs on draft lines when the state issued its shutdown orders for dine-in services.
“Anyone who’s just counting on revenue for your bar or your taproom … you’re still going to struggle with your revenue. And who knows for how long?” Knight said.
To counteract the loss of taproom sales, they’re working on increasing their number of accounts for can distribution, hoping to increase the share of revenue can sales represent from about 20 percent to about 50 percent, by expanding their distribution to about 200 stores.
Currently, Knight said they contract mobile canner IronHeart Canning to package their beers.
But he applied for and was awarded an Economic Injury Disaster Loan (EIDL) and payroll protection program through the Small Business Administration’s relief aid programs, part of which will be used to hire back employees and invest in some new equipment.
So far he was given a $10,000 grant as an advance to the EIDL, but hasn’t gotten the full loan yet, and he received $55,000 from the payroll program.
While Knight said he’s not sure yet how much he will get for the EIDL loan, he hopes to use some of it to invest about $150,000 in a new in-house canning line and a new grain delivery system.
“Production should double, once we get the canning line,” Knight said.
Right now, the second floor of the brewery above the taproom is used to store the grain, which is gravity fed into the grist hydrator below. Once they get a new flex auger system, they’ll be able to move the grain storage to an adjacent space on the first floor, and free up the second story space for more dining — space which will become key for bringing in revenue as the state implements a phased reopening strategy that emphasizes social distancing.
Knight, who usually has a staff of 14 but was reduced to five, said he is already using some of the PPP money to restaff the brewery. The SBA sets an eight-week deadline to bring staff numbers back to where they were before the COVID-19 circumstances, or else the money becomes a loan he needs to pay back.
Three people have been hired to a total of eight so far, including a new person to help with increasing can sales, Knight said, but he had to pay bonuses of up to $2,000 to get people to go off of unemployment, and likely will need to do that with more rehires.
“It’s hard to get them back now because … they’re making more than they would,” Knight said.
That’s because they’re making more money on unemployment, with the supplemental federal aid added to it. As a result, people who normally made $600 for 30 hours a week, are getting $1,000 for being unemployed, Knight said.
Ultimately, Knight is hopeful that they’ll be able to use the government aid as a springboard for increased production and distribution.
“If we play our cards right, we can actually bounce out of this better than we were before,” Knight said.
Long Blue Cat recently canned a few new varieties, including Cabrona Mexican Lager (4.2 percent), Knolltop Brown Ale (5.5 percent), which is made with maple syrup from Knolltop Farm in Sunapee, and re-releasing Klementine Kolsch (4.2 percent), Latchkey IPA (7.2 percent) and Radioface Double IPA (10 percent).
Knight said they’re also working on finalizing the labels on a new, unnamed New England style IPA, double dry-hopped with Citra, Mosaic, Falconer’s Flight and Lemon Drop hops. He expects to announce that beer in mid-May.
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