Alcohol sales are up during the pandemic—but Austin beverage businesses are still hurting

People are drinking more since the pandemic started, but this trend hasn't had the trickle-down benefits one might expect for small and local alcohol producers.

A study published by the Journal of the American Medical Association in September found that, since the pandemic began, three in four adults consumed alcohol on one more day each month, on average. In Texas, per capita sales of spirits increased more than 10% in June compared to the prior three-year average, according to a surveillance report by the National Institute on Alcohol Abuse and Alcoholism.

Although retail sales have improved, they do not necessarily offset the losses in other areas, such as keg sales to bars and restaurants or taproom revenue. Increased demand from home drinkers has also led to some unexpected challenges, including a can shortage.

This has been the case for Ranch Rider Spirits Co., a local canned cocktail company.

"Our bar and restaurant business dropped down to essentially none," co-founder Brain Murphy told Austonia. "But our retail business really performed well."

Murphy and his co-founder, Quentin Cantu, met as first-year students at the University of Texas McCombs School of Business and launched a food truck, Ranch Hand, with investment dollars from professors.

The truck's cocktails were so popular that they started Ranch Rider, a canned cocktail company that uses just a few ingredients: tequila, sparkling water and fresh fruit juice. It launched late last year.

As a growing business, Ranch Rider has faced some challenges over the course of the pandemic.

During the early days of lockdown, consumers "had all the time in the world," Murphy said, and didn't necessarily reach for a pre-mixed, canned cocktail.

But eventually people moved from the sourdough stage of quarantine to other activities, such as taking evening strolls, going out on a boat or golfing, all of which were relatively safe and canned cocktail-friendly.

"Austin has been great at supporting us," he added.

One unexpected challenge, however, was sourcing the aluminum cans in which its products are sold.

Big beer and soda conglomerates also saw their restaurant and bar business dry up while retail demand—from grocery and liquor store customers—increased. Instead of selling their wares in kegs or in soda fountain-friendly vessels, they needed cans.

This demand squeezed out many small producers, like Ranch Rider and craft brewers.

"We're still very much in the throes of that shortage," Murphy said.

Craft brewers are in the same boat.

Although retail sales may be strong, they rarely account for the losses in other revenue areas, said Charles Vallhonrat, executive director of the Texas Craft Brewers Guild. He estimates many craft breweries have seen their revenue fall by more than 50% this year.

Hops & Grain Brewing announced earlier this month that it would close its East Austin taproom to focus on its beer production business. It follows in the footsteps of other local breweries that have closed due to the pandemic, such as South Austin's Skull Mechanix Brewing and North Austin's North by Northwest Brewing Company.

For those businesses that survive this period, Vallhonrat expects some pandemic-era adaptations to remain in place, including curbside beer pickup and online reservation systems.

But they'll have to survive the depressed brewery and taproom sales and can shortage to get there.

"It's been a real challenge," he said.