At the current time the beer industry is considered to be alive because of a massive injection of enthusiasm and ideas; according to the Campaign for Real Ale (CAMRA) in the past year 187 breweries have launched themselves into the market. This river of beer has also not gone unnoticed by the press. The Telegraph proclaimed that 'A Craft Beer Revolution is Brewing' (13 December 2013) and the Guardian urged 'all hail the British craft ale revolution' (26 October 2013).
For the consumer more breweries, more beer and more choice is undeniably a good thing. Living in London, near the South Bank, I don't have to go far to find
evidence of this new beer revolution. Up the road from me is the
wonderful Kernel Brewery, across Borough Market is Brew Wharf, going a
bit further would lead me to the Meantime Brewery, while in my local
vicinity I have six dedicated ale pubs serving a cornucopia of different
beers from across Britain. I am, without a doubt, sharing in the beer bonanza.
But can it be considered that because of these trends the brewing industry is successful? The story of the new UK's beer revolution tends to be written, in large part, by those on the outside of the industry who consume its products. We hear precious little about what is going on inside it. For example, is the beer market is becoming saturated? Do changes in the price of ingredients alter which beers are produced or is this down to the whim of a brewer? How many breweries are producing beer that is poor that may lead to their eventual closure? Are brewers thinking the market for beer will grow, or is their uncertainty amongst them? Where do new entrants learn how to run a brewery and what is information sharing like in the industry? Lastly, are any of the new breweries making profit? No one outside the industry can realistically answer these and other questions...yet.
Being fascinated about the management and operation of the modern brewing industry - something that stems from my career as a business historian - yesterday I issued a simple request on Twitter: 'does anybody know of a micro/craft brewery that may want to talk about their finances and business model?' The response was not encouraging. I was advised to contact a number of breweries, but in general I got the impression that getting under the skin of the industry would be hard. But I am not fazed, I plan to go ahead a project to understand it as much as I reasonably can. My findings, I hope, will be documented here.
I have a starting point though. One brewery, the Pilot Brewery in Leith, replied to my request, albeit briefly. After less than a year of operation their finances were 'perilous' and their business model was 'ill-thought-out'. This was a slightly tongue in cheek comment, but could this be the case with some new and young breweries? I can't tell you, but I hopefully will be able to in the future....
Interesting. I've often wondered if this triumph CAMRA likes to trumpet about is a bubble waiting to burst.
ReplyDeleteOf course it is, in what way can it be possible for growth in manufacturing against massive decline in retail outlets be anything other than a bubble unless all these new micros are planning a massive export drive in the near future.
ReplyDeleteLook forward to your next post on this subject when you have obtained more information. As the editor of 'Ullage' - West Berkshire CAMRA newsletter / magazine, I am privileged to get some inside information on local breweries although this does not extend to finances.
ReplyDeleteTaking 3 local small breweries, there is solid evidence of progress.
a) West Berkshire Brewery - now operating on a larger scale after moving to new premises (3rd premises within Yattendon area since starting.). The brewery has a strong 'green' ethos. This brewery has a strong local following and brews using English hops and malt. In 2013 a lager and a stout were introduced to the beer range which includes a mild (Maggs' Magnificent) and an award winning strong bitter (Dr Hexter's Healer). A 'Good Old Boys Club' was started in 2013 with members entitled to regular brewery tours including latest beers to sample. The brewery has one tied pub - the Rising Sun in Stockcross, near Newbury. New chairman David Bruce, who lives in Berkshire and has extensive experience of running pub companies has recently purchased shares in the company (during 2013). News has emerged in 2014 that the founders of the brewery are planning to sell some of their shares, giving investors with £1000 available the chance to buy a share in the brewery.
b) Two Cocks Brewery - This microbrewery was established as an additional enterprise to a small farm with the equipment in one end of a barn (with brewing capacity increased after a year enabling the original equipment to be sold to enable the Five Bells, Wickham, Berkshire, pub an opportunity to establish their own microbrewery during 2014). A marketing background and exposure at the 1st Craft Beer Rising beer festival and on TV (Grand Designs - Channel 4) has enabled the brewery to expand its distribution into several London pubs and beer retailers as well as the local market. Sales of bottled beer, with a distinctive real feather protruding from behind the label are an important component of overall sales. A recent beer 1643 Viscount which is pale and less bitter was brewed with the thought that it might appeal to wine drinkers as well as beer drinkers.
c) Siren Craft Brew - established less than a year ago in Finchampstead, this brewery is already recognised internationally as one to watch. They started off in a big way with large capacity brewing vessels and a launch at the Craft Beer Co pub in Clerkenwell. Having an American brewer with experience of brewing in the USA and Denmark means many of their beers are well hopped with American hops. Distinctive features include stylish labels, the use of different types of wooden barrels for ageing beers and establishing competitions to find new beers to brew. Some beers are flavoured with addtional ingredients eg coffee (Broken Dream). Beers are brewed for cask and keg - including the 'one way' kegs that make exporting feasible. Siren Craft Brew beers can already be found in cities with a strong beer culture like Copenhagen and Barcelona.
Drawing together some strands from these cases, it would seem that established breweries need to continue innovating and engaging with their customers and that microbreweries need strong marketing skills and / or distinctive beers from the outset to prosper.