Craft Beer Weekly – State of the Nation
This week there has been a lot of discussion about big corporations trying to get a slice of the 'craft' cake. There is no denying that this seems to be happening in every area of 'craft' or 'artisan' food and drink.
In the Irish craft beer industry, it has taken a bit longer than in other industries for the macros to admit to themselves that this 'craft' thing isn’t going anywhere and is actually doing extremely well. But even they can no longer deny the facts. Between 2011, when craft beer really started taking off here, and 2012, Irish craft beer sales increased by 43%, and it did not stop there. According to the Irish Times, sales increased by 50% this year alone. Since 2011, the sector has almost tripled in size, and by 2017, it is expected to grow to approx. €235m in retail sales value. And all this happened in the middle of a recession, when almost every other industry was struggling and crumbling around us. No wonder they want in.
But are they managing to do it? Yes and no. In Ireland, we’ve seen two main strategies used by macros trying to elbow their way into the craft beer market. The first strategy is to buy the majority of shares in an already established craft brewery. This has worked quite well for Molson Coors with Franciscan Well in Cork, and for C&C who currently own 87.5% of Five Lamps. The main reason this has worked so well is because the big guys in these 2 cases have done it exactly right. They are coughing up the money, but letting the people who actually know what they are doing and understand the market and consumers do what they think will work. They’re not dictating recipes or beer styles; they are letting these guys decide for themselves what they think people will like to drink. And it’s paying off. Franciscan Well were one of the craft beer pioneers in Ireland. They have always made great beers and did well by themselves for many years. With the shot in the arm from Molson Coors, they have been able to expand and give young brewers a chance to shine, which has resulted in many fantastic new beers. Not only that, they have also gone to great lengths in helping new, small craft breweries find their feet and have passed on best practices. That is the kind of investment we need. In the case of Five Lamps, the initial C&C share was 98% and the deal is that equity is reduced as performance targets are met. It’s now at 87.5%, so it’s going pretty well. Again, that is because Five Lamps was established as an independent company at first, by people who knew how to make good quality beers that people want to drink.
The other strategy that has been tried by macros in Ireland is to appeal to craft beer drinkers by slapping “vintage” looking labels onto their bottles or bringing out a “Pale Ale” or “Winter Ale” or “Summer Special” etc. and making it look 'crafty'. They also like using the word 'crafted' in their ads. This strategy is completely missing the point. Craft beer drinkers aren’t stupid. We don’t fall for shiny labels or slogans. What we look for is taste and quality. I don’t care if you give me the most amazing label, most catchy name or some elaborate made-up story. If your beer is bland as f*ck, I’m still not gonna buy it. I’ll try it, yes. But if it tastes like water, I’m not going to pay for it. And with the standard of real Irish craft beer improving hugely in the past year again, you’ll have to come up with something outstanding to get a craft beer drinker's attention. In Ireland, this strategy has not worked very well so far. People who are already drinking craft beer don’t fall for it, and it does not seem to be too appealing to people who would usually drink beers from big corporations either.
So, is the Irish craft beer industry in danger of being highjacked by big corporations? No. The main problem the macros have remains firmly in place: they do not understand the craft beer consumer. Until they figure that out and actually start brewing something that tastes like a craft beer and not just looks like it, there is no reason to panic. The Irish craft beer industry is flourishing and will continue to do so for many years to come. When it comes to craft, quality will always prevail over quantity.
Great, but how can I make sure I’m not giving my hard-earned cash to a big corporation without knowing it, when I was actually looking to try an Irish craft beer?
The answer is the same as with any other consumer product- you need to make informed decisions. There is a huge wealth of information out there for you. The most fun way to learn about craft beer is to join a craft beer consumers or enthusiasts group like the Dublin Ladies Craft Beer Society or Beoir. Not only will you meet lots of like-minded people who share your passion, but you will also have access to a ton of insider information and you’ll have people at hand who are happy to help with any questions you may have. In addition to that, there is one thing absolutely anyone interested in Irish craft beer should do: Buy Sláinte – The Complete Guide to Irish Craft Beer and Cider. This book is a fantastic resource and tells you everything you need to know, from the history of beer, to the brewing process, glassware, beer and food pairings, and everything in between. It also contains a list of all Irish craft breweries and their details, including who owns them. It is a brilliant read and will give you a very solid foundation in all things craft beer. I can’t recommend it enough.
At the end of the day, it’s fantastic that the Irish craft beer industry has been so enormously successful that even the big guys are taking note and are starting to realise that this could turn into a real threat over the next few years. The market share is still very small at about 2%, but is set to continue to grow. This will be helped further by the good news that the amount of beer that craft breweries can produce while still paying a lower tax rate has been increased from 20,000 hectolitres to 30,000 in the last budget. The fact that big corporations are feeling the need to actually take action speaks volumes. The craft beer revolution is far from over, and it’s onwards and upwards from here!