A taste for adventure

20 August, 2013

Not so long ago, British beer was the envy of the world, while three virtually identical brands accounted for the bulk of sales across the pond. But then mass-produced bitter and lager took over the UK market and the scene began to look equally lacklustre.

Everything changed in 2002 when Gordon Brown introduced the progressive beer duty that gives a tax break to smaller brewers, causing an explosion in microbreweries. Initially they brewed the ales of yesteryear – what Camra referred to as “real” ales when it saved them from oblivion by launching in 1971. But these ales came with an image problem: associations of bearded, sandal-clad beer festival dwellers put off young people.

Smaller brewers needed inspiration and it was perhaps unsurprising they turned to the US. A backlash against decades of blandness had been brewing there and out of nowhere it became the champion of the beer world and international pace-setter as microbreweries sprang up, unearthed ancient recipes and began crafting flavou some beers with dazzling citrus hops.

The UK has become the third-largest importer of US craft beer and the category is the antithesis of beards and sandals: discerning young hipsters in Shoreditch bars can regularly be seen drinking Sierra Nevada, Brooklyn or Samuel Adams beers while discussing shamanism and the politics of Hugo Chavez and playing with their trilbies.

Craft beer is gaining traction among discerning young adults

British brewers have followed suit and the likes of Darkstar, Meantime, Brains, Camden and Brewdog are making US-inspired beers with hoppy flavours, high abv levels and interesting ingredients such as chilli and chocolate.

Many are also digging up old recipes, focusing on quality and provenance above price, and competing with their American – and Belgian – rivals on taste. The movement has grown to the point where bartenders are turning into demagogues – akin to music geeks working in record shops – engaging drinkers in 10-minute conversations about hops and zymurgy before they have a chance to drink anything from the baffling array of pumps.

But the category is gaining incredible traction in the on-trade and, as usual, the trend is starting to filter through to take-home, where craft beer is now worth around £40 million.

New figures show annual sales in supermarkets are worth £34 million – up 9% on last year – and in the convenience channel £3.7 million, up 18% (IRI, year to June 22). Volume sales are also up 8% overall.

The data only covers stores that use electronic tills, so independents that are not scanned probably account for another few million.

But, like all emerging categories, craft beer is afforded limited shelf space and retailers still seem to need convincing of its potential.

“We sometimes find it hard to get enough air time with the supermarket buyers, so I’m sure for smaller microbrewers it can be a real struggle,” says Paul Harvey, head of multiple retail groups at Brains, which has won various multiple listings for its craft beers. “The bottom line, though, is that the beers coming out of our microbrewery appeal to a demographic that supermarkets want to target.

“We believe the increasing number of beer varieties and styles we have planned, including a bacon and chocolate porter called Aporkalypse, will keep the interest and innovation for both customers and consumers. “There’s a certain amount of stagnation

in the core premium bottled ale market to the extent that the core customer is an older male, aged 45 to 60. Craft beers tick the boxes with buyers because they bring more younger consumers and women into the beer category.”

Crawford Sinclair, sales director at Innis & Gunn, adds: “It’s a difficult conversation because shelves aren’t elastic and space is at a premium, so if you add more craft beer you have to lose something else. We are battling lager, ale and cider. But I’ve had meetings with the major retailers and they are fully aware this category offers opportunity for growth and they are very excited and looking at increasing their ranges.

“It benefits the retailers because they can earn greater margins and bring choice and differentiation to their ranges with flavoursome beers from across the world.

“It’s a small base but growing fast – and it’s huge in North America. We have a healthy market out there and are close to that scene and we think it will take off in the same way over here.”

Innis & Gunn makes a perfect case study to track the UK craft beer revolution. It celebrates its 10th anniversary this month, having been set up in the wake of Gordon Brown’s decisive fiscal measure. It has slowly built up its following and now sells around 50,000hl a year, with many of its beers stocked in major multiples and leading independents.Innis & Gunn celebrates its 10th birthday this month

Founder Dougal Sharp estimates it will double its sales within three years.

But as it grows, critics fear it is becoming too mainstream to still be classed as a craft beer producer. It also does not have its own brewery – it brews at Wellpark, where Tennent’s churns out 2 million hl per year.

This raises the question that plagues the category: what exactly is a craft beer?

The American Brewers Association defines a craft brewery as “small, independ- ent and traditional”, producing less than 7 million hl per year and not owned by “another alcoholic beverage company that is not itself a craft brewery”.

The UK has no such definition. The biggest brands IRI includes in the category are AB-Inbev-owned Leffe and Hoegaarden, followed by Innis & Gunn, Brewdog, Sierra Nevada and Duvel, which all sell relatively small amounts in the UK market.

But Sinclair believes size isn’t a barrier to being labelled “craft” and claims it is more to do with approach. “There are some huge craft beer brewers – Samuel Adams [which produces 3 million hl annually, mainly for the US market], Brooklyn, Sierra Nevada – so we don’t think craft can be determined by your size,” he says.

“The biggest craft beer producer in the US, Samuel Adams, started out without its own brewery and didn’t have one for several years. We don’t believe it’s to do with your particular machinery. It’s to do with the attention, the recipe, the ingredients you source, the time taken to brew the beers. We get to use state-of-the-art equipment we could never afford and we use our own equipment to oak-age the beers, so we get the best of both worlds.”

