Breweries in tourist hotspots face slow return to ‘normal’

While much of the industry has met the news of easing restrictions with relief, breweries in tourist hotspots like Cairns in Far North Queensland are a little less optimistic.

Craig Parsell, chairman and co-founder of Hemingway’s, which has venues in Cairns and Port Douglas, said that the “one-size-fits-all” approach that the government is taking to the easing of restrictions around COVID-19 might not work for the brewery or others like it.

“We’re leaning on being conservative in terms of reopening, and for where we are in a tourist area, it will depend on whether the tourists have access to get in and out. Even when we do open we will probably open in a staged manner,” he explained.

“We’ve got two venues and one is very tourist reliant. The venue at Port Douglas is 70 per cent tourist in terms of revenue, whereas Cairns is 30 per cent tourists and the rest locals.

“But the problem is now that none of the locals have jobs at the minute so unless there’s some freeing up of the borders and the airlines are running then it’s going to be hard for either venue to open.

“Even for Cairns where it’s 70 per cent local people, many of them aren’t going to be able to afford to go out. So it will be quite tough.”

Indeed domestic and international tourism is worth $122 billion to the economy according to Tourism Australia, with more than 9 million international tourists visiting in 2018-19, and this has effectively been erased in just a few months. Breweries, like many venues, often make most of their revenue during the summer period, but some, like those in Cairns and breweries like Blizzard in the Victorian High Country, can see peak business in winter.

The easing of regulations may be a relief to brewery venues with a close local population in urban areas, but in regional and rural areas, particularly those reliant on tourism, the future is a bit less certain due to the ongoing travel restrictions.

While NSW, ACT and Victoria have not closed their borders, restrictions in other states and on international travel will be restrictive.

This week the Queensland Premier faced heavy criticism from the hospitality and tourism industries for suggesting the ban on travel into the state may continue until September. Even intrastate, relaxation of laws in Queensland restricts people from travelling any further than 150 kilometres from their homes, and like many other states, 10-patron limits apply.

Continuing restrictions like this in Queensland will hurt the economies of regional and rural Queensland especially, Parsell explained.

“In Queensland in particular, when the borders are going to open is a big issue. Places and businesses in Far North Queensland and the Gold Coast will be underwater completely if they go with that approach [of maintaining lockdown past federal guidelines],” Parsell said.

Hemingway’s during COVID-19

Parsell explained that there is a double edge in the medium term to the easing of restrictions, especially with international travel not likely to be on the cards until 2021.

“No one can go to Bali, Fiji or Thailand or anything at the moment and that’s unlikely to change before Xmas.

“People will get on the planes and travel, I’m confident in that but until the tourists start moving, places like us and Busselton and others aren’t going to be open or certainly will be losing a lot of money,” he said.

There are already campaigns underway to encourage domestic holidays once lockdown restrictions are eased, such as a recent campaign by Tourism Australia, but this won’t be a silver bullet for the industry’s worries.

“There will be tourism campaigns, the federal and state members in FNQ are already talking about investments in terms of marketing it as a destination, there will be money coming through and being made available, but the reality is it that although it will help, there is always a lag on any sort of marketing campaign.”

He said it was also a balancing act with getting the safety of staff and customers balanced with the economic impact of restrictions.

At Hemingway’s, the brewery has seen some success in online sales and drive through, but like many, this has not been enough to offset the decline in venue revenues.

“Online sales for packaged beer has been going quite well. In some channels we are doing ok, we do home delivery and open two or three days a week in the afternoon to do a drive through, but the reality is given we’ve got two big venues, our revenue is 2 or 3 per cent of what we would normally do.

“It’s keeping staff engaged but we’ve not had to run the brewery hard to keep up with demand.”

Like many breweries, Hemingway’s are looking to innovation to drive sales and interest, in keeping with trends towards bulk buying and lower cost beers which saw a major surge particularly at the beginning of the COVID-19 lockdown.

