Surviving The First Wave - A Business Update
We could only fully stand by both the content and delivery of our blog on Monday if we were happy not only to stand by those satisfied and thankful of it, but also stand by those offended and upset by it. Although our intentions were to guard against suffering by highlighting just how many people have died of Covid–19 in the UK, the results must guard against suffering amongst our readership too, and they fell short with a post that landed poorly in the eyes of too many.
I apologise and take responsibility for putting out a message that was confusing, and without the space each subject deserved on its own. Our business concerns and updates are significantly less important than the pressing concerns we have around the perception the government have created of the gravity and scale of suffering wrought by Covid–19, which though utterly horrific here in the UK due the scale of illness, economic damage and death, are concerns on a different level to those caused by continued systemic racism in the UK and USA specifically, that has abused Black bodies, tortured Black minds, and held back the lives of Black people for centuries.
To those of you we offended and upset by talking through important and life-changing social concerns, alongside benign business updates, I’d like to sincerely apologise. Though our weekly email newsletters cover everything from the current issues we’re facing as a team, to our activism and allyship, calls to action, and plain old business updates, we’ve yet to bring that broader update format to our blog. Our sense that we could offer a broad update did not present itself to everyone as we intended. Regardless of the consistency of our actions, the strength of our conviction, or the passion in our voices, we aren’t in business to wilfully offend anyone. Upon reflection and deliberation back and forth with several of our team, and following conversation with some of those that raised their concerns, we feel that it is important that challenges are not encapsulated in shocking or offensive messages, placed alongside rather pedestrian and benign updates, lest the vitality of important messages is lost.
These are times of heightened, difficult emotions, long days, and short nights, and in that context, I also want to apologise for adding to a sense of overpowering emotions at a time when many of us, myself included, feel regularly overcome. We should have been more sensitive, and more careful, and we’ll endeavour to do both now and in the future.
Though the majority of our blog posts are drafted by me, they are expressive distillations of conversations I’ve had across the team, often over weeks, but in this case over the past few months. A great many conversations about the stability of our jobs and the government’s wilful negligence, several times weekly conversations around our duties and the threats of insufficient action around racial justice, many conversations around the changes we’re foreseeing in the industry add up to a greater sense of empassionment that may not logically befit a single author. My efforts on Monday to provide a much needed update, resulted in short, poorly-detailed, and emboldened statements and perspectives that seem to come across to some of our readership as beyond reasonably sincere, maybe to the point of obfuscating the layered individual experiences and perspectives that come together to form a collective expression on the page.
Monday’s the 29th of June’s full blog as posted is archived here, as a mark of this point of reflection and learning. We have replaced the contexts of Monday’s blog today, Sunday the 5th of July, using the same URL so as not to erase from view the disappointment felt by many of our readers on Twitter.
We continue to evolve and learn, mostly through failure, and only once in a while through success. To those that were in full support of Monday’s blog - we hope you’ll take some time to appreciate the corrections and clarifications made here. To those of you who were offended by use of tragedies to draw a comparison to the scale of Covid–19 deaths, or by our business update nestled within a blog about much bigger, much more important issues, we hope you’ll accept our apologies.
We will post another blog in the coming days, unpacking the worries we have about the wider world’s continued efforts to survive Covid–19, and a separate blog expressive of our continued work in taking ownership of our responsibilities to support the Black Lives Matter movement, and play our part to amplify and assist the workings of everyone engaged in the long-term work of inclusion, equity, and justice.
These past months have brought incredible suffering to far too many families, communities, and businesses. We present this update with deep gratitude foremost in mind for all the people that have supported us through some truly difficult times, that together have allowed us to avert a cash-flow crisis that could have closed the brewery and lost over 40 jobs within weeks.
Friends of the brewery have been in isolation at home for nearly four months. They’ve done what they needed to do, despite struggles, torment, and a significant mental health burden, to keep themselves alive and as well as possible. Members of our team’s families have endured similar isolation, with lesser degrees of personal struggle, but with a hope that their short-term sacrifice is worth it. It is truly heartbreaking to think that all the sacrifices made by many of us may not be enough to keep Covid-19 case numbers from rising up again in a second wave.
