CALGARY — Two of Canada's biggest independent craft breweries are reporting buoyant results during 2020 despite lost on-premises sales as bars and restaurants were restricted or closed due to COVID-19 pandemic measures.
Calgary-based Big Rock Brewery Inc. said Friday it had its strongest adjusted earnings results in seven years in 2020, despite higher inventory losses and a huge drop in keg volume sales.
Meanwhile, Waterloo Brewing Ltd. CEO George Croft says the Ontario company actually realized double-digit percentage increases in sales in 2020 because only about two per cent of its volumes are sold in bars and restaurants — most is marketed in retail stores.
Big Rock reported Friday it had earnings before interest, taxes, depreciation and amortization of $5.1 million in 2020, compared with an EBITDA loss of $1.1 million in 2019.
"Our EBITDA performance has returned back to where it was in 2013 and our balance sheet is strong as we used that money to pay down debt," said CEO Wayne Arsenault in an interview.
He said the craft brewery's outperformance came despite headaches caused by the pandemic a year ago as its on-premises customers were forced to shut down at the same time that travel restrictions prevented equipment manufacturers from flying in to make a key brewery repair.
Croft said Waterloo Brewing was "exceptionally fortunate" because it was able to keep producing throughout the pandemic and wasn't affected much by bar closures.
"What happened was when people weren't able to go to bars and restaurants, the consumption that was previously happening in bars and restaurants moved to the retail channel," he said.
"So our business during the pandemic was actually up."
In its most recent financial report, Waterloo Brewing noted EBITDA of $4.0 million in its fiscal third quarter ended Oct. 25, up 19 per cent from the same period of 2019, as revenue leaped ahead by 40 per cent to $22.8 million. Its fourth quarter results are scheduled to be released in April.
Big Rock, which has its main brewery in Calgary and satellite breweries in Vancouver, Toronto and Etobicoke, Ont., reported a net loss of $700,000 last year on revenue of $44 million, an improvement over a net loss of $2.9 million on $42.7 million in revenue in 2019.
The reduced loss came despite taking a $1.5 million non-cash impairment charge in the fourth quarter as a result of the temporary suspension of its Etobicoke brewing and packaging operations due to less product demand.
The company reported $2.1 million in damaged and obsolete inventories in 2020, mainly from issues in the second and third quarters of the year.
"We don't pasteurize any of our beers ... so when we were out at the bars and restaurants and they all suddenly closed, they were full of inventory," said Arsenault.
"We had to take all of that inventory back and it's perishable so we ended up losing those kegs."
Big Rock said sales volumes increased slightly in 2020 to just under 17.3 million litres.
Arsenault said the company capitalized on opportunities in its wholesale channels to make up for its exposure to the on-premises market, where keg sales volumes dropped by 55 per cent. He said normally about 20 per cent of Big Rock's sales come from the on-premises market.
This report by The Canadian Press was first published March 12, 2021.
Companies in this story: (TSX:BR, TSX:WBR)
Dan Healing, The Canadian Press
