Alphabet soup

Will this recession be brought to you by the letter V, U, W or L?

Southern Sun Pub & Brewery is one of many breweries and brewpubs across the County that have temporarily suspended all operations.
Michael J. Casey

Things are not looking up. While Gov. Jared Polis’ statewide stay-at-home order has expired, Boulder is one of many counties extending shelter-in-place to May 8. Could it be longer? Possibly.

Regardless of when the order lifts, it will not be business as usual at the brewery until customers feel safe to lead normal lives — with normal defined as the type of patronage that existed roughly two months ago in the pre-coronavirus times.

What will it take for customers to feel safe? A vaccine, for one, but that’s maybe a year away. More pressing: Disposable income. More than 279,000 Coloradans have filed for unemployment in the past five weeks. And with a state population of 5.759 million, that puts unemployment at almost 5%. For comparison purposes, unemployment in the Centennial State peaked at 8.7% during the Great Recession in 2010. Back in February 2020, it was 2.5%.

Beer, in a generic sense, is recession-resistant. Breweries, on the other hand, are not. They are as susceptible to economic trends and shifting customer tastes like any industry. Craft beer, which typically operates at a higher price point than mass-market beer, concentrates these pluses and minuses. Years of tremendous growth would surely result in an analogous decline, many predicted. Though, not even the most cracked of them could have predicted it would look like this.

The question now: What shape will it take? Shorthand relies on four letters — V, U, W and L — to graphically illustrate recession and recovery. When the government issued in-person closures back in mid-March, just about everyone had their fingers crossed for a V-shaped recession, a sharp downturn with a quick return. Everyone stays home; the coronavirus curve is flattened; everyone goes back to their usual spending.

But, with ever-extending shelter-in-place orders and the prospect of a slow restart in the service industry, drawing a V seems unlikely. Optimists now turn to the letter U.

A U-shaped recession is like a V, only rougher. The line heads south, bumps along the bottom for an extended period, a year or so, and eventually climbs back up.

There’s a hitch: This recession is both an economic crisis and a public health one. Turn the economy back on, send everyone back to work, and the line will go up. But then the virus mutates and comes back with a right cross: Down goes business. Either to another government-mandated shutdown, or because customers are too scared to leave their homes.

They call this terrifying little fellow a W-shaped recession, and, at this point, brewers would be damn happy to see it. Just as long as it’s not the dreaded L, anything but L — you can probably guess what an L-shaped recession looks like: The line goes down, bottoms out and stays there.

At the beginning of April, Brewers Association economist Bart Watson ran an informal survey to gauge how the impact of COVID-19 and social distancing was affecting small breweries. Of the 525 responses, 59.9% said they would have to close their doors in three months if the situation did not change. Apply that number to the 8,000-plus breweries operating in the U.S., and you have 4,792 businesses closing their doors by Aug. 1 — 30 of them here in Boulder County.

Not accounted for in the data: The numbers of breweries that will not manifest because of this pandemic. Over the past five years, brewery closings have been on the rise while openings have slowed. But openings have outpaced closings almost three to one. 2020 looks to invert that number. And 2021 might even be worse. When the dust settles, the stimulus dries up, and the goodwill runs out, the real excrement will hit the fan. You could call that an I-shaped recession. When that happens, start stocking up.

On the mend

Susan France Tom and Kristy Horst of Crystal Springs Brewing Company

What will it take to make it through? Resilient employees, for starters. Just ask Tom and Kristy Horst, owners of Louisville’s Crystal Springs Brewing Co. On March 22, Tom was sent to the ICU with pneumonia and bronchitis while Kristy was hospitalized with both and COVID-19. The two are on the mend, currently recovering from their quarantined home.

Not a lot of business can survive any hiccup in day-to-day operations, let alone a pandemic. Less when the leaders are down for the count. The Horsts hired well when they staffed Crystal Springs, and it might be their saving grace. A tomorrow when we can sit on Crystal Springs’ patio and raise glasses of Summertime Kölsch to toast their hard work can’t come soon enough.

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