California Governor Issues Statewide "Stay at Home" Order

March 20, 2020

California Governor Issues Statewide “Stay at Home” Order

Dear Client:

It started in the Bay Area, but now the entire state of California, one of the largest economies in the world, has ordered most of its citizens to stay at home.

California Gov. Gavin Newsom late on Thursday issued a statewide order for all residents to ‘stay at home’ amid a coronavirus outbreak, according to CNBC.

“We need to bend the curve in the state of California,” Newsom said, as he announced a statewide order for Californians to stay home.

“There’s a social contract here, people I think recognize the need to do more … They will begin to adjust and adapt as they have been quite significantly. We will have social pressure and that will encourage people to do the right thing,” he said, in addressing how this order will be enforced.

Newsom added: “Home isolation is not my preferred choice … but it is a necessary one … This is not a permanent state, it is a moment in time.”

The stay at home order is in place till further notice.

“All dine-in restaurants, bars and clubs, gyms and fitness studios will be closed, according to the order. Public events and gatherings are also not allowed.”

But…. “Essential services will stay open, however, such as pharmacies, grocery stores, takeout and delivery restaurants, and banks.” Earlier reports include cannabis clubs, but those were walked-back later.

Which brings us to the issue of, what is an essential service? I would assume that the manufacturers that produce and deliver the food, beverages, eggs, milk, pharmaceuticals, diabetes sensors, catheters, face masks… etc etc. … and yes, beer brewers and distributors are “essential”. So can all those people still go to work in California? These are not directly addressed. Which brings us to our next article…..

IS THE BEER INDUSTRY “ESSENTIAL” DURING CRISIS?

One consistent concern we’ve fielded in recent coverage: some brewers and distributors aren’t sure exactly how some of the federal, state and local bans specifically apply to their operations.

For example, California hasn’t exactly been so clear in all the details of its various COVID-19 shutdowns in the last few days. For instance, in the wake of California’s first shelter-in-place order on Monday, affecting just the Bay Area, some breweries weren’t sure if they were allowed to be open at all, even for to-go sales. We’re not even sure they’ve gotten clarity still.

In other instances, some readers have asked us, for plant/warehouse situations, how are max gathering limits (the CDC recommended gatherings of no more than 50) to be applied?

To that end, the OC Register reported yesterday that lobbyists for giant consumer brands from A-B to Target have banded together to petition all levels of government for both clearer rules, and exemptions.

More than “four dozen industry groups,” including the Beer Institute and the Distilled Spirits Council of the United States, are asking the Trump administration as well as local governments “to set a clear framework for consumer goods makers, food processors, distributors and their workers to prevent shortages.”

They’ve sent letters “asking for clarity on the types of businesses that are exempt from gathering bans and curfews enacted to slow the spread of COVID-19.”

The BI was nice enough to furnish BBD with a copy of the letter.

It explains that while the CDC gathering ban exempts businesses, state and local interpretations have not been as clear.

“Some states have clearly exempted food, beverage, and consumer packaged goods manufacturing facilities … while others have not. This lack of uniformity is leading to significant confusion and could further deteriorate if a level of consistency across states and municipalities is not achieved quickly.”

Bottom line: As manufacturing facilities are not areas of “public gathering,” but rather highly regulated businesses, the group is asking all levels of government to exempt consumer packaged goods manufacturers from curfew and gathering restrictions, “so that we can ensure the continued supply of food, essential items, while also ensuring worker safety.”

They’d love for such exemptions to be coordinated in “a unified, clear and public framework.”

They also asked that the “manufacturing and transportation of ingredients, packaging, warehouses, distribution centers and other indispensable parts of the supply chain be considered equally critical.”

THE BIG QUESTION GOING FORWARD FOR POLITICIANS. Is beer an indispensable item? I think even politicians are smart enough to do the political math, and realize that while you can create mini-martial law, there are limits to what you can deny Americans. And since beer is proprietary licensed DSD’d and merchandised, it doesn’t interfere with the supply chain capacity and stocking of other essential products like food and toilet paper and electronic bidets.

Stay tuned. ….

MORE FROM BEER DISTRIBUTORS IN THE TRENCHES

Yesterday’s story on distributor best practices was well received among those looking to trade virtual notes with others across the country in handling the currently unprecedented situation.

More input and operational “hacks” have rolled in.

It’s tough out there, but all three tiers are leaning in, together.

“THERE HAS NEVER BEEN SO MUCH INDUSTRY COLLABORATION.” “I’ve been in email/ text loops with other wholesalers sharing best practices and stories,” said one California distributor. “There has probably never been so much industry collaboration.”

More silver linings:

“I will say that the day to day tension of distributor/customer is gone,” said one large wholesaler in the Southwest. “All parties are just concerned with meeting customers’ needs. I am very proud of our team and despite the fact that the situation stinks; the good will of man has not disappointed me.”

A large multi-state distributor also shared that he “was in a few stores yesterday afternoon and the inspiring thing to see was the power of DSD with plenty of stocked shelves and beer product available while bread, pasta, paper products, etc were completely blown out, which I’m sure is the norm across the country.”

BEER DISTRIBUTORS MAY BE DEEMED “ESSENTIAL.” Back to our top story: Beer distributors are concerned about their “essential” nature as well.

As we understand, the dubbing of distributors as “essential” during widespread COVID closures is being done on a state-by-state basis. Clearly that’s an important designation, as more areas revise not only retail but also working conditions.

To wit, today, New York Governor Andrew Cuomo is enacting an executive order for most businesses to go to 50% in-person staffing –save, of course, any essential business or those providing “essential services.” And as one distributor explained to us, beer wholesalers are considered to be essential in the area, because they deliver to grocery stores, so they are not affected.