Establishing A New Norm In An Everchanging World
With our furloughed colleagues from both retail sites here in Manchester and down in London now returning to work, our aim is to gradually and cautiously increase production, without placing any significant cash-flow risk upon the business. There have been many changes since we went into lockdown, and there’ll be many, many more to come.
Our greatest asset, aside from our good intentions and will, has always been our agility and ability to turn on a penny. When we don’t yet know which way to face, or which direction to head, we find it vital, time and again, to turn as fully as possible, with the least amount of inertia.
The financial stresses we faced in March, at a time of great uncertainty, risked not just wiping out every penny of cash the brewery has made in its entire life, but wiping out all the working capital that’s kept us afloat. I was remiss in my writings that led to our blog on Monday, in not outlining the financial position we were in at the moment of lockdown. I’ll go into that now, for the sake of clarity.
As a five year old business, and with a team of 43 people, across 5 warehouses and two railway arches totalling 30,000sq.ft, we went into lockdown with what we’ve got to show for all those years, £250,000 in the bank, but also with about that in bills to pay, nearly four times that in hop contracts to cover over the course of the year, and with £250,000 on our creditor books. When the lights got switched off for 99% of our trade customer base, and with no detail on the government’s furlough scheme at that time, I figured we had about at best 6-7 weeks before we’d have to stop paying all our staff. The only rational thing to do at that point was to not increase the creditor books at all (by selling beer on credit, to businesses that had as little clue as we did as to what was about to happen, and for how long).
Our decisions from that point forward have been based on two key commitments I made to our team:
The workplace will be as safe and controlled as possible, with an aim of nobody getting sick at work.
We’ll do everything to get through this with nobody losing their job.
I am sadly used to facing a degree of public criticism from drinkers and trade customers alike (that honestly hurts, and bothers a great number of us - we’re a close team, and anyone having a personal go at me also impacts the lovely bunch I get to work with), but we faced extra critique early in lockdown for the path of direct-to-consumer we have taken this past few months. Some people seemed to decide that five solid years in business of consistent focus on independent businesses was us somehow faking it, and that then, in the midst of a global pandemic, our true colours were showing. We’ve faced criticism like that irrespective of our track records since before we even brewed our first beer, but it doesn’t get any less painful at all. I often wonder just how much more we could do to serve our customers and drinkers, if our energy wasn’t so regularly zapped trying to defend who we are, to people that never seem to acknowledge any of the good, but never miss a chance to point out the bad.
I want to reassure everyone reading that the shape we’ve taken to best guarantee our survival is not the shape we’ll assume, or that we can even hope to hold onto once all this is over. In future months, we’ll once again be able to place ourselves in the middle of a long chain of supply that starts with tens of thousands of jobs in engineering plants and in agriculture, and ends in tens of thousands of jobs in retail and hospitality. Being part of such a chain wasn’t just what made us who we are today, it’s interconnectedness is most expressive of what we are.
A Few Questions From Twitter
Why didn’t we just keep brewing beer for trade?
Well, aside from the looming cash flow crisis, my primary commitment to our team resulted in us deciding to ensure the safety of our team by having only those of us who were isolated at home, and self-transported, come into work within the brewery warehouses. We reassigned our entire production team to online order picking and packing duties, knowing that if and when we felt we could brew again, we’d have just the crew we needed at work. As a result of this safety-oriented practice, we only had enough hands at work to pick and pack. Slowly at first, then with greater efficiency over time, but never approaching the efficiency of our normal 93% of our beer to trade business (where we’d normally have 4 people working collectively in goods out, we’ve had 13 people picking and packing online orders).
We also went into lockdown with 700hL of beer in our FVs, and hundreds of kegs in our coldstore. Nothing exceptional under normal circumstances, but one heck of a worry the second draft beer sales firmly paused for an indeterminable amount of time.
Our next priority was making March’s payroll, and once we hit that (with some assistance from the crew in taking a bit less that month, which we paid back in May’s payroll cycle), our focus was making April’s payroll.
