Hoping for more growth: Alaska breweries trying to bounce back after pandemic
ANCHORAGE, Alaska (KTUU) - Alaskans really like beers, especially local ones. The breweries that ferment so many of the local favorites were doing really well before the pandemic, according to the latest edition of the Alaska Economic Trends report, but like so many in the food and beverage industry, they took a major hit when the coronavirus changed everything in 2020.
For how many people live in the state, there are a lot of breweries. As of 2019, there were 44 across the state according to the report put out by the Alaska Department of Labor and Workforce Development, up from 36 in 2017. That puts Alaska at the fifth most breweries per capita in the nation in 2020, according to the report.
Despite the pandemic, five additional breweries opened in Alaska in fiscal year 2020, for a total of 49, according to the report. Overall, the department reported that Alaska also ranked fourth in gallons consumed per capita in 2020.
Even though that’s a lot of beer, Brewers Guild of Alaska President Lee Ellis said the real money for breweries lies with the tourists, like so many others.
“It’ll be a big question of what tourism does this summer, so it’s kind of hard to say right now,” Ellis said on whether breweries will go back to an upswing any time soon.
The trends report shows that annual brewery jobs dropped from a peak of 503 in 2019 to 397 in 2020. Between fiscal years 2019 and 2020, the report also shows that consumption of locally brewed beer fell 14%.
Ellis is also a co-owner and managing member of Midnight Sun Brewing Company. He said he had to let go of a few people during the pandemic, mostly in the front of house. He said he only just got back to a full staffing levels about three weeks ago since last March.
The breweries were still producing during the pandemic, though. According to King Street Brewing Company Co-owner Shane Kingry, they had to adapt just like everyone else.
“The last couple of years, a lot of our volume has shifted into cans,” Kingry said. “That helped us offset the substantial high double digit losses in the draft side.”
For those who don’t know, the draft beer is the beer in kegs — the ones the breweries sell to bars, brewpubs, and other places that sell the brewery beer.
Ellis said at Midnight Sun, they were putting about 60% of their brews into cans and bottles and the rest into draft pre-pandemic. Now, it’s more like 90% in cans and bottles, and 10% in draft.
Ellis said it’s not good for the brewery business model to put everything into cans, even if it does sell beers.
“Draft beer — keg beer — is definitely, financially a better proposition,” he said. “Kegs don’t cost a lot of money to purchase, the don’t cost a lot of money to maintain. Cans of course are pretty expensive, and have gotten extremely expensive during the pandemic.”
He added that aluminum cans have effectively become the two-by-four of the brewing industry these days.
Ellis and Kingry said King Street is definitely better off than they were last year. However, without the same number of tourists as the summer of 2019 and before then, they still have a long way to go before breweries will be poised for the kind of growth they saw before COVID-19 set them back.
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