When big breweries go “craft beer”.

Craft-Bier-Markt wächst in den nächsten Jahren weiter

The big brewery groups are looking for ways to get a piece of the craft beer action. We have looked at three different strategies and we unveil, why corporate breweries are so keen to do so, even in Switzerland.

The trend towards tasty, local beer brewed in small quantities and by hand, generally referred to as “craft beer”, has definitely arrived in Switzerland. At least the latest figures from the Swiss customs authorities suggest so. According to the statistics, there are now already 1084 breweries and new ones are founded every week. Even if the share of the majority of these breweries of the total quantity produced is negligibly small (more detailed analysis here), the large, long-established breweries seem to get increasingly nervous.

Getting a piece of the action

There are also good reasons to be nervous. If the Swiss beer market develops similar to that of the US beer market, which is about 15 to 20 years ahead of Switzerland in terms of development, then the share of craft beer will grow from today’s 2-3% to more than 10% (currently it’s at 13% according to the Brewers Association). With a output of around 4.6 million hectoliters in Switzerland, 10% of the market for craft beer would be 460,000 hectoliters or 46 million liters. That’s a lot of beer and a lot of money.

Accordingly, the big established breweries naturally do not want to leave this market to the small, new ones without a fight. Especially not because craft beer can and must be sold at a higher price due to the much higher cost per liter for small breweries because of the small production volume. However, if you brew it fully automated in large quantities you will walk away with a higher margin, despite slightly higher costs for more raw materials. The mark-up is definitely more attractive than in the competitive, traditional Lager market.

However, there are some differences in the strategy used by the large breweries to serve the craft beer market. Certain corporations seek their success in defaming the craft beer trend. Others are buying up heaps of successful craft breweries. Still others use existing breweries in their portfolio and make these “crafty” or start to brew their own “craft beer”. Below is a brief overview.

The ridiculous hipsters

Let us begin with what we believe to be a hopeless strategy: defamation. No joke. Budweiser has invested millions in anti-craft-beer advertising in the USA (shown in 2015 and 2016 in the Super Bowl break) and ridiculed the trend and all the bearded hipsters. You want evidence? But please watch it only once, otherwise the counter will give legitimacy to this ridiculous behavior.

From the Budweiser product manager’s point of view, such a strategy may be obvious: If you sell less and less of “your” beer but get your bonus on sales, you should leave no stone unturned. From the corporation’s point of view (in this case AB InBev), this is hardly promising, which is why they have also been diligently shopping in recent years (e.g. Golden Road, Goose Island, Wicked Weed Brewing).

By the way, the Swiss Brewers Association is blowing the same horn as AB InBev. The association writes on their website about craft beer: “With craft beer the brewer’s idea for a beer is fixed at the beginning. It is brewed and released, regardless of the demand for this specialty beer. If the beer sells well, this is a nice side effect. In contrast to this, there are the breweries that brew beers according to the consumer’s needs. The beer is made according to the taste of the majority and is successfully sold in the market.” So craft beer seems to be beer which the consumer does not really want. This statement is not only wrong, but also a verbal slap in the face of some members of the association or their beers – see also section “Extension of product range”.

Craft-Bier bei Coop ist oft nur "Crafty" gehört also zu Grosskonzernen

Acquisitions and participations

The latter strategy of AB InBev is also chosen by Heineken, for example. In recent years, the family-owned company has taken over several craft breweries in Europe and overseas, or at least acquired significant stakes in them. E.g. Langunitas Brewing Company from California or recently Beavertown from London and Oedipus from Amsterdam.

The outcry that goes through the craft beer community after such aquisitions is enormous. As soon as the Beavertown deal was known, lots of breweries left the Beavertown Extravaganza festival and fans returned their tickets by the dozen. It is difficult to estimate how damaging this customer behavior will ultimately be for the breweries. We believe, however, that the turmoil will quickly subside and that access to existing distribution networks will allow the breweries to acquire many more new customers than the purist craft beer drinkers they lost.

At bierversuche.ch, we have a critical view of this. On the one hand as consumers we suddenly come across beer in a freshness that was hardly possible before, e.g. Lagunitas IPA at Coop. On the other hand, we only consider this good as long as the taste and quality of the beer stays the same and the employees of the acquired breweries don’t suffer, e.g. through layoffs like in this AB InBev case. We also shake our heads over insane actions like pouring out barrel aged beer at Ballast Point, now owned by Constellation Brands.

Expanding the product range

A third and final strategy that we believe to recognize is the one that the Carlsberg Group is pursuing. It uses national and regional brands such as Feldschlösschen and Valaisanne and expands their range towards craft beer. On the one hand, new and old products from regional breweries such as Valaisanne will be distributed nationally. On the other hand, the product portfolio of the largest national brewery Feldschlösschen is expanded with new products.

Feldschlösschen nun auch mit Pale Ale

Just recently, Feldschlösschen launched a “Pale Ale” after its “Weizen”, “Hopfen” and “Dunkel”. And Carlsberg itself now has an IPA in its own product portfolio. However, we are very much questioning whether this will convince craft beer drinkers to drink Feldschlösschen instead of a real craft beer. On the positive side, however, we note that perhaps one or the other previously bullheaded lager drinker will find his way into craft beer like that.

Either way, the craft beer market will continue to undergo many changes, also in Switzerland. We know from well-informed sources that one of the larger Craft breweries in Switzerland had already received a take over bid from Feldschlösschen, but that the offer was rejected. We at bierversuche.ch will definitely stay on it.

This article has stirred up quite some discussion on our Facebook profile. Join it. 

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.