Thursday, 30 June 2011

Craft Beer and the Recession


I have written in the past about the price of beer and craft beer in particular. I mentioned it here when I posed the question "how much can this market stand?". There wasn't much by way of conclusive response and one does wonder in these recessionary times whether there is still potential growth in the market.

Now comes some hard evidence, not from here, but from that other place, the USA, that craft beer might just be weathering hard times much better than you'd think.  Sales for Budweiser, the flagship brand for AB InBev, plunged 7.3% in 2010, driven it seems by the fact that the unemployment rate among core blue-collar beer drinkers remains three times that of more affluent, white-collar consumers.

On the other hand, craft brewers have had a different experience. Sales at Boston Beer Co., the maker of Samuel Adams and the market share leader in this category, edged up 1.7% in 2010. Sierra Nevada Brewing increasing its sales by 7.8%, Magic Hat Brewing gained 14.8% and New Belgium Brewing soared by 18.3%. "Craft beer costs more, but the consumers are saying, 'We're getting something different here and we're willing to pay for it.'"

Other reasons given for this success include that US consumers show a preference for craft beer with stronger and more experimental flavours. IPA sales for example, are are up over 40% compared to a year ago. Local loyalty is another reason it seems, with consumers willing to pay extra to support independent brewers in their own communities.

Now here isn't the USA (despite the wishes of some) and "local" certainly isn't much of a factor here - that's reserved for largely for cask - with imported beers dominating the emerging craft sector. But it seems likely that the craft beer market in Britain has a good chance of emerging from the recession in growth, albeit not enough of it indigenous.  (My own view is that the new London brewers can locally exploit this gap if they are smart and nimble enough.)

In this niche there is a lot to fight for and maybe this is why we see so much fuss being made about craft beer, though the answer seems to be in taste and innovation, not copying cask by producing keg versions of cask beers, though of course it could be argued that this itself is a niche within a niche.

So back to the question of "how much can this market stand?" "More", it seems, is the likely answer.

21 comments:

The Beer Nut said...

I think the pattern is clearer if you don't separate craft keg from craft cask. The American figures bear out what the 2011 Cask Report said: people might not be buying a whole lot more craft beer in the UK year-on-year, but they're prepared to pay more for it when they do.

Mark said...

"imported beers dominating the emerging craft sector"

Really? I disagree. Maybe dominating in terms of influence but not volume.

And you seem to suggest that craft beer is keg only when that's simply not true - more 'craft beers' in the UK are cask than keg. And local is very important. Take someone like Mallinsons. I'd call them a craft brewery, wouldn't you? And they are making great beers that people want to drink. They mostly sell locally, too, but also get around to the better beer pubs in the UK.

Beer from smaller (craft, micro, whatever) breweries is on the increase but you'll probably see that the better ones are grower faster than the ones who don't make good/interesting beer. Quality will always win out. What keg has to do with it is a moot point and a different blog post because it's so specialist. It's the great, craft cask and bottled beers which are making the difference more than anything else, I think.

Barm said...

I was in a pub the other night that is able to charge £5 for a pint of Erdinger and £4.90 for Peroni. It doesn't seem like the number of such pubs is declining either, rather increasing.

The Beer Nut said...

So it's not just about craft beer, then.

Tandleman said...

BN - I only separate craft beer (bottled and keg) from cask to compare what might be happening here with what was reported from the US and because cask has a definition that by and large we can all agree on, whereas craft hasn't. I agree that in principle people will pay more for craft beer in certain circumstances.

Mark - the point about cask and craft illustrates as clearly as it is possible to do, that the term craft, unless you separate it from cask, is meaningless. It seems to me that people were happy enough to call non cask beer "craft" when it suited them to do so and now when it doesn't they don't. If you think that small cask brewers are part of the emerging craft market, then you are either making a new definition - that time has somehow been restarted - or conflating the two for whatever reason. Excellent small cask brewers have been around rather a while, not just when they turn up on a Southern doorstep in a fancy pub.

You also talk as if the fact that:
"Beer from smaller (craft, micro, whatever) breweries is on the increase but you'll probably see that the better ones are grower faster than the ones who don't make good/interesting beer. Quality will always win out." is somehow news to me, that I hadn't thought of that at all when I was supping it and campaigning to promote and protect it for all these years and as I still do now. The fact that you are finally getting to see some of the good stuff from the North down South, is frankly, not the point.

You again seem to think that I of all people don't know that local is important. Jeez!

Back to the point I was making. Expensive imported stuff does dominate in the craft sector when you exclude cask and I'm suggesting it has a good future. I'm also suggesting that some of that ground can be grabbed from imports. Good cask is excluded from my posting because that will usually be more widely and locally available as it has been for donkey's years.


Barm. Erdinger and Peroni are just poor and an example of how gullible people can be.

Barm said...

That's not the end of it. Budvar was £4.20 and Fyne Jarl £3.50. So price is in inverse proportion to quality and shows that brand recognition is more important to most people. Very sad really.

Chuck Beaumont said...

Tand, the US is largely a Proper Real market, which enables the transport of coast to coast goodness, without the various influxes of air. I would love to taste a classic English Ale that has gone through the Proper Real treatment. That means not pasteurized and very lightly filtered. Proper Real is indeed taking baby steps on the island, but for it to mature into a dispense style that can be respected, it must be executed properly.

Barm said...

Executed properly means setting the correct gas pressure and pouring it properly. The outlets that will bother to do this are the ones that already sell cask. In other outlets, ordering proper real keg is a crapshoot likely to result in a pint of beer-flavoured soda. Too much risk.

John Clarke said...

