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How Craft Beer Shook the Alcohol Industry

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The explosion of the craft beer scene has seen a resurgence in the number of British breweries and a significant shift in drinking culture.

The word hipster is a term often associated with craft, but it would be lazy and do a disservice to proclaim the craft beer revolution as being simply down to ‘hipsters’.

The number of UK craft brewers has grown 65%, from 1,026 in 2011 to 1,700 today. There are more craft breweries per capita in Britain than anywhere in the world – clearly the boom is in full ascendancy, but such fierce competition in the market raises questions about how long this wave can continue.

Craft beer boom

Craft beer has exploded into the market, growing 40 per cent a year.  The boom in the UK can be attributed to the decision in 2002, by then-Chancellor Gordon Brown, to give beer duty tax relief to small breweries.

Its variety is what appeals to people – smaller breweries are not beholden to a rigid formula, name or brand – and nor does it have shareholders to answer to.

Therefore a major advantage of smaller scale production is that it is quicker to change up to react to trends. It’s too big an operation for a worldwide player to undertake a major shift in production because of a regional or national trend, particularly with the heavy marketing strategies that exist with large companies.

For large companies, consistency is key to their business model. But craft beer’s appeal is in its originality, often with a regional demographic, and independence. Craft beer drinkers like to feel as though they’re supporting small, local breweries.

BrewDog, a brewery from Scotland, began in 2007 with 2 employees and a dog. In 2017 this had morphed into 750 employees (plus a dog) and 55,000 people who contributed via crowdfunding. As well as this, they also operate 46 bars.

Emphasising the weight of support from loyal drinkers, BrewDog set 2 world records in 2016: for the highest ever equity crowdfunding raise, and for the most consecutive years in the Sunday Times Fast Track 100.

Crowdfunding

Crowdfunding has played a significant role in craft beer’s rise – to the tune of almost £50 million via 65,000 individual investments. More than 40 UK breweries have used crowdfunding in the last 4 years to aid expansion.

BrewDog has received just over £25 million since 2009 in numerous crowdfunding efforts. BrewDog was valued at £1bn in April 2017 and promptly sold a 23% stake to a US investor. Conversely, another independent (at the time, anyway), Camden Town Brewery, smashed its target of £1.5m and managed to generate over £2.75m to boost its European distribution.

It makes sense that making quality beer for local people will ignite a community feeling, giving people a sense of pride in pitching in to create something they can enjoy together.

How can you benefit from craft beer?

By serving it! And providing your customers as much information as possible about the drinks you serve will go a long way towards sales. Customers will appreciate your knowledge, and considering how the beer’s source is so important to the craft concept – it’ll be a smart idea to get your staff up to speed with it.

Given how much the market has grown, you can’t ignore it. It’s worth making room both in terms of taps and fridge space for craft beers – supermarket giant Waitrose upped its range of speciality, craft and international beer by 27% to 95 beers in May 2017. Tesco increased its offering by a third in April of the same year. This is in response to Waitrose reporting sales up 33% year-on-year and Tesco up 40%.

Clearly then, this isn’t slowing down any time soon and there is a lot of money to be made. Customers are looking for it, give it to them!

Serving craft beer

These pilsner glasses are perfect to serve craft beer. They’re designed to clearly display the beer’s colour and retain the head. They are slender and graceful and look good in punters’ hands.

It's also important that your cellar equipment is in good condition to ensure smooth production. Cleaning your beer lines regularly will keep beer fresh, free from contamination and tasting great!

You may also consider updating your bar furniture to match the artisan theme associated with craft scene.

Celebrities who love craft beer

There are celebrities who not only love craft beer, but are brewers themselves!
President Obama had his own beer brewed at the White House via a home brewing kit. The recipe was even published online, and the White House Honey Brown Ale is the first alcohol brewed or distilled on the White House grounds.

Paul McCartney is known to be a home brewer as well, giving away his batches to family and friends. Rock legends Queen even have their own brand – Queen Bohemian Lager – which is an authentic Czech lager brewed in Bohemia. The logo was even designed by Freddie Mercury in his school days.

Will the craft beer bubble burst?

Craft is mainstream in the US, but in the UK only 23% of adults drink craft beer (Mintel’s 2016 beer report) – meaning supply is bigger than demand.

Growth has certainly slowed down in 2017, although after its meteoric rise there was bound to be a natural plateau. It remains to be seen whether customers choosing craft are simply following a trend or plan to treat their taste buds for the long term.

Rather than diminishing interest from customers, it’s the intrusion of the large multinational corporations that are giving the most cause for concern.

Impact of ‘big beer’

It’s been reported that craft beer brewers are making a loss for first time in 10 years. This has been attributed to the response from large beer corporations at losing 12% of the US market to craft.
London’s original craft beer brewery, Camden Town, formed in 2010 and was sold in 2015 to brewery giant ABI – owner of Budweiser – for £85m.

In the US, two giants have merged in a £79 billion deal to become a true global behemoth – with just four breweries (AB InBev, MillerCoors, Constellation Brands and Heineken) controlling 80% of the market – and it has been claimed this has added $2 billion a year to prices, resulting in thousands of job cuts and a supply chain that favours Big Beer.

One tactic of the larger companies, other than acquisitions, has been to replicate craft label imagery and brand names and put out their own versions. This results in consumers thinking they are buying independent but actually giving money to the giants of the industry.

It remains to be seen what effect will be had on the UK craft beer industry in the future, as bigger breweries continue to purchase independent craft breweries and put out their own beer with the same craft marketing.

Will customers care enough to research which beers are on offer behind the bar in their local? What percentage of customers actively want to support independents, and how many just want to drink good beer regardless of who produces it?


Fighting back

In the US, an Independent Craft Beer seal for breweries was unleashed in July 2017. The UK is looking to follow suit with an “Assured Independent British Craft Brewer” seal. This allows customers to know who they are buying from and assures them they aren’t deviating from the traditions of craft.

This won’t be vital for everyone, however. While many undoubtedly wish to buy original craft that remains independent, many are just looking for a quality beer. Bigger chains are quite clearly capable of doing this, especially as they recognise the craft fans’ preference for high end – therefore it is likely the multinationals will produce quality craft beer for the mass market.

If taste isn’t sacrificed for mass production, many people won’t mind if what they’re drinking is served in 10 bars or 10,000.  It’s up to the larger breweries to commit to the essence of craft beer if they want to be successful themselves or simply disrupt the craft scene and halt the buzz.


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