THE BREWING industry is at odds over whether a strict definition of ‘craft brewing’ is needed as big players muscle their way into the booming sector.
Craft brewing used to be a bit like teenage sex - everyone was talking about it and many wanted to try it, but not many really know how. Not any more. More independent breweries were created last year in the UK than at any time in the past 70 years, while sales of locally brewed beer jumped by 33m pints – volumes increased 8% in 2013 to 1.55m barrels.
Much like sex, craft sells, with drinkers more willing than ever to experiment with different beers and pay more for the experience. And it isn’t only the public that can’t get enough of it. Keen to revive stagnating sales of their mainstream brands, the big players are snapping up small breweries at a frightening rate.
But this raises the question: does this make the beer any less craft? And, if so, should the UK follow the lead of the US and define what is meant by craft beer?
These are questions the sector has been grappling with for years. In the most recent survey of members of the Society of Independent Brewers (SIBA, in which members must produce less than 20m litres a year), 41% craved a definition, but 28% didn’t and 31% didn’t care. Graham Mercer, the distribution manager at Lerwick Brewery in Shetland, is in the no camp.
“I can’t see a regulation of definitions as being a good thing for the industry,” he says. “I fear that an attempt to narrowly define and categorise craft beer within the industry may be self-defeating and stifle the creativity and innovation of brewers.”
Supporters point to the US market, where a definition has helped to create consistency and a craft brewing sector that took 9.6% of the market according to recent figures from the Brewers Association. This was up from 7.8% the previous year. The target is 20% share by 2020.
An adjustment to the definition of “craft beer” – moving the production goalposts from “under 2m barrels” a year to “under 6m” – has helped. In addition, less than 25% of the craft brewery can be owned or controlled by an alcohol industry member that is not a craft brewer.
For those who want a definition here, size matters. Benevolent big brothers are seen as a curse. “If we do not look to put an industry recognised definition on craft beer then the large, monolithic brewers will simply exploit all that we have worked so hard to build,” wrote the Scottish craft brand Brewdog in a recent blogpost.
But they can also be a blessing: as small breweries team up with major brewers, so they vacate premises enabling new breweries to move in. Let’s not forget, this is a sector where there has been safety in numbers, with sharing of best practice, techniques and equipment having played a huge part in lifting quality and sales across the sector.
What’s more, craft beer, in spite of its explosion, still only accounts for just 2% of the UK market according to this year’s figures from SIBA. A lack of definition might make accurate sales figures a headache, but it has allowed brewers to play on different marketing cues – provenance, quality, aroma and technique among them. It has also given bigger breweries the opportunity to steal a slice of the market.
The commercial success of craft beer was always going to fuel competitor interest. With their mainstream brand volumes stagnating or in decline, the movement is providing a lifeline for some of the brewing behemoths – especially in their home markets.
Some companies have been careful not to alienate consumers, launching joint ventures rather than equity shares in smaller breweries. One recent example is the partnership between the Tennent’s lager maker, C&C Group, and the Alloa-based craft brewer Williams Bros. In an interview with the Scotsman this year, Scott Williams, the co-owner of Williams Bros, explained that “big breweries in other countries tried to understand the craft beer market by creating their own businesses within it and it never really worked because people saw through it.
“I think that was one of the reasons why C&C thought they would work with someone who already has a good reputation in the craft beer market, so they can get to understand the market better and enjoy it better.”
But will the taste of craft beer turn sour in consumers’ mouths as bigger companies begin to play in the subsector?
Probably not. When asked whether they’d welcome a definition for craft beer, 46% of drinkers said yes, but it isn’t a deal-breaker. Critically, they relate craft brewing to production methods and quality rather than size – 40% say they would consider trying a craft-style beer from a large brewer (Mintel research, 2013).
“The beer drinker is the winner here,” says Paul Butler, the founder of the craft brew website Bru Haroo, “as the larger breweries do the right thing and start producing quality, authentic beer again.”
Second, the interest in craft beer shows no signs of drying up. According to Mintel, two- thirds of drinkers are prepared to pay more for quality beer, whilst 48% are keen to try different brands.
As fast as brewers experiment, consumers demand more variety. Pubs are devoting more and more coverage to craft beers, while in the supermarkets the ranges are expanding so quickly that craft beer is threatening to clutter the aisles and confuse customers.
The ale buyer for Tesco claims the beer market is undergoing its biggest facelift since canned lager was introduced in the 1960s. “Ten years ago we had about 30 bottled beers and some of our bigger stores would perhaps have stocked what was then considered exotic world brews, such as San Miguel,” Chiara Nesbitt told the Guardian. “But nowadays, UK beer drinkers have become more discerning, which is why we now stock more than 300 bottles of ales and carry a whole range of specialist world beers.”
But that means customers need help to navigate the fixtures. Georgie Denny is a senior research executive and part of the beer team at the qualitative research agency The Big Picture. Her team recently observed the beer fixture in some larger supermarkets and found there is little to aid navigation of the category – meaning consumers stand bemused in front of cluttered displays, often walking away empty-handed. She explains: “Take a trip down the beer aisle in your local Tesco and you’ll find a disorganised and overwhelming array of brews. Mainstream lagers sit side by side with traditional ales, and craft beers skulk among fruit ciders. The chaos is symptomatic of the rapid growth of the craft beer category.”
In short, supermarkets need to work harder to bring some order to the fixture to aid consumer decision-making and increase sales. There are numerous themes that could be used to segment the category, she adds, such as provenance, colour, strength or technique.
Disorder, at least, is better than decline. In the UK beer category overall, volume sales are forecast to fall from 4.1 billion litres last year to less than 3.5 billion litres in 2018 (Mintel, 2013). Value is expected to rise – from £16.7 billion to £18.4 billion – but as prices increase many drinkers are hunting for “discernibly higher quality” to justify the cost, says Mintel’s senior drinks expert, Chris Wisson. “Focusing on the quality of ingredients and the brewing process should help brands to convey their superior quality to drinkers.”
For Mercer at Lerwick the debate about definitions all comes back to the customer. “The recent success and growth of the craft beer industry has been built on consumers looking for choice – for something beyond the definitions of traditional real ale,” he explains.
“The small independent brewers have reacted to that demand – being innovative, entrepreneurial and coming up with a vast range of recipes to excite the consumer. I fear that an attempt to narrowly define and categorise craft beer within the industry may be self-defeating and stifle the creativity and innovation of brewers. We should trust our customers to taste our beers and let them decide if they want them.”
And currently they want more and more. “There is no question that the trend is accelerating,” remarked Spiros Malandrakis, an analyst at Euromonitor International, recently.
“Craft brewers take chances. The flavours, packaging and branding tend to be much more forward-thinking.” He added: “The big boys are definitely brainstorming about how to stop the microbrewery tide riding against them.”
And if they can’t beat them, they’re likely to continue joining them.