Then there is the problem of distinguishing craft beer from the premium ale category.

If you incorporate premium bottled ales into craft beer, it suddenly goes from a £40 million category to a £250 million one. It also goes from an emerging category to an established one.

But Sinclair thinks various factors set craft beer apart. “Brewdog, Meantime and Camden are brewing some great beers which are clearly differentiated from the traditional British ale category, which is often an integrated category driven by cask ale which then becomes a bottled ale,” he says.

“With craft the styles are different, the sizes are different – often 33cl rather than 50cl – and there’s a different approach to the way the beers are brewed.”

But leading ale brewers argue they have been crafting beers for decades. Jon Sandy, strategic insight manager at Wells & Young’s, says “all beers have developed from a craft tradition”.

Bill Simmons, off-trade controller at Fuller’s, adds: “Fuller’s is a craft brewer. We have incredibly passionate, world-class experts working here, who are all deter- mined to make the best beers possible.”

To complicate matters further, these leading brewers are teaming up with smaller producers to create American-inspired craft beers. Fuller’s has collaborated with Cumbria’s Hardknott Brewery to brew Brit Hop, while Wells & Young’s teamed up with US craft brewer Dogfish Head to produce Dogfish Head DNA for the UK.

And then there is the case of Cornish brewery Sharp’s, which was snapped up by multinational giant Molson Coors, leading Camra to call the buyout the “acquisitive actions of a global brewer ... for short-term profit”.

Under the American definition, Sharp’s would no longer be classed as craft, but Molson Coors has so far managed to keep it as a separate side of its business and it is still producing unique, flavoursome beers.

“I love Sharp’s but I could never find any,” says Sinclair. “Since it has been part of Molson Coors I can find it in supermarkets, so having that stronger distribution is great for the consumer.”

Flummoxed as to a nailed-down definition of craft beer in the UK, OLN posed the question: “What constitutes a craft beer?” to its 6,000 Twitter followers.

Perhaps the most intriguing response came from Simon John Garrett, who said: “Why fiddle about with arbitrary definitions? For the sake of contention? All a bit silly. Let’s just have good beer.”

Beer in Britain is becoming more interesting, more diverse and more flavoursome

And that is the main thing to take from this so-called craft beer revolution: beer in Britain is becoming more interesting, more flavoursome and more diverse, and it is being driven by everyone from Fuller’s to tiny microbreweries.

If brewers can stay true to the craft principles that made their beer so good in the first place, while increasing capacity and gaining mass-market distribution, everyone wins. Consumers can benefit, as can retailers – who can make higher margins and add differentiation and excitement to their ranges.

Simmons at Fuller’s says: “Craft beer, as many people attest to, isn’t about the size of your brewery but a mindset about brewing. It’s about being passionate and doing things the right way – like using the best possible ingredients – which at Fuller’s we have been doing for 168 years.

“A host of Fuller’s beers, such as Bengal Lancer, and many of the collaboration brews we have are created, are undoubtedly craft. But I would count London Pride and ESB as craft beers – they are created with the best ingredients, by the most passionate people.

“Whatever you call craft – artisan, passionately produced, hand-crafted – people will always have different opinions. It doesn’t matter what you call it, so long as it is top-quality beer brewed using the best ingredients, with the correct brewing ethos.”

It all means beer is moving further away from water and heading towards a promised land of bourbon stouts, treacle porters and Double IPAs. Retailers can drink to that.

Top 10 craft beer SKUs

A category approach

Premium bottled ales are already well represented on UK shelves but Innis & Gunn is trying to build up the emerging craft beer category as defined by IRI in the UK off-trade.The market analyst classes Innis & Gunn as the fourth- largest brand in the category after Leffe, Hoegaarden and Duvel.

But Innis & Gunn wants to see a wider range of smaller brewers represented alongside its bottles on UK shelves to maintain the category’s healthy growth figures, so it is taking a “category approach” when advising retailers on how to build a craft beer range.

Sales director Crawford Sinclair says: “Like any category you need brands people can recognise to ensure they aren’t frightened away.You need signposts such as Leffe, Hoegarden and Duvel, and Innis & Gunn to a certain extent. Once they are in that category you want them to discover new and different beers like Camden, Brewdog, Meantime and Blue Moon.

“For smaller players such as Meantime and Camden there’s a real opportunity to engage more with retailers.The only obstacle is their capacity.They will have to ensure they can meet big orders. I don’t know how much each can produce but they would be a hit in the off-trade.”

Sinclair believes retailers can play a big part in helping grow the category.“A lot is down to the retailers to put on offers and educational stories and shelf talkers and in-store sampling,” he says.




Bookmark this


Site Search

COMMENT

Welcoming the wine rookie

It’s all true. Wine writers loaf around in a state of partial inebriation and partial undress, bitching about having to taste free wine all day and using recondite words like malolactic, terroir and recondite. 

Click for more »
Upcoming events

Polls

Is blended Scotch overshadowed by single malt in retailers?

  • Yes
  • No
  • Don't know

Facebook

Twitter