Coronavirus in Sioux Falls: Beer makers face tough decisions during COVID-19 crisis

Stacey Berry and her husband make Belgian style-influenced beer because that’s the beer they fell in love with while being stationed in Germany.

And when it came time to pick materials and colors for Covert Artisan Ales’ new taproom, the couple went with their own tastes.

It makes sense the taproom’s grand opening will happen on the Berrys' own time. They want people to be able to celebrate Covert’s new space and maybe draw more beer drinkers who haven’t yet tried the unique styles they bring to the Sioux Falls beer scene.

And they want to be safe.

“For us if we opened at half-capacity it would defeat the purpose,” Stacey said. “It definitely doesn’t create the kind of opening that we would have wanted.”

Being a craft brewery during the coronavirus pandemic means being creative and actively making adjustments, and Sioux Falls operations have persisted despite a drop-off in bar traffic, shrinking revenue and having to make staffing cuts.

It's already clear not all will make it through these dark times.

Beer makers in Sioux Falls are all small, hard-working operations that take pride in their work while depending on low margins to move their brewing operations forward. They depend on loyal following of local imbibers well as the interest of the millions of visitors who come to South Dakota every year and want to spend at least a small part of their trip bending an elbow and sipping on a style unique to the region.

Brewers face drop-off in demand

The spring of 2020 was primed to be a busy year for Sioux Falls beer.

The annual Brrrvana winter beer festival unfolded without a hitch at Monks House of Ale Repute, with a good number of beer drinkers coming to celebrate their favorite golden beverage on Leap Day, little more than two weeks before Sioux Falls Mayor Paul TenHaken would call for a state of emergency due to coronavirus.

“Far and away the best one we’ve ever had,” Monks founder Jerry Hauck said Tuesday. “It seemed to be picking up.”

Fernson Brewing Co. was humming along, prepping a busy line-up of seasonal brews for the taps of its recently opened downtown taproom.

Then, the first cases of COVID-19 were reported in South Dakota. City officials responded swiftly to the worsening pandemic and on March 12 issued the state of emergency and used the following weeks to add more restrictions for bars and restaurants.

The change in customer behavior was “pretty instant,” Fernson co-founder Blake Thompson said.

“It should have been one of our better months, and all of a sudden, everything shot down,” Thompson said.

Fernson’s brewing operation is one of the largest in South Dakota and the locally owned beer maker has spent years building a fan base and getting on the taps of restaurants and bars in Sioux Falls and across the region. With closures, demand for Fernson kegs from the food service industry all but evaporated. His company sold three kegs in April, Thompson said.

“We were selling hundreds a month,” he said. “When they closed-slash-shutdown, it gets awfully hard to sell a keg.”

Fernson’s canning line helped offset the damage of lost keg business.

But local craft beer makers also rely on direct interaction with their customers for revenue, with tap houses where brewers can feature a lineup of core styles, plus a rotating series of seasonals.

That’s partly why Covert has been so careful with setting a date to open its new downtown space. The Berrys have continued to offer their regulars new beer through bottle releases during the state of emergency, but the taproom is a way to draw new customers.

But the conferences and summer concert series that draw potential beer drinkers are mostly cancelled or postponed.

“With a lot of the brewery locations, especially in the downtown area, it was kind of dependent on tourism and events,” Daniel Berry said.

How breweries responded

For the owners of Covert, the coronavirus means entering a holding pattern while continuing their production process, brewing what are called wild and spontaneous-style ales that use a unique form of fermentation and often have a longer timeline before reaching the customer.

It’s hard to sit on a finished taproom they’re so anxious to share with others, including its unique design and views of St. Joseph’s Cathedral and the Arc of Dreams. The space will a capacity for up to 78 patrons when it opens.

“There’s additional complexities that brewers are having to deal with right now,” Daniel said.

COVID-19 has forced beer makers to consider a vast array of alternatives to the standard methods of doing business and make a number of adjustments.

Fernson had already prepared for a hectic crowler season and responded to the coronavirus by closing its taproom in-house and pivoting to canning. The company’s two staff designers have been vital in creating new labels to go with styles that originally would have been kegged, Thompson said.

And one of those styles exploded in popularity, helping Fernson find more demand for its product even in unprecedented times. The Twin Bing pastry stout quickly sold out and has been the topic of inquiries ever since, Thompson said.

“We get calls all day, every day for that beer,” he said. “It caught us off guard in a good way.”

For others, the coronavirus has meant giving up the business.

Hauck agonized about what to do for six weeks before finally coming to the decision to sell Monks, and he’s not sure if a new buyer will continue Gandy Dancer Brew Works, the small batch brewery he added to the business in 2012.

Selling wasn’t his first move. For a couple of weeks, communicating remotely from Arizona, Hauck tried to keep the bar open.

Business dropped by 30%. Given the margins, it no longer made sense so he made the decision to close.

“You have to get to a certain amount of sales before you get any money,” Hauck said. “It just didn’t make sense to stay open and continue to lose money.”

So he closed the doors in what at first seemed a temporary stopgap measure. Hauck then applied for one of the federal government’s stimulus loans for small businesses.

The Paycheck Protection Program came with an eight-week deadline to spend the money with the bulk of having to go to personnel. For Monks, it meant re-opening and losing money. He returned the funding.

Hauck joked about putting a clause for free beer in the paperwork when the sale is finalized.

He’s going to miss the bar.

He also knows he won’t be the only person making the tough decision to get out of the beer business during the pandemic. There are more than 8,000 breweries in the United States.

“I’m thinking when this all gets settled, another six months, a couple thousand of those are going to be gone,” Hauck said.