The pint glasses belonging to the shareholders of C&C may not have been fizzing with much optimism on Wednesday ahead of the Bulmer's cider producer's annual results announcement. With Covid-19 tearing through the hospitality sector - temporarily closing pubs, restaurants and hotels - the shareholders may have been braced for bad news.
The results revealed an operating profit for the year ended February 2020 of €116.4m, a solid performance for the company. However, this did not reveal anything about the impact of Covid-19.
Accounting for factors like the decline of on-trade sales, which typically account for 80pc of the company's revenue, as well as the cost of furloughing staff, Covid-19 has left C&C down €12m a month - a big bite out of C&C's apples.
Analysts warned that C&C is likely to be left licking its wounds as a result of the Covid-19 pandemic. Irish broker Davy expects C&C to suffer a €20m-€30m loss in its current financial year, due to the operational disruption.
Interim executive chairman Stewart Gilliland said the pandemic had presented "a challenge of unprecedented scale and uncertainty" and that the ongoing closure of the on-trade has "material implications" for C&C's earnings potential.
Despite the negativity surrounding the results of the past few months, shareholders and investors were happy with the company's shift of emphasis and investment toward its 'take-home' or off-trade business line as a result of the forced change in consumption habits. Share values initially surged.
Ireland's drink industry has been struck by Covid-19, mainly as a result of the stalled on-trade sector across the world.
Figures from data analytics firm Nielsen found that alcohol consumption had fallen in Ireland as a result of Covid-19 restrictions and the closure of the on-trade.
The total volume of beer and cider sales was down by 36pc in April 2020 compared to April 2019, despite a 58pc increase in the volume of beer and cider sold in the off-trade.
The numbers on the sale of spirits revealed a similar trend. There was a 24pc increase in the volume of off-trade sales, but a 13pc decrease in the overall volume sold.
According to Drinks Ireland, the Covid-19 pandemic has significantly affected Ireland's drinks industry, with the closure of the on-trade and restrictions in supply to many off-trade channels, not just here but across global markets, heaping commercial pressure on producers. In Ireland, restaurants and pubs which serve food and operate as restaraunts with table service only are due to reopen on June 29.
Also, the closure of brewery and distillery visitor centres, which usually attract three million mainly overseas visitors, has severely affected jobs and revenue.
With the drinks industry struggling to cope with the hammer blow of Covid-19, Drinks Ireland has called on the Government to help the sector recover.
A policy document the industry body produced has called on the Government to provide cashflow supports, help the sector's visitor centres attract domestic tourists and continue to promote the sector's wares internationally to help boost export sales as markets reopen.
Patrick Higgins, an analyst with Goodbody Stockbrokers, said the biggest challenge for alcoholic beverage companies from Covid-19 had been the shutdown of the hospitality or on-trade sector.
This channel accounts for around 50-60pc of total volumes depending on the category, with an even greater bias from a profit perspective.
"While we have seen a sustained uplift in volumes sold through the retail channel, this has been nowhere near sufficient to offset the impact of the closure of the on-trade," he said.
Higgins said that producers have initially sought to shore up their balance sheets to ensure they have the liquidity to see them through any near-term capital requirements. Cost bases have been minimised as much as possible, while service levels have been maintained to satisfy retail demand with the help of Government supports where possible.
The surge in demand at the supermarkets has helped many stay on their feet through the pandemic.
Over the four weeks to May 17, media intelligence business Kantar found that sales of alcohol in supermarkets skyrocketed by 93pc.
Seamus O'Hara, chief executive of Carlow Brewing, the firm behind craft beer brand O'Hara's, said that off-trade sales had helped keep the business going since the beginning of Covid-19.
"Off-trade has kept us going, and it has been pretty strong over the past couple of months," O'Hara said. "We have diverted over some of our sales resources to get behind that as much as we can. It's up 30 to 40pc.
"Consumers have more time on their hands. They are trying other things. You might hear of them baking banana bread; they are also looking out for craft beer and speciality imports, which could be good in the long term for our industry."
Despite the off-trade bounce, O'Hara is concerned about the on-trade in future with social distancing restrictions set to change the revenue levels of many companies in the hospitality industry.
On-trade accounted for 50pc of his domestic sales before Covid-19, which have now effectively stopped. Exporting is another area of concern for O'Hara, who sells his beer into more than 35 countries. With the on-trade stalled across the world, the export market has become even more challenging.
The onset of Covid-19 couldn't have come at a worse time for Carlow Brewing. In January, the company had upped sales for St Patrick's Day. Orders started to get cancelled in February as Covid-19 began to affect international markets, leading to stock overhangs and credit issues, with the company yet to be paid for some of the extra stock it had produced.
