Business
Craft beer is on track to conquer London Beer Week. The U.K. event began on Monday in London, and the city will also host Craft Beer Rising, an annual industry event, on Friday and Saturday. 8,000 people are expected to attend the latter, far more than the 2,500 who went to the 2013 launch.
Craft beer currently accounts for only 2.5% of all beer sales in the U.K., much less than in the U.S. where it reached 11% of the market last year. But 20% of British consumers surveyed say they drink craft beer, and 170 new craft breweries opened in the U.K. in the last 18 months. In contrast to the country's largely flat market for beer consumption, craft beer is growing at 23% annually, according to non-profit trade group Scotland Food and Drink.
For example, last week BrewDog claimed to have become the number one craft brewery in the U.K. after reporting huge sales growth. The Aberdeenshire-based beer maker has launched more than 40 bars around the world since it was established in 2007, and it now exports to 55 countries. BrewDog said its overall turnover rose by 52% last year to nearly $64 million, and its U.K. sales grew a staggering 130%. The firm plans to increase its output nearly tenfold by opening a brewery in Columbus, Ohio this August, and it will also open additional bars this year in Amsterdam, Warsaw, York, Berlin, and east London.
The biggest challenge the craft beer industry has -- in the U.K. and elsewhere -- is not attracting new customers; it’s figuring out how to handle such rapid growth. The established multinational mega-brewers are aware of the growing popularity of craft beer, and how profitable craft breweries can be (BrewDog said its operating profits had grown by 112% annually since 2011.) They have been trying to buy craft breweries, with some success.
But while some craft brewers are selling out, others are defiantly remaining independent. In December, after Camden Town Brewery agreed to be bought by AB InBev (the world's largest brewer), BrewDog’s co-founders James Watt and Martin Dickie lamented, "2015 has been a bad year for craft beer. Global beer mega corporations, the ones who destroyed, bastardised and commoditized beer over the last 50 years have been acquiring craft breweries left right and centre."
By contrast, most of BrewDog’s expansion is being bankrolled by its “Equity for Punks” crowdfunding initiative. Rather than being bought out by a multinational, it feels this approach builds customer loyalty and lets the firm control its own destiny. Other craft breweries could emulate this model.
Still, for many consumers, what matters most is the finished product, not the ownership structure. Thus if a large beer corporation buys a craft brewery but takes a hands-off approach, letting it keep its management and its style of brewing, most of the craft brands’ customers will likely stay on. On the other hand, changing operations or altering the taste of the craft beers in an attempt to suit the mass market would be a tragic sell-out by the craft brewery owners.
Some consolidation of the industry is inevitable. But for new entrants and those craft breweries wishing to remain small, there’s a simple rule: if they make good beer, the demand will be there. Scaling up is not necessary.