Are our adaptations re Covid–19 going to stick around?
Most of what we’ve done is bring forward plans we had for the end of this year, or next year, or the years after that, and put as many of them into play asap (some bearing fruit already, some yet to bear fruit).Our livestream events will continue long term. We’ll make further investments of time and energy into not just our weekly Wednesday events, where we’ve recently hosted Evil Twin, Finback, Paul Wood from JW Lees, and our pals at Boundary (to name but a few), but our conversations across the industry and more. Sadly, due to distancing, a bit of a skills gap (erm, it’s debatable as to how much skill I’ve shown having not ran a stream yet without a technical hitch), and a touch of confidence zapping doubt, I’ve been the damn centre of yet another one of our public-facing outputs - something I’m working to change.
What preparations are we making for a second wave?
In short, we are simply assuming a second wave will happen either locally or nationally, and either soon, or in the autumn or winter. As a result, we’re not inclined at present to produce draft beer unless we can either be paid up front for it, or until we are sure Covid–19 is truly behind us.
What support for our staff or customers have we made for people who are shielding?
To be honest, I don’t think we’ve done all that well supporting customers who have been shielding (unless they’ve been buying our beer and turning up to our YouTube channel for new weekly content), but we’ve had several of our staff at home since March to minimise contact and proximity, and public transport use too.
At work, we have removed office block doors, prohibited room sharing (until just last week, when we now allow a couple of people to share a ventilated room), ate outside or in the drafty warehouse, mandated regular handwashing, and mask use in confined spaces, and more. We’ll share our full procedures in a focused Covid–19 post later this week.
How do we see our relationship with bottle shops in the future?
Now that our retail teams are off furlough to process online orders and direct-delivery, we are naturally looking forward to being able to brew more. We’ll be in a position to resupply some of our trade customer base in July, and will cautiously build back up from there.
Early public and private criticisms aside (which we hope aren’t indicative of a lack of trust in who we are and what we are about), we think our relationships with our customer base is one of mutual respect and mutual trust, and can’t wait to get our beers back where they ought to be - in the heart of so many communities up and down the country.
Why are we activating a direct-deliver service out of our Enid St taproom instead of selling B2B?
Well, Enid St, and Bermondsey in general have not been well served these past few months. Some of our taproom neighbours have thrown caution to the wind (and have possibly, and I fear irreparably, lost the trust of local residents) by soliciting passing trade business without providing toilet facilities, and without due care for the noise, rubbish, and general impact of busyness made worse during these worrying and difficult times.
We all feel it’d be irresponsible to add business to a situation that’s attracting steadfast opposition by growing numbers of residents, and worrisome attention from the local licensing authorities. In an effort to cover the Enid St team’s payroll, and resolve the inordinate number of issues our customers have had with courier services, we’ve hired a couple of vans and are looking to grow our customer base by offering a cold beer delivery service. In time, we hope to offer click and collect, but as things stand, probably only on the quieter days.
Our staff making deliveries are doing what we’ve been doing in MCR these past few months - dropping off at a distance, and retreating after making a call or ringing a doorbell to maintain social distancing. Where you may see two people in a van together in the future, it’ll be staff who already live together. (Justin and Shomari drove down to Enid St together a week ago to deliver stock, but as Shomari was off for a couple of months with Covid-19, we all concluded Justin was of no risk to him, and vice versa.)
What will the future of events look like, such as Friends & Family & Beer 2021?
We are sad, but also glad to see most advertised beer events in 2020 cancelled, or at least pivoted to some kind of virtual or online event. Bringing large numbers of people together in closed spaces with the horror of festival bathrooms (we had cleaners at FFB20 and still saw the bathrooms descend into a sorry state) anytime in the next few months, feels like an intolerable and unnecessary risk.
We’re in discussions with MCR Central about potentially holding a date for FFB21, but we definitely aren’t even holding our breath for an in-person event next Spring. It’s safety first for the next 3-6 months as a default. After that, depending on whether or not we are genuinely safe or considerably less at risk, we’ll see.