Yes - to listen to some folk you would think "craft ale" is something new. Let's not forget that Brendan Dobbin was making his Yakima Grande Pale Ale, Guiltess Stout and Green Bullet (all as good as anything on the market today) at Manchester's West Coast Brewery over 20 years ago. It is 10 years since Richard Sutton started brewing Blue Moon - still one of the most best IPAs around (although he's never identified it as such, and knowing Sooty I suspect he would have no truck with all this "craft ale" stuff anyway).

It is odd (and I know this is a bit of a generalisation but here goes) that just because the very good beers we have been enjoying up here in the north have finally percolated to, and are also being brewed by a handful of breweries in, the south we suddenly have a revolution on our hands.

Mark said...

Whoever said that craft beer was just kegged beer then?! And what exactly is 'the craft sector'?

Craft beer isn't a new thing, I think it's just a new term which is being used. An Americanism that we've tried to adopt but not quite worked it out yet because there's no definition that anyone will ever agree on.

Tandleman said...

Mark. I think you may have used it. I'd try and define things in British terms if I were you rather than slither about over it. You are slippier than an eel on this one.

I define craft beer in the UK as non cask artisanal beer, both natively brewed and imported. Tell me I'm wrong.

The Beer Nut said...

Dunno about right and wrong, but you're the sole blogger I read who uses that definition.

Moving away from beer for a second, is there a semantic difference between "craft" and "artisanal" in relation to any product? They mean the same thing to me. Craft just sounds less arsey.

Tandleman said...

BN. I always strive for originality, though of course I don't give a shit either way in this case. I merely point out inconsistencies and give you a straw man.

I return to the point that this is all a bit Alice in Wonderland. (Or is it Looking Glass?) Things mean precisely what one wishes them to mean.

Craft beer is meaningless, so my stab at a definition is as good as the next man's.

On your second point, craft is indeed arsey. Maybe not as arsey as artisanal, but yiu get my drift.

Tandleman said...

PS. This post was, I thought, uncontroversial.

Curmudgeon said...

"I define craft beer in the UK as non cask artisanal beer, both natively brewed and imported."

I would say in the UK context that is how it is used. Nobody refers to specific cask beers as "craft".

Begs the question of how you define "artisanal", of course ;-)

On the broader issue, inevitably the general beer market will tend to move in line with the overall economy. "Quality beer", which is something that tends to be bought by less recession-prone customers, and also currently has a wave of enthusiasm behind it, won't be affected to anything like the same extent. But there isn't really a direct switch from one to the other.

Tyson said...

I return to the point that this is all a bit Alice in Wonderland. (Or is it Looking Glass?)

Hmmm. It may be controversial, but I'd say Through the Looking Glass

StringersBeer said...

Doesn't spend on these "low-cost" indulgences (low-cost as in less than essentials like rent, fuel, etc) typically hold up well in recessions? Little treats to offset the pain?

Chunk said...
This comment has been removed by the author.
Mark said...

How can you assert so confidently that "Craft Beer is meaningless" when even in this very thread there is disagreement on what the term even means.

Your description of it being limited to non-cask is something I've not encountered before.

Mark comes under fire a lot for being happy-clappy, evangelistic and all the rest of it ... better that than writing in such a hostile way all the time. I find myself reading your blog less and less because I just don't enjoy it. How about some humility when sharing your opinion?

Mark.
BeerBirraBier.

Tandleman said...

"How can you assert so confidently that "Craft Beer is meaningless" when even in this very thread there is disagreement on what the term even means."

Because "even in this very thread there is disagreement on what the term even means." would be a good enough reason I'd say. If you'd like some more, look at previous arguments on this subject, or the one raging on Ratebeer right now, where many are saying that in a British context it is meaningless. That's the problem with trying to copy the US. Then you have to make it fit, rather than it fitting.

It isn't the first time that you have had a pop at me. Fine. It goes with the territory as far as I'm concerned, with having an opinion on things. Read what I said when I started this blog. Forthright opinion. At least I have something to say and say it. Don't want to read it? Don't. Plenty of others do.

Nor do I think you need to defend Mark. I doubt if he'll thank you for it. I certainly wouldn't. It comes across as creepy. I might well disagree with Mark on some things, (and what I wrote was specific to what he wrote) but he is a good lad that takes the rough with the smooth. He'll encounter much worse as he goes along. We all do.

But you must suit yourself.

Mark said...

I'm not really trying to have a pop at you, apologies for it coming over like that. Personally I just think your blog suffers through the way that you're sometimes so antagonistic. I think it's good to have an opinion, I just don't personally think the best way to share that opinion is by militantly asserting it as fact.

Lightening the mood a bit, I was just reading your latest post on sparklers and again in that post you assert that cask ale served without a sparkler is worse than with a sparkler. The difference being that in that post the cheeky, jokeyness is clear and it comes over in a completely different way. Perhaps a limitation of blogging is that your can't put accross the same message as easily as in person. Which is another relevant point because the times I've had a beer with you in person I've always come away thinking you're a top bloke - maybe that's part of the reason that I find your more extreme web personality less fun to engage with?

My reference to Mark wasn't an attempt to defend him at all. I was purely trying to illustrate the difference in approach between someone like him (or Mark Real Ale Reviews or Andy Mogg or Leigh Good stuff etc etc) and yourself. I would much rather read happy-clappy than negative etc. I picked Mark in my first comment because he's posted most in this thread.

Consider my comment as feedback from somebody that's been reading your blog for a while now and choose to do with it what you think is best. On reflection, I could've delivered that feedback in a much better way. Again, apologies for that.