The dual impact of weak export and domestic on-trade sales could affect cash flow for the smaller players in the sector. O'Hara said the Government had helped out in terms of deferring taxes, such as duty and VAT, but that it could lead to an issue as the industry gets back on its feet.
"The nightmare down the track is that, just as we are getting going and trying to fuel the business to build back up, there are a lot of deferred payments to be taken care of," he said. "Lower costs, debt or some sort of grants are needed to try and help us out with that.
"If all those [deferments] kick in at the same time, there will be a crunch."
Reduced export sales may have negatively affected beer manufacturers, but for those in the spirit category, it has been a nightmare. According to Drinks Ireland, the Irish drinks industry contributed more than €1.4bn in export value to the State in 2019. Approximately €1.1bn of this was accounted for by spirits exports.
David Stapleton, director of The Connacht Whiskey Company, said that businesses had taken an "absolute punishment". "No one has escaped the wrath," he said.
The company's key markets are Ireland, the US, mainland Europe and Russia. With the on-trade at some level of lockdown across these markets, it means that fewer people are trying his product.
"We build our brand through those channels and then it rolls into the supermarkets and off-licences," he said. "The consumer says 'I tried that in the bar on Saturday night, I'll buy a bottle of that'. So, in effect, we have seen our revenue stop. You are working on fumes."
With the export market crucial for his business, Stapleton has called on Bord Bia and others to help the industry re-establish itself in international markets by getting "boots on the ground" to promote Irish wares.
The export market isn't his only concern, however. Like many whiskey distilleries across the island of Ireland, he has invested heavily in developing a visitor centre for international tourists who come and fall in love with whiskey. With international tourism expected to grind to a halt this year, the viability of these centres is in question.
"That is gone - 80pc of our visitors are overseas visitors," said Stapleton. "I don't want to get into the realm of existential threats, but our two primary sources of income have all but stopped. We are acutely aware of the challenges in hospitality and tourism; these are our primary markets."
Stapleton said that the visitor centre will remain, but that it will have to "scale down to the bare bones". He hopes Failte Ireland, the semi-State agency responsible for developing the Irish tourism industry, will help distilleries promote their visitor centres to the much-vaunted wave of domestic tourists.
The combined effect of Covid-19 has made the launch of The Connacht Whiskey Company's own whiskey, scheduled toward the Christmas period, a challenge. "If we can't get sips on lips, or people to test, try and enjoy it to create fanfare, then the launch is a challenge," he said.
"It's a very uncertain world, any nugget of certainty gives us a sense that I can now bet on that," he added. "Right now, we are throwing darts at a dartboard with a blindfold on. We just don't know where we are aiming for."
With the sector scrambling for certainty, one area that many of the smaller producers would like to see resolved is the limits placed on selling online. Currently, independent breweries are restricted in what they can sell to individual customers, with minimum orders set at 24 quarts, which works out at about 18 litres, or three cases per sale.
For Stonewell Cider founder Daniel Emerson, the online sale limitation is something that must change to provide smaller drink producers with a chance to compete in the current climate. His own business has been affected "drastically" - year on year in March he was down 50pc, in April 85pc and then May, 60pc.
To get the business kicked off again, he is hoping that he would be able to sell his cases individually online, as opposed to selling several at a time. "If I want to sell to an end consumer, the minimum I can sell is around 19 litres. That is totally impractical. It has to be removed entirely."
Emerson said that some of the supports from Government, which are mostly finance packages, aren't working for small alcohol producers. He is hoping for certainty over some of the wage subsidy supports, which he would like to see extended to around three months after hospitality reopens.
"I personally think that [they] indicate a fundamental misunderstanding of how small business owners operate," he said.
Despite the negativity taking much of the fizz out of the sector, the drink producers are still confident that they will recover with the right support. The reopening of the on-trade will be the key catalyst for driving the recovery from the pandemic.
Goodbody's Higgins shares this view, pointing out that producers should work with their on-trade customers, supporting them where possible. He said it was difficult to know what the long-term consequences of the pandemic would be for the industry.
"If there is a recession, history indicates that while overall volumes are fairly resilient, consumption trends typically shift from the on-trade toward the off-trade channel," he said.
Carlow Brewing's O'Hara said the potential is there for a recovery in future, but it will be linked to the resumption of the on-trade.
He believes people will want to go out to pubs and restaurants again, sparking life into a crucial side of his business, but recognises it is essential that the Government clarifies how long it will take, particularly with the reopening of restaurants and certain pubs potentially three weeks away.
"The market will come back," he said. "It is now about how long we will have to operate sub-optimally in reduced capacity with 100pc of our overheads. It's how long you have to maintain that and what support is there to help you to do that.
"If the supports are there, then there is a good future for the industry. If the gap is too wide, then there is going to be a lot of issues and, unfortunately, a lot of causalities."
Sunday Indo Business