The British beer industry has grown at an astonishing rate over the past decade, with the number of new breweries constantly on the rise. In the last eight years, there has been a 20% increase in trademarks for beer in the UK. And as of 2019, the UK has the second largest number of breweries per person in the world (behind New Zealand). It’s estimated that the overall number of breweries in the UK reached 2,274 at the end of 2018.
This British beer craze is undeniably linked to the global craft beer movement, which originated in the US in the 1970s and has spread across markets including Italy, Spain, Australia and Canada. Yet, when asked what “craft beer” is, no one knows. The perceptions of producers don’t necessarily align with those of consumers. And that could spell trouble for craft brewers.
There’s now early evidence that the growth of the sector is stagnating, as the number of new breweries opening has begun to plateau. According to the latest data from the UK’s Office for National Statistics, overall beer sales dropped from £3.7 billion in 2017 to £3.2 billion in 2018.
There are a couple of reasons for this. Since 2015, off-trade sales (in supermarkets, bottle shops and other outlets) have accounted for more than 50% of overall beer sales. Meanwhile, as pubs have continued to close across the UK over the past 20 years, there’s been a decline in sales of beer consumed on premises. This puts extra pressure on craft brewers to find other routes-to-market for their products – including international markets.
Yet, according to the latest report by the Society of Independent Brewers (SIBA), more than half of their surveyed members were not exporting, while those that were exporting, sent only 1% of their total production abroad.
In fact, in 2017 the UK exported 560m litres of beer – that’s less than half the amount of beer imported in the country the same year (1,005m litres), which shows that British breweries face fierce competition from imported beer as well. In this competitive environment, the overall market share of craft beer in the UK still remains below 5%.
Despite these challenges, there are still plenty of opportunities for British brewers to attract consumers away from industrial and imported beers and grow the thirst for British craft beer abroad. That is, provided there can be some agreement on what “craft beer” is.
The craft beer battle
In contrast to other countries, such as the US and Italy, there has never been a broadly accepted definition or classification of “craft beer” in the UK. Despite heated debates between the Campaign for Real Ale (CAMRA) and Scottish company BrewDog, and efforts by some major players to lead the discussion on the definition and values of craft beer, there’s still no clarity on what the term specifies, or what kind of quality or criteria must be met.
One possible reason for this could be that attempts at collective action by British brewers have been highly fragmented, with multiple brewers’ associations and networks sometimes perceived by those in the industry to serve opposing interests. For example, SIBA and the United Craft Brewers both share the same vision about the craft beer market but serve smaller versus larger players, respectively.
Depending on whether you speak to a consumer, a smaller brewer or a larger one, the “craft” label holds very different meanings.
The producers’ perspective
Our research with brewers across Scotland and England found that those who identify themselves as “craft” brewers:
Are typically beer aficionados who have decided to transform their enthusiasm into a living and set up their own businesses – with the vast majority being micro-businesses employing fewer than ten people.
Are motivated by a lack of tolerance towards the standardised, predictable beer flavours that have so far dominated the market.
Tend to use traditional – instead of industrial – methods to make beer and experiment with different types of beer, hop varieties, old or quirky recipes and unusual or exotic ingredients.
Research conducted by SIBA among their members identifies that one of the key issues faced by micro craft breweries is the fact that big national and international brewers have begun mass-producing their own “crafty” products.
In recent years, beer industry behemoths have aggressively sought to capitalise on the popularity of craft beer – either by establishing their own microbreweries, or acquiring existing ones and marketing them separately using large budgets unavailable to smaller firms.
The smaller brewers in our research also questioned whether pioneers of the craft beer movement, which have now grown into large businesses, still classify as “craft” breweries. Discussions over size and “selling-out” have become key dimensions of the craft beer debate, from the perspective of producers.
The consumers’ perspective
Any discussion about what craft beer stands for must also include the people who drink it, given that changing consumer demands and habits have helped fuel the craft beer movement since its inception. We conducted a series of in-depth interviews with British consumers, who had various levels of beer knowledge and found that they considered “craft beer” to be “the most misused and misunderstood term in the whole beer industry”.
This shows that British consumers are already very confused about what craft beer stands for. When asked what they think craft beer is, our respondents highlighted not only the independence and size of the business making it, but also the scale of production and nature of ownership. This aligns with the unique, exclusive food and drink experiences that consumers increasingly desire.
Our research showed that consumers define craft beer not only as a product, but as a process. For consumers, the term “craft” carries connotations and values relating to the producer, the ingredients, the method, the unique artistic skills instilled in the process, as well as the constant novelty.
In the UK, the term “craft beer” has so many associations that there’s a danger it may end up meaning nothing at all. This would jeopardise the future of a promising sector, as the UK has a long history of brewing and the potential to become a key player in the global craft beer market. That’s why it’s now crucial to establish a well-defined identity and clear standards, that would signal the superior quality and craftsmanship of British craft beer to consumers across the world.