British beer is on the cusp of its revolution. Its enthusiasts are no longer bearded, be-cardiganned, CAMRA membership carrying men in rural pubs. They are young, urban, self-styled “punks”. Craft beer – while still only representing less than 1% of the UK beer market – is beginning to make its voice heard.
With advertising campaigns, equity drives and major brands entering into the export market, thirty years after the dawn of the craft movement in the US, British beer seems to be catching up.
In 2014, HMRC, the UK revenue agency, received 30 applications to launch breweries in London alone. In 2013 there were 29, almost double that of the previous year – just 16, accountancy firm UHY Hacker Young said this week.
It has a ready market. Growing disillusionment with poor quality beers and an increased consumer focus on quality, provenance and value for money has fed into the educative ethos behind the craft movement.
“Craft beer is beginning to be seen as part of the luxury food and drinks segment with consumers willing to pay high end costs,” says Rob Maugham, tax partner at UHY Hacker Young.
Craft breweries offer more than their traditional mainstream counterparts, says Neil Simpson, FD of Aberdeen-based craft brand BrewDog.
“It’s a higher priced product generally yet its been growing throughout difficult economic conditions in the UK.
“So why is that? It’s down to general customer apathy with the mainstream. If you’ve got limited money, you want to feel that you’re getting real value for that and a real experience with that.”
And, the growing start-up culture that surrounds the UK grassroots food and drink industry has been encouraged. The UK Government introduced a tax relief for small brewers – those producing less than 10.6 million pints per year – as early as 2002, and while interest has been steady. It is only in the past few years that its explosion has been evident, and it is the steady expansion of a select few brands that have spearheaded its charge.
In 2009, BrewDog turned to alternative finance to raise revenue, its first attempt raised about £700,000. Between 2011 and 2013 there were two more rounds of crowd funding, with the brewer raising over £7m in total. It now has £32m turnover, 25 bars and exports to over 50 countries.
BrewDog’s crowd funded heritage is part of its brand, says FD Neil Simpson. Its “equity for punks” approach to growth has helped spread awareness of the product, the brand and its message.
“You get your customers involved with the business. The whole idea is to get everyone as passionate about what we’re doing as we are.
“By bringing the customers in as shareholders you get engagement. For us that was more important than the actual money.”
However, maintaining its grassroots brand identity – or as Simpson calls it “that David vs Goliath rebel cause” – as it becomes a global exporter, a face on every high street and in every shop is one of BrewDog’s biggest challenges, he says.
The reassurance, like many things in craft beer, comes from the brands more established American cousins.
“Some of the bigger craft brewers in America still have their same beliefs and grass roots and they’re three four times the size as we are now.”
But with new brands propping up every day and imitators riding the wave of an undeniable trend is there really room for the craft beer movement to expand any further?
“Its still growing now in the US. It’s double digits of the beer market there and here its less than 1%,” he says. “I don’t see any reason why the rest of the world shouldn’t be following the US journey.”
Craft beer is a collaborative industry, and the growth of the brand is not threatened by its rival UK brewers, he says. Simpson clearly sees the BrewDog brand as a Over the past six years BrewDog it has established a firm basis from which it can break new ground, open new stores and continue to export internationally.
“Outside of the US there’s no real big craft beer brand that’s trying to do that, and we see Brewdog as leading that charge.”
Besides, he says. The Craft beer revolution is a collaborative journey.
“I think we’ve got a structure that can now step to the next level which means bringing the beer to a bigger audience and educating more people and by doing that the sector as a whole will benefit we’re keen to promote all good craft beer not just BrewDog.”