Kegs are going bad as coronavirus keeps restaurants closed. Boston Beer has a solution
- Boston Beer is turning millions of dollars of expired beer into ethanol to recoup some lost sales to restaurants and bars shuttered by the coronavirus pandemic.
- Consumers are drinking more at home, but craft breweries rely on revenue from restaurants and bars.
- Dogfish Head Craft Brewery, which merged with Boston Beer last year as part of a $300 million deal, is making hand sanitizer using high-proof ethanol, the company said.
As bars and restaurants remain shuttered in response to the coronavirus pandemic, Boston Beer is turning millions of dollars of expired beer into ethanol to recoup some of its lost sales.
Beer sales rose 11.6% in the week ended April 11, according to Nielsen data, as consumers drink more at home. But the spike doesn't benefit craft brewers as much because they rely on sales in restaurants and bars. The shift in consumption trends is leading to expired kegs for many craft beer manufacturers.
Supply chain disruptions caused by the pandemic have led farmers to dump milk and crush eggs, even as grocery stores struggle to keep high-demand food items in stock.
Boston Beer, parent of Sam Adams, is taking a less wasteful approach when it comes to the $5.8 million in beer returned by retailers and distributors during its first quarter.
The company's founder and chairman Jim Koch said on CNBC's "The Exchange" Friday that it will distill the returned beer into ethanol, so it can be blended into gasoline. The company, the second-largest craft brewer in the nation, according to the Brewers Association, has been recycling stale beer like this for decades to ensure freshness, but lately it has stepped up the volume.
The brewer is also adapting to the crisis by making hand sanitizer. Dogfish Head Craft Brewery, which merged with Boston Beer last year as part of a $300 million deal, has transitioned into making the product using high-proof ethanol.
Dogfish Head is producing between 200 to 400 gallons of hand sanitizer a day and donating all of the profits to help restaurant workers. Its home state of Delaware is its number one customer, according to Sam Calagione, Dogfish Head's founder and president.
"Today we're making enough hand sanitizer per week in our facility to clean over half a million hands," Calagione said.