“We’ve bought a new product, our Resilience Beer. It’s got a low abv at 3.5% so there’s a low cost of production, it definitely compares with the commercial beers in terms of pricing, because its low abv we can make it cheaper and it seems to be doing well.

“We had pre-orders for 80 to 100 cases the day after we put it out there on pre order and that’s a sign of the economic times – people are looking for something more economic.”

It’s a similar route to those that Otherside Brewing Co in WA and Brisbane’s Ballistic Beer have taken, identifying demand for cheaper options which are still craft.

Venue re-openings

One of the biggest issues with the easing of lockdowns has been the federal and state government’s “one-size-fits-all” approach to venues, Parsell explained.

“One of the issues is that obviously we’re going through this phased release, with 10, 20 and 100-patron limits. In my mind that one size doesn’t fit all.

“Both of our venues are 2,000 square metres plus, we couldn’t open if there’s 20 people, but even for 100 people, they’re still going to be spaced out and have 20 square metres per person.

“Opening should really be decided on how safe a particular environment is for the customers. The other thing is that half our space is outside.”

The next focus for venues will be on hygiene and customer and staff safety.

“Our venue manager is working through a plan and they’re both aware that there’s new standards around cleanliness, and a lot of stuff that needs to be put in place,” explained Parsell.

Queensland have introduced a COVID safe checklist as well as resources around COVID-19 safety training with TAFE as art of efforts to up the game of venues.

The future

The big question from many venues is once the immediate danger is over and lockdown has been eased, what will a post-COVID-19 world look like.

Many have theorised a fundamental change in the way we consume food and drink and how we go out for entertainment, but Hemingway’s Parsell believes it might not be as dramatic as that.

“In terms of whether people will go out, I’m confident they will. I’m down in Melbourne at the minute and every second person I talk to who has been homebound for a month or two is already saying ‘I want to get out and I want to have a holiday,” he said.

“A lot of people do [think it will change how people consume] but my view on it is that people revert to the mean.

“There is generational change that was already happening. The 18-25s don’t drink as much, their idea of a fun night out isn’t necessarily going to the pub and having a drink.

“[COVID-19] will reinforce some of that generational change but the average Joe probably won’t. Hopefully everyone will be a little more conscious of health and cleanliness. I think that would be a good outcome, but would it change someone going to a craft beer bar? I very much doubt it.

“The bigger issue is economic – can people afford to go out as much when we come out of the other side?”

Learn more about Hemingway’s from in our previous Beer is a Conversation podcast at the brewery

With the eyes of the world now turning to the economic impact of COVID-19 and many speculating downturns and recessions, Parsell said this should be the major concern for craft beer, but that it will always have a place.

“It depends on the health of the economy. If people can, they will still want to trade up to something that is better quality and more bespoke.”

However even if people do return to their usual habits, how long it will last in the wake of a disease which has no known vaccine and may re-emerge.

“The biggest risks for venues and the bigger venues in particular, is that if we get reopened and start trading gain, and then suddenly there’s an enforced closure for a particular venue or geographical location, most places wouldn’t be able to recover from that.

“In these last six months there’s been JobKeeper, deferment of payments for interest and principle on asset finance and the likes, and people are hedging free kicks.

“But if we come out of this and there’s another spike in the COVID-19 numbers, its unlikely they’d have the same support.

“Those places wouldn’t survive if they had to close down again, the cost of closure and reopening is significant. That’s why we won’t rush into reopening, until we have the level of confidence that there are the numbers to sustain being open and also that it’s safe to do so.”

While Parsell urged caution for venues, he said there is a lot we can be doing proactively as part of industry action to gain government support and awareness of the plight of individual industries, including leaning on your federal and state members of Parliament and make them aware in Canberra and the state capitals that regional areas aren’t necessarily the same as the big cities.

Find out more about government aid for the tourism industry on the Tourism Australia website, or for general state and federal initiatives, check out the Brews News COVID-19 Resources page.

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