Is craft losing its bottle?
With around 1,700 small breweries accounting for 7% of UK beer sales, craft beer is having a moment and causing major disruption to the category. A distinct line has been drawn between the new ‘craft breweries’ and the established players in the industry. However, as major breweries look to capitalise on the growth and lessons of craft brands, and craft breweries increasingly become less unique and independent, the line is greying and people are asking ‘is craft losing its bottle?’
Craft brewing stems from experimentation. Small microbreweries in America began using locally sourced hops and ingredients to create new and interesting flavour profiles. Consumers today have an extensive range of pale ales, IPAs and porters to choose from. Small-scale artisanal companies began putting more value into their beer which has led to a craft beer craze that has swept the UK market for a decade, now boasting sales worth over £420m and growth of over 10% for the third year in a row.
Two fingers up to the establishment
As significant as the market growth, craft beer brands have brought a new attitude and approach to how they behave towards drinkers and the industry.
With their unique ‘Punk’ philosophy, the Aberdeenshire-based craft beer giants Brewdog pride themselves on being true to the core values of craft beer. It is entrenched in their brand identity, something they take great pride in showing off – pushing bearded brewers to the forefront of their promotional videos, proclaiming their mantra, “We are Brewdog” over and over again. They have made a point of challenging the establishment, and it is their disruptive attitude, alongside controversial PR stunts and unique animal packaging, that has made them the fastest growing drinks company in the UK and the largest craft brewery in Europe.
With profits rising as high as 69% in 2015, they had what they described as “an epic year”. It cannot be taken away from James Watt and his team that they have set the standard for expanding a craft beer brewery. They have not swayed from their ‘Punk’ philosophy, which has been allowed to remain thanks to their ‘Equity for Punks’ scheme, allowing investors the opportunity to become shareholders (or Equity Punks) in the company. This creative financial alternative to big corporation takeover has allowed Brewdog to stick fervently to its ethos and expand their business exponentially.
Selling up or selling out?
Whilst Brewdog have continued to play by their own set of rules, not all the breweries have been as committed to maintaining their independence with a significant amount of take overs by the ‘big boys’. Beginning in 2015, a spree of multi million pound buyouts of craft breweries had occurred. Camden Town Brewery (CTB), who led the way in the UK market for over ten years, were bought out in January of this year by drinks giant AB InBev for a reported £85m. Despite his company being sold, founder Jasper Cuppaidge insisted, “nothing has changed”.
In some respects he is right, CTB are still brewery based, stating on their website that “Our brewery is at the heart of what we do”. However, in a controversial move, CTB started brewing some of their beer overseas in an act to guarantee supply to its pubs and restaurants. Whilst they are still able to operate control over their product, managing quality and the authenticity of their recipe, it is a questionable move for a brand and category that so heavily sells to its consumers on the provenance of its products (Camden Hells – it’s in the name after all).
CTB have stuck to producing a core range of successful products, resisting the urge to diversify and risk weakening the brand’s positioning. This highlights another interesting challenge for brands as they attempt to grow, in a market which is saturated with novelty and innovation, where retailers and pubs are constantly looking to present variety and uniqueness, rather than build loyalty to any brewer or product.
CTB continue to follow many of the traditions that made them so popular in the first place, such as their recent annual Camden Tank Party, inviting Londoners to the brewery to drink beer straight from the source. Time will tell if this sort of community outreach is sustained and if it’s enough to keep CTB in good stead with consumers, despite the big takeover.
It has not been such smooth sailing for Greenwich-based brewery Meantime, creators of the hugely successful London Pale Ale and Yakima Red. Meantime were bought by US drinks giants SABMiller in 2015 for an undisclosed sum, and the brewery will go on sale again soon as AB InBev (who have just completed the $71bn takeover of SAB) plan on shedding the brewers from their portfolio. Meantime’s Chief Exec Nick Miller, claimed the takeover would not harm the company’s reputation and that the “craft tag was becoming increasingly redundant”. This attitude undermines the core values of the brand and says a lot about Meantime’s commitment to their craft origins. It also goes to show how the challenges for small breweries trying to expand are the same as those faced over the past few years by the big breweries. Namely, how do you stay relevant when all consumers want to talk about is provenance and authenticity?
Battle of the brands
The creative battle with craft beer brands is much the same as for any other brand. One needs to understand that brands are like people with a history, values and distinctive personality traits that make them attractive to others. Some have a more matter of fact or functional way of expressing themselves, whilst others behave more emotionally. Consumers have proven to identify with their beer brands, in the aftermath of the Meantime buyout fans were critical, accusing the brewery of “distancing itself from its craft roots”. During the buyout of CBT, fans were disappointed to see the independent brewery ‘selling out’. In reality, it was the feeling of drinking a local, independently brewed beer that they were afraid to lose, not just the flavour.
In the battle to see which brands continue to win and those which go on to lose, it is clear that brands will need to continue to focus on delivering consistent campaigns that drive home the message of what makes them a meaningful choice in an ever more cluttered category. Focus on a small core product range and finding opportunities to drive recognition of the brewery, and not just the product, will help deliver greater visibility at the bar and in the aisle (physical or virtual).
An authentic product, daring communication and striking packaging will ensure that craft never looks tinny and never loses its bottle.