California cideries hope for retail lift as restaurants, tasting rooms close during pandemic
When restaurant dining rooms and bars closed down across the country the first time this year to slow the coronavirus pandemic, that shut off the tap on half the profit for the maker of Ace Premium Craft Ciders.
But even with a second round of shutdowns for such indoor spaces in the past two months, Sebastopol-based California Cider Company ended its fiscal year on June 30 with sales down only a couple of percentage points from the year before, thanks to a roughly 30% boost in sales through grocery stores and other retailers. And co-founder Jeffrey House is seeing a hot start to the new fiscal year.
“July and August look like they will be record months,” he said, noting sales are on track for $2.4 million in each of those periods.
Tasting at the cidery in a west Sonoma County industrial park, consisting of a small inside bar and outdoor seating in the garden or under a tent, already accommodates California’s rules in place since July 14 allowing public-serving operations to be conducted only outside with other safety protocols. Because cideries have the same state beverage alcohol licenses as wineries, they were allowed to reopen visitor services under the early June revision to the state pandemic shelter order, but breweries and distilleries must serve beverages with food under those rules.
The varying virus-related restrictions on tasting rooms and closures of indoor dining and imbibing have hit the estimated 1,000 cideries nationwide hard, according to Michelle McGrath, executive director of the Portland, Oregon-based American Cider Association. While California Cider’s projected production of 2.5 million gallons this year is among the larger-scale operations, two-thirds of U.S. cideries make less than 100,000 gallons annually, with the majority turning out under 25,000 gallons.
“The higher-end ciders are struggling because they rely heavily on tasting room sales and restaurant sales. Both channels are greatly reduced due to pandemic,” McGrath said.
Up to two-thirds of domestic cideries have tasting rooms, but their contribution to finances varies widely by operation, she said.
Reduced traffic in tasting rooms, bars and restaurants meant that at least half of U.S. cideries saw losses of on-premises sales of at least 50%, compared with the same period a year before, and half those cideries saw losses exceeding 80%. If these venues stay closed, many cideries will need government help to survive, McGrath said.
“This loss doesn’t include the projected growth determined before the pandemic,” she said. “The losses have been tremendous.”
For example, California Cider had been projecting revenue of $22 million–$23 million for fiscal 2019, which would have been in line with sales growth of 15%–20% in each of the past few years.
Sales of hard cider rocketed into contention as an adult beverage of choice. Retail sales are 10 times higher than a decade before, with much of that coming over just a few years, according to Nielsen. Sales shot up from $57 million in 2010 to $528 million just five years later but then fell over the next two years to $467 million in 2017.
Cider sales at a half-billion a year amount to just over 1% of U.S. beer sales and were on par those of hard seltzers, a beverage alcohol category that has been soaring annually, according to the consumer research company.
Buffeted by last year’s “summer of selzer,” in which sales alcohol selzers quadrupled toward $1 billion a year, sales of hard cider ended 2019 down 4.5% from 2018, pulled down by 12.5% retreat by national brands but partly offset by 12.5% growth from regional brands.
“We’ve seen double-digit growth each quarter for regional brands since at least 2017,” McGrath said. Described by data trackers as “craft beer style” — though not a malt beverage — cider ranked as the No. 3 style after India pale ales and seasonals,
When the pandemic hit, cider benefitted from the “pantry stocking” surge in retail sales, going up 38.1% for the week ending March 21 from a year before but settling down to 2.3% through July 11, pointing to the shift from store sales back to restaurants and bars that were initially allowed to reopen. Growth in COVID-19 cases have prompted states to roll back those relaxations of restrictions.
Retail sales of cider across the shelter-order period through July 18 were 14.9% ahead of the same time frame last year, according to Nielsen figures.
Like wine sold in kegs for on-premises venues, kegged cider benefits from being able to last in the cylinders a long time — up to a few years — before it spoils, unlike beer that can turn in months.
