With overall beer sales down but the craft segment growing, where will further growth of independent beer come from?
The figurative pie that represents the beer market is getting smaller. AB-Inbev’s “high end” breweries would lead you to believe that it’s all the fault of wine and spirits. The opposite argument is that “craft”, whether beer, wine, cider or spirits, is a category in itself.
Either way, consumption of beer is decreasing (although the minutiae of that statement warrants further investigation and qualification). Most independent brewers have long since given up on trying to increase the size of the pie and instead focus on grabbing themselves a bigger slice.
Regular, Recurring And Reliable Sales
How do they go about that? Certainly it’s in finding new customers, but if we shift analogies from the culinary to the technological, we’re now well past the early adopters stage and looking at the large population that follows.
The growth of the independent or craft beer segment will not rely on people developing tastes for barleywines or barrel aged sour beers. The growth is in what I call the longtail. Away from the pointy end.The growth of the independent or craft beer segment will not rely on people developing tastes for barleywines... Click To Tweet
By this I mean that true growth is going to come from regular, recurring and reliable sales. It’s the person who decides to trade their fortnightly slab of Toohey’s or 150 Lashes for a case of Young Henry’s Natural Lager or 4 Pines Kolsch.
Increasing Market Share
We’re seeing an increasingly competitive market. There’s still the potential for sustainable business for breweries with their own premises serving specialist beer to a local community. However, to move the needle on independent beer’s share of the market it’s going to come down to the larger craft breweries competing with non-independent beer brands.
This relies heavily on access to market. Given the decision the ACCC recently laboured to, on-premise sales look set to remain a difficult proposition. At the same time, I’d have concerns for breweries entering the game now with the intention of competing with established brands on bottle shops shelves.
Price point is a massive factor. Even with the “craft” offering positioned as a premium product, there’s still a mental leap required for many drinkers when it comes to paying $50 for a case or $70 for a case.
The likes of 4 Pines and Stone & Wood are in a position to get closer to that pricing but they’re not going to match it anytime soon. That’s where the process of telling a brewery’s story and getting beer into people’s hands is so important. Thankfully, there are ways that can be done.
The challenge is in hitting the sweet spot between availability, price, a higher quality product, and the intangible associations with a brand (the positive feeling someone experiences when buying and consuming a particular beer).
This won’t endear the large independent breweries to some craft beer drinkers who already give out to them on the perceived conservative nature of their core range. What it will do is help the segment overall.
However, wider demand for independent, flavourful beer isn’t just going to appear magically overnight. That demand needs to be generated. The larger independent breweries are in a better position to do that than smaller breweries, given their scale of production and ability to market and distribute their products more widely.
Increased demand opens the door for other breweries and it’ll benefit early adopter consumers who have been crying out for the availability of good beer at sporting events, music venues and restaurants. It’ll also allow breweries to reinvest in their brewhouses and in special or seasonal releases.
Capturing the longtail of beer drinkers will increase independent beer’s share of the market. In turn it’ll make wholesale buyers pay attention and then reconsider the beer they offer.Capturing the longtail of beer drinkers will increase independent beer's share of the market. Click To Tweet
Growth will create growth. It’ll be very small, incremental growth but growth all the same.