I think that’s covered the bulk of the questions we had, but do reply to us on social media if you have anything to ask, and we’ll get to it sooner or later.
>> Cold Beer To Your Door
Starting this week in both Manchester and south London, we are offering a cold beer delivery service. We’ve acquired two refrigerated vans (on a pretty affordable hire purchase scheme) for Manchester, and are renting two refrigerated vans in London (until we properly evaluate our opportunities down there).
We are really excited to finally have our own cold-chain delivery service! Since day one we’ve kept our beer cold after packaging, but until recently, most of our beer left our cold store to travel on unrefrigerated trucks, to unrefrigerated warehouses, to end up on unrefrigerated shelves. Not at all great for beer freshness and the best possible flavour.
Cold-chain (meaning cold every step of the way) beer, delivered to your door is the best possible replication of the quality beer experiences we were previously able to offer you in our taprooms. Until we can safely open back up (rather much later this year, or maybe not even this year at all), our new cold beer delivery services are the best possible way to enjoy our beers.
>> Credit, Where It’s Due (And Not Where Owt Is Overdue)
One of the biggest causes for our cash flow crisis at the start of lockdown was the industry’s reliance on credit terms. We think that some of the reasons for which credit terms are offered are incredibly sensible and necessary, but that we must look carefully at credit term norms in order to protect ourselves from another cash flow crisis.
We recognise that across all our trade customers there are vast differences in the readiness of our beer for sale at the time of delivery. Pubs that buy our cask beer must allow it to settle, before conducting their processes of venting, tapping, and conditioning the beer ready for sale (taking several days from delivery, at best). In essence, we think that credit to our cask customers is essential, as the beer we sell and deliver is not yet at its best.
On the other end of the spectrum, in terms of readiness of our beers to sell, are bottle shops that can (at least in theory), open up boxes within minutes of delivery and immediately start putting money through the till. This point was drastically oversimplified in our prior post, in a way that made it seem as though bottle shops could find themselves in profit on the day of delivery. The truth is that although bottle shops can sell our delivered beer with the least preparation and shortest delay, their rate of sale is considerably lower at their peak times, than bars at peak times.
We feel that in these times of great uncertainty, we must offer credit where it’s due, and not credit for the sake of historical norms, and that some of the industry’s credit norms may no longer best protect the mutual interests and good cash flow from farmer to producer, wholesaler to retailer. We’re unsure how we’ll be able to fairly evaluate credit terms for the wide variety of businesses we sell to, but we’ll be working hand-in-hand with all our customers to find a model that is workable for us all.
Although we may be able to return to offering our wider trade customers some kind of evolved credit terms in the future, the months and years ahead of us will be spent working on better systems that prioritise payment upon sales rather than to fixed terms - too often we’ve been left waiting for payment whilst companies large and small spend the cash from the sale of our beer on buying beer from other businesses.
Once we feel we can look again at credit terms, we’ll offer them coupled with tighter controls that'll require payment within due dates to maintain a credit facility. When we’ve worked so hard to make the majority of our beer so saleable, late paying leaves us feeling both sad and undervalued, and puts our business at risk. We’re going to be happy to leave behind the previous norms of credit for the masses - it’ll help to more quickly weed out the businesses (some of whom stung us over the years) that aren’t being run with the best financial controls in place.
>> What We’re Thinking About Draft Beer, Our Taprooms, and Pubs
We all need to let off some steam, and unwind even just a bit like we’re used to, after many stressful months, and the temptation will be hard to resist for a great many who have suffered enough since March (not all of us have the privilege, the livelihood, home environment, maturity, sense of shared humanity, or mental well-being to have kept up the best possible behaviour in these past months).
But we’d like to urge you all to take the utmost caution. The weeks ahead may well be more dangerous than any of the weeks just passed, so please, continue to stay at home as much as you can, and if you can’t please keep your distance, be mindful of shared airspace, and keep yourself as safe as possible.