And it’s hard to imagine something more essential than delivering water to grocery stores. Says the California distributor from the top of our story: “We are actually getting more beer and water on the floor than ever before,”

And they noted that “beer distributors may be deemed, ‘Essential,’ in this crisis. About time!”

Relatedly, distributors are trying to get local agencies to help facilitate distributor replenishment, via flexible hours, or even simply more clarity on current regulations.

“We’re trying to get stores to receive us earlier but they are so backed up that hasn’t come to fruition yet – we’ve asked CBBD to reach out to ABC to relax delivery hours so we can deliver as early as 12:00AM,” said the California source.

Of course, we’re also fielding other themes:

REDEPLOYING ON-PREMISE PERSONNEL INTO THE OFF-PREMISE. This isn’t really a best practice anymore, it’s the reality. The on-premise is virtually shut down across the country, and the off-premise is getting slammed day in and day out. Hell, some distributors are pushing more volume through the off-premise right now, than they ever have before as a company, (although we still don’t know how long that will last, and we caution that pantry load — or increased consumer inventory — could lead to soft demand later).

HISTORICAL WEEKS FOR SOME DISTRIBS. In fact, one Texas distributor told us they had their “two best volume days in history this week” and “will end the week with our best volume week ever.”

SELTZERS A BIG PART OF PANTRY LOADING TOO. Another multistate distributor told us their off-premise business in one of the states they operate in is up double digits, and had “our largest depletions ever for a Monday (30 40 50% higher orders).” This distrib also told us that they just recorded their “biggest week ever with seltzer for the week ending March 7.” That week saw them sell “almost 5.0x” the amount they sold last year (42,000 cases) with White Claw and Truly leading the way. In fact, this distrib said “White Claw is growing in case volume 2x vs. Mich Ultra” in this particular state in the Southwest.

BUT HOW LONG DOES IT LAST? That same multi-state distrib asked “how long does the pantry loading last and we hit a wall?” Will it curtail? Or will “people continue to drink and relax with beer / seltzer while they’re in self quarantine mode?” I know I’ve had a few 3 o’clock quarantinis.

ANOTHER SILVER LINING? As one distributor put it succinctly, “Maybe the cessation of unnecessary meetings and ride-withs with suppliers will become permanent as they see we can sell beer regardless.” Ha, fat chance.

BEER INSTITUTE AND BREWERS ASSOCIATION ASKS FOR EMERGENCY EXCISE TAX RELIEF

On Wednesday, supplier trade groups, including the Beer Institute and the Brewers Association, sent a letter to Senate Majority Leader Mitch McConnell and Senate Minority Leader Chuck Schumer, urging for quick economic relief for our nation’s brewers, distilleries, wineries, and cideries.

On the beer side of things, the letter asked congressional leaders to address three things, per BI release.

Suspend federal excise taxes during the duration of the COVID-19 outbreak. These tax savings will allow brewers and beer importers much-needed economic relief. In addition, we are working to make the current excise tax rates permanent to provide long-term certainty for the beer industry and avoid a $130 million tax increase at the end of this year.
Increase funding for Small Business Association (SBA) Disaster Assistance Programs. No- and low-interest loans through the SBA will allow producers to respond to economic stress and endure this crisis.
Create an industry stabilization fund to provide cash advances to ensure our businesses have enough receivables to pay their employees and to borrow against.

In addition to these efforts, lawmakers are also working on a coronavirus stimulus package which could pass Congress as early as next week.

“Ultimately this package will likely total somewhere in the range of $1.5 trillion once Democratic and Republican priorities are incorporated,” according to Henrietta Treyz, director of economic policy at Veda Partners, reports MarketWatch. It will likely include billions for hard-hit sectors as well as a new loan program.

ED. NOTE: The distillers and wineries are asking states and feds for exceptions, which is important. Check out yesterday’s Wine & Spirits Daily issue for more. (no paywall)

DEALS STILL ROLLING

Coronavirus is paralyzing parts of the economy. And yet, in the beer sector, consolidation rolls on.

One dealmaker source told BBD that they have more than a handful of M&A transactions still in the works, half for buyers and half for sellers, and most with financing. So far things are still moving forward and the financing commitments seem to be staying in place, per source .

BEER BRIEFS:

CAMPAIGN US DECLARES GUINNESS “WE WILL MARCH AGAIN” SPOT THEIR “AD OF THE WEEK.” Earlier this week, BBD reported on the poignant new Guinness spot on St. Patrick’s Day, a giant occasion for the beer that’s basically been cancelled by COVID 19. Guinness nods to the situation, saying “we know this year things feel different,” and promises that “we’ll march again,” while showing images of friends and family toasting over Guinesses at the pub or in their homes. Campaign US found the ad brilliant, making the spot its ad of the week. “Messaging surrounding the Coronavirus can be tough for brands. One small misstep or poorly thought out post could be perceived as making light of the situation, but consumers still want some form of communication,” the outlet noted. “To that end, Guinness’ reassurance that the world will keep on spinning is a refreshing one.” It was a damn good ad indeed.

NEO-SPEAKEASIES ALREADY POPPING. Well that didn’t take long. One day after San Antonio instructed all bars and in-dining restaurants closed for business, a local independent sports bar near us posted on Facebook that they will be having “private parties” at the bar three nights a week for friends and family, and that these “were not public gatherings” but more “private fundraisers.” The posting was deleted a few hours later. People will be people.

Plus, this from Twitter: