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Italy’s Burgeoning Beer Market Is Especially Vulnerable During the Lockdown

March 25, 2020

By Coral Sisk, March 25, 2020

Tuscany's capital of Florence is known as Chiantiland, an epicenter for wine culture. Only recently has craft beer become a thing for otherwise Sangiovese swirlers. This is not only happening in Florence. Italy—the country that ranks fifth in Europe for number of breweries—is now home to over 800 producers, according to Assobirra.

Much of the growth of the craft beer category growth can be traced back to grassroots beer enthusiasts building their businesses from the ground up. Beer-makers had been reveling in a sort of industry high with craft beer sales increasing across Italy over the last few years. Now with the COVID-19 crisis and government ordered decrees forcing many to stay home and non-essential businesses to shut down, brewers have halted production and bars have closed their doors for the unforeseeable future. Unlike wine, beer's shelf life is limited and brewers around Italy risk losing thousands in wasted kegs.

The beer sector in Italian cities like Florence are uniquely impacted as most of its revenue relies on the world knocking on its doors. In this tidal wave of COVID-19, Lapo Ricci is one of the bar owners feeling the ripple effect in the Italian beer industry. A Florence-born bar industry professional for the last 15 years, Ricci is fully immersed.

“The biggest problem is that we don't know when the situation will end,” explains Ricci, a partner at Brewdog Firenze and One Eyed Jack, as well as development manager for Piccolo Birrificio Clandestino, an Italian craft brewery operating for the last decade in the Southern Tuscan port town of Livorno. “It's impossible to know how to plan production, especially since we're scrambling to sell off previous batches. The most likely outcome is bars and breweries around Italy will be sitting on thousands of kegs full of rotten beer.”

The expiration date of beer is of concern but so is diminishing quality, which varies from style to style. A freshly batched keg could last for nine months but the crisp taste will dissipate after as little as two months. Some styles are more volatile. A keg of pale ale or IPA would be lucky to last more than 90 days.

While bars have closed and staff sent home, workers at breweries are still permitted to work during the lockdown as beer production falls into the category of the essential agricultural sector. However, sales and distribution and production have slowed, thus endangering the workforce in the coming weeks as the lockdown continues.

Craft beer consumption comes from tourism especially for cities like Florence, Milan, Naples, and Venice. The question is: when are we going to see tourists again?”

Birrificio Lambrate in Milan opened in 1996 as one of the first microbreweries in Italy and has grown to be one of the largest craft producers in the country. “2020 was supposed to be a great year after significant investment in high-tech packaging systems,” owner Giampaolo Sangiorgi says. “We had several projects in the pipeline and had to stop due to the lockdown. One loss for example, is having already produced and packaged an order of 12,000 bottles for Netherlands, only for the sale to be cancelled last minute.”

Some breweries have turned to home deliveries to offload time-sensitive stock, but Ricci says that isn't enough. “We are waiting for a stimulus act from the government but there is no way to recover what we have already lost,” Ricci says.

Even if makers like Ricci are able to sell off remaining batches, they are worried about when the industry will be viable again. “Craft beer consumption comes from tourism, especially for cities like Florence, Milan, Naples, and Venice,” he says. “The question is: when are we going to see tourists again?”

Ricci explains Italy's biggest markets for Italian craft beer consumption is Asia and the US. “Asia is in better condition now, but the US is way behind. Maybe we can expect some tourists from the US around October. Maybe after,” he says.

Countless jobs have already been lost and the only thing beer industry professionals have is hope that residents and citizens will adhere to the government enforced lockdown measures so the outbreak can fizzle out as quickly as possible. Regardless, some businesses will go under.

Brewfist packaging beer after the lockdown

Brewfist brewery in Codogno, ground zero for the COVID-19 outbreak in Italy, has been the hardest hit. The tap room and brewery have been closed for over a month and all of its employees have been at home on lockdown. Pietro Di Pilato, one of the owners still at the brewery, explains, “The issue is not being able to produce, but when my biggest clients will be able to buy beer again.”

The industry is doing its best to adapt, such as focusing on less time-sensitive styles. Birrificio Vetra in Lombardy is focusing production on pilsner. Owner and head brewer Stefano Simonelli says, “We are resorting to techniques which afford two months of lagering.” He suggests brewers lager at 0°C in order to buy time in the tanks. “When you keg or can beer there is an oxidation risk, so better to keep them in the tank longer.”

Going forward in how the industry envisions its next steps, everyone seems to understand diversification is in order and needs to be done pronto. Otherwise, their market is set to suffer for a very long time.

“There have been some breweries feeling the pinch for nearly a month. Before the decree ordered all bars to close, we were planning events to help each other but now this is impossible,” Ricci says. The silver lining in all this is being passionately Italian. “Luckily this situation has brought a sense of unity between pub owners, distributors, and breweries. I'm sure we will figure out a solution together. Otherwise there is no other way to succeed.” 

ZX Ventures, a division within AB InBev, is an investor in October
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