We will not be opening up our taprooms for the foreseeable future, mainly because we can’t yet figure out how to do so with the least risk to our staff and their families, or to our customers and their families. Sure, we have six toilet stalls, a drafty warehouse mezzanine, a vastly overpowered ventilation system, and lots of practice in table bookings from our 2015 taproom days (when CBRE, our landlord, used to restrict our retail business to just 4 hours per week), but we aren’t in business to risk running in a way that could jeopardise anyone’s health or wellbeing.
There will be all manner of responses to the government’s re-opening strategy. Most of our industry’s response will be well thought through from the point of customer safety. Others are clearly against all sensible medical advice. All reopenings in the beer industry must be evaluated on a case by case, site by site, business by business basis. There are landlords and bar owners, who often make their money from zero-hours bar staff contracts, in establishments where staff are routinely sent home when it’s quiet, or left without sufficient resources to manage the busiest times, who are already ignoring staff concerns or wilfully ignore best practice. We hope you’ll spend your time and energy at establishments that make it abundantly clear your health and wellbeing, and that of their team too, are of us concern.
And though all of us have been in far too many pubs and bars where the hand wash sinks sat dry for hours on end (in both the men’s toilets and behind the bar too), we believe that craft beer bars and well-managed pubs, often run and staffed by enthusiasts in business to provide excellent hospitality, are best positioned to cater well to the hygiene changes necessary to safeguard the health of both staff and patrons alike
If we can delay re-opening for not just the next week, but for weeks into the future, we may well choose to, in order to leave as much of the market as possible for businesses that have had no income stream at all since lockdown. We have been able to produce and sell beer in cans, so we’re keen to see how our can sales continue, before making an assessment of where we go next.
>> Beer For Trade
In many senses we can not wait to once again make enough beer to sell to our trade customers, but I’d be remiss not to start with a simple, factual statement - in our current position, we are simply not able to do anything but continue to make as many direct-to-consumer sales as possible. If we diverted beer to the trade at this time, I’d take on the risk of having to let staff go, and I’m in no mood to risk such a thing.
We are, however, at a point today where we have our full production team back in the brewery for the first time since March. We’re weighing up how we ramp up production from where it is now, and will look at how we do so in the coming weeks. We hope to be offering up draft beer and cans (terms to be decided on a business-by-business basis) to the trade within a month, so we hope you’ll be able to find us pouring and stocked back at all the places you’re used to drinking and shopping at very soon.
We’ve loved being part of a growing and evolving independent ecosystem, and are determined to see ourselves in business at the end of Covid-19, and at the end of the recession or depression that follows, to be in good business alongside other independents for years and years to come. For five years we could have sold a higher proportion of our beer ourselves, but we set our own retail prices in line with RRP, gave discounts to distro and wholesalers, and genuinely worked to find not just the beers that customers loved that we love to make, but ran business in a way that supported us and supported other businesses too.
It is true to say that businesses have helped build us up by listing our beer, or by going further and promoting our beer and our practices and values, but it is also true to say that we have helped to build those same businesses up with the best beer we can produce (and by always trying to improve), that’s attractive, that sells well, that’s ultimately delicious too.
Our indie ecosystem has always been one in which each business ran however each business saw fit - sometimes favouring the promotion of import over domestic beers, some by buying macro-owned beers over local indie, some businesses have paid other bills off our beer sales, and sadly some businesses have been buying our beer only because it sells well, and yet doing a bit to sully our reputation at the same time. There have been efforts made to improve the storage and handling of beer in cellars and storerooms, away from ambient storage to cold storage, but there’s still a long way to go before the UK steps up to meet the standards near ubiquitous in the US. We may not prefer all of the practices some of our trade customers engage in, but we know that running an independent business is hard, and that a one size policy definitely wouldn’t fit us all. Ultimately we have always looked for the good, the positive community impacts, and the values we share, and consciously overlooked the other things. Life’s too short!
We do hope to be in a position later into July or early August to supply accounts in Manchester and central London (most likely via our own refrigerated vans if they have capacity outside of their home delivery service runs), and to customers we deal with directly beyond that, before finally working to recommence business with our wider wholesale customer base once we can afford to do so.