Special Report: The Maturation of Craft Beer

03 Oct 2016 --- The European and US craft beer sector have exploded in the last ten years – in fact micro is now mainstream, as highlighted by recent acquisitions of craft brewers by the big players in the industry. Recently in the UK, craft brewer Camden Town Brewery was bought for about £85 million (US$111million) by giant AB InBev, the maker of Budweiser and Stella Artois beers. Meanwhile, the world’s second-largest brewer, SABMiller – itself in the process of being taken over by AB InBev – acquired London’s Meantime Brewery last May, in another multi-million dollar deal. 

And across the Atlantic Los Angeles-based Golden Road Brewing, the largest craft brewery in the city, was acquired by Anheuser-Busch in another show of consolidation in the beer sector that will see Golden Road bringing more of its fresh, canned beer to the local market as well as introducing hop-forward beers to more consumers. 

In September 2015, Heineken announced the acquisition of a 50 percent shareholding in the Lagunitas Brewing Company, the fifth largest craft brewer in the US by volume. Lagunitas owns a stable of award-winning brands, including Lagunitas IPA which is the largest India Pale Ale brand in the US and has become a benchmark for the category.

As Bart Watson, chief economist of the US Brewers Association, puts it: “the craft beer industry is entering a period of maturation.” At the same time, he says, most markets are not yet near saturation and there is plenty to come from this ever-popular sector. 

“As craft’s base gets larger, as with any industry, it becomes more difficult for it to grow at the same percentage rate. Yet there is still tremendous dynamism reflected in eight percent growth for craft,” he says. “Production growth of small and independent craft brewers continues to be one of the main bright spots for domestic beer in the US. Even in a more competitive market, for the vast majority of small and independent brewers, opportunities still exist.” 

This is backed up by the recent mid-year metrics which shows the brewery count in the US has reached an “historic high.” From June 30, 4,656 breweries were operating, an increase of 917 breweries over the same period in the previous year and on top of this there were are around 2,200 breweries in the planning stage. 

Europeans have the same thirst for craft beer as their American cousins with big scenes in Britain, the Netherlands, Germany and Scandinavia. 

Jan de Grave, from the European Brewers Association, explains that the best basis for sales statistics and general growth is “Beer Statistics 2015,” as the next edition is due to be published within the next few weeks. 

“There are now 6,500 plus active breweries in the EU, double the number in 2008, with around 650 more openings in 2014 alone, representing an 11 percent increase from 2013, the European beer industry has bounced back from the financial crisis,” he tells FoodIngredientsFirst.

“The EU remains the second largest beer producer in the world after China; more importantly, the number of European breweries has significantly increased in recent years, producing 383 million hectoliters of beer in 2014.”

Predictions are for the breweries opening rate (compared to closing rate) to remain strong, driven by the continuing consumer appeal for independent beers with a “local-feeling.” 

As the craft beer scene becomes deeply rooted in American and European culture, are we just scratching the surface of its potential? 

Wide-Reaching Appeal 
The upsurge of brewers and their products demonstrates there are very few boundaries when it comes to determining what constitutes a beer. Then there’s the wide-reaching consumer appeal which spans the generations and races from millennials to older traditionalists, men and women, British men to Hispanic women; the breadth is wide and encompasses a range of demographics and taste profiles. 

Millennials have a thirst for trying new unknown beers and take pride in discovering new taste, flavors and getting ahead of the trends in craft especially and as their spending power is, and will continue to be, extremely strong. According to the US Brewers Association millennials account for the majority of weekly craft beer drinkers (57 percent), followed by Generation Xers (24 percent), while women make up a quarter of all weekly craft beer drinkers in America. 

From chocolate to vanilla, hops to honey, new flavors are coming on stream all of the time. Vanilla stout was crowned Beer of Britain 2016, while hops and IPAs continue to show strong growth as well as new fruit flavored sours. Ongoing experimentation into 2017 will inevitably lead to a new wave.

Just a few months ago, Sainsbury’s expanded its collaboration with Scottish breweries to extends its range to include chocolate and coffee stout, grapefruit infused IPAs and honey ales. Currently the craft ale category is in double digit growth at the supermarket and local partnerships are going from strength to strength. 

“The appetite for craft beers amongst consumers is growing rapidly. Customers want a beer with real character and they want to experiment with their purchases so Sainsbury’s commitment to stocking Scottish products is really encouraging and we’re proud to be a part of it,” says Kenny Webster, managing director of supplier Isle of Skye Brewing. “Following wider trends seen in the food and drink market we know that provenance is really important to customers and craft beer in no exception.” 

Other hot topic trends throughout 2016 also include energy savings, clearer labeling and innovations in packaging; as the craft beer market progresses from bottles to more economical, recyclable and cooler-friendly cans. 

One example of metal packaging gaining market share in the segment is Norwegian brewer Aegir Bryggeri taking advantage of the 360 degree branding offered by cans. The brewer recently partnered with can manufacturer Crown Bevcan Europe & Middle East to switch from glass bottles, opting to use the Crown 360 End – said to be the world’s first full aperture end for two- piece beverage cans. 

“The innovation allows consumers to remove the entire lid of the can and utilize their sense of smell to engage with the contents within. Since experiencing the full aroma of craft beer plays a critical role in the consumption experience, the full aperture end was the natural choice,” says Crown. 

Beer brands have already started the process of updating their labels and online information platforms and, by the end of 2017, over half of the beer brewed in the EU will carry ingredients and nutrition information. This follows the March 2015 commitment by The Brewers of Europe to voluntarily go beyond current EU legislative requirements for such declarations, which exempt alcoholic beverages of more than 1.2 percent ABV (alcohol by volume).

“Brewers are immensely proud of the beers they brew and the ingredients used to produce them,” says Pierre-Olivier Bergeron, secretary general of The Brewers of Europe. “We want Europe’s consumers to know the ingredients in beer and how these beers can fit within a balanced lifestyle.”

By Gaynor Selby