Canada, BC: B.C. craft breweries facing closure without support with COVID loan repayments

The industry association representing B.C. craft breweries says up to 15 per cent of its members could face closure next year, if they don’t get extensions on pandemic support loans, Global News reported on November 28.

The warning comes as the Jan. 18 repayment deadline looms for federal Canada Emergency Business Account loan holders seeking partial forgiveness. The federal program offered up to C$60,000 in interest-free loans to help businesses and non-profits survive COVID-19 slowdowns and shutdowns.

Ken Beattie, executive director of the B.C. Craft Brewers Guild, said that like other parts of the hospitality industry, the craft beer sector still hasn’t fully recovered from the pandemic.

The once-booming industry, which has grown to 240 breweries in recent years, is also facing surging costs, he said, and the deadline to repay federal loans may be the final straw for many.

“Man, it is super tough, because every cost, every input has increased … whether it be the barley, the hops, the packaging, the cans, fuel surcharges, distribution, absolutely everything has skyrocketed,” he said.

“There is a cash flow problem in the industry because of the increased costs, and you’re just layering on more challenge and more cashflow issues — you have to decide is it worth the repayment of the loan or is it worth risking businesses.”

At Victoria’s Moon Under Water brewery, stress about the repayment deadline is real.

Co-owner Clay Potter said the business took out a C$40,000 CEBA loan, and had a financial strategy in place to pay it back.

That strategy, however, was predicated on a post-pandemic boom in the tasting room.

“And we haven’t really seen that happen … with the economic downturn people just aren’t spending money like we needed them to be, like they were before the shutdown,” he said.

“It leaves us in a tight spot.”

Potter said breweries are also facing a changing market place, with older and younger people drinking less alcohol.

Moon Under Water has expanded into both non-alcoholic beer and into distilling premium craft spirits in order to hedge.

“You’ve got to diversify,” he said.

Beattie said Ottawa had extended the deadline by a few weeks, but all that time will allow businesses to do is to secure additional loans and take on more debt.

Liberal Pacific Economic Development Minister Harjit Sajjan said the government understood business concerns, but was non-committal on help.

“We know there is going to be some challenges for some businesses. But we are reaching out to them and trying to work with them to find other options as well,” he told Global News.

Beattie said how serious of a hit the craft beer industry in B.C. takes should become clear soon into the new year.

“That will be the bellwether for us because people will not be able to get through to the spring,” he said.

“We are small independently-owned and operated businesses with mortgages and kids who are in school and this is their livelihoods — and all the staff that work in those places …. you’ve got to extend the period of time.”

29 November, 2023