E-Malt.com News article: USA: Craft beer trend spreads across the United States

A new craft brewery opens every 16 hours on average in the US. But in Mississippi, one opens only every four months, Financial Times reported on August 16.

Mississippi has the country’s lowest number of breweries per 100,000 population: 0.3, against Vermont, which has 8.6, the highest.

For Matthew McLaughlin, a lawyer at Baker Donelson based in Mississippi’s capital, Jackson, the state’s strict alcohol regulations are a frustrating barrier to the development of artisanal beer.

“Craft beer is turning into a conversation about economic and community development, tourism and the creative economy. Unfortunately for Mississippi, it has turned into a conversation about missed opportunities,” McLaughlin says.

But that is beginning to change. In nearby Florida, a new state law came into effect last month that now permits craft breweries to operate a limited number of taprooms — beer bars — without having to feign that they are also promoting the state’s tourism industry.

In the 1980s, Florida had granted an exception to Anheuser-Busch’s brewery at Tampa. Busch Gardens was allowed to sell beer to the public, which could be taken home, so long as it promoted tourism. Though the loophole had been intended for Busch Gardens, other breweries exploited it too.

The new law also allowed the sale of beer in 64-ounce refillable jugs. Florida had been the only state to have a ban on these “growlers”, that within the craft beer industry, are considered the most popular size.

The changes are further signs that craft is moving from hipster fringe sector to mainstream beer market. “Craft beer is a staple out west and is growing across the country,” says Nielsen, the market research group.

The craft beer sector employs 360,000 people in the US and generates $20 bln of sales, giving it a growing economic clout that is forcing big brewers, and the traditionally conservative south-east states of the United States, to recognise to the rise of the segment.

In the United States, craft beer accounts for 11 per cent of the overall beer market by volume. Production in the first half of this year has risen 16 per cent and craft is on track to account for 20 per cent of the market by volume by 2020, according to the Brewers Association, the industry’s trade body.

Alan Clark, chief executive, of SABMiller, brewer of Miller Lite, Grolsch and Peroni, admits that the big brewers initially ignored the sector.

“We were too slow to recognise that the small players were ahead of the game,” Clark says. “We thought the change in tastes would be short-lived, but now we are trying to reposition ourselves with an increased focus and investment on the craft sector.”

In June, SABMiller bought Meantime Brewing Company, a UK craft brewer, but has also developed its own craft brands — Blue Moon and Leinenkugel are both more than 20 years old.

Complacent big brewers had it coming to them, says James Watt, co-founder of BrewDog, which launched in 2007 and is now the UK’s biggest craft brewer.

“Nothing had changed for 50 years — the same industrial, lowest common denominator, pedestrian, bland and boring beer made by faceless, monolithic mega-corporations,” Watt says. “We opened up people’s eyes to taste and flavour.”

Small breweries have soared in number. There were 3,739 breweries as of June 30 in the US — up from 3,464 at the end of last year, and 97 in 1985, the steep rise driven by a proliferation of small and independent breweries. In Europe, 5,665 breweries were open at the end of 2013 — a 75 per cent increase over five years.

Riding the craft trend, however, is not easy for the four largest brewers — Anheuser-Busch InBev, SABMiller, Heineken, and Carlsberg.

On the one hand, craft beer has injected dynamism and interest into a flat sector. Beer as a whole has been under assault from spirits and wine, says Bryan Roberts, director at Kantar Retail research group. “Craft beer has been a real fillip for total consumption.”

Sales of craft beer rose a frothy 18 per cent in the US last year, against 0.5 per cent for mainstream lager. But craft has also taken market share from the big brewers, even if mainstream beer overwhelmingly outsells craft.

Still, the big brewers profess to welcome the craft trend because of its favourable demographic features: small-scale beer is skewed towards households with annual incomes of at least $100,000 a year and drinkers tend to be younger than those of mainstream lager, according to Nielsen.

Luiz Fernando Edmond, chief sales director, of AB InBev, the world’s biggest brewer whose brands included Budweiser, Stella Artois and Corona, says: “I don’t see craft as a negative thing, at all. Craft can command a bigger price and create new occasions. It sells a lot into restaurants, into food occasions where wine used to be more prevalent. So, this is a big opportunity for us.”

AB InBev had just made its fourth craft beer acquisition in as many years, snapping up Seattle-based Elysian Brewing, which counts pumpkin ale among its brews.

Brian Perkins, Budweiser’s vice-president, brushed off the controversy, saying: “The prevailing discourse in beer is that small must be good, and big must be bad. We don’t accept that.”

Nevertheless, a big company brewing craft beers is a contradiction in terms for many craft drinkers and some industry bodies, which exclude such beers from their craft data.

There is little doubt, however, that big brewers will continue to buy up craft producers, says Danelle Kosmal, vice-president of beverages at Nielsen.

Kosmal notes that although many consumers define craft beer as produced by small independent brewers or in small batches, this does not appear to stop them buying “craft” even when it’s produced by a big brewer.

“Those brands acquired by big brewers are still growing. In some cases, the consumer doesn’t know it’s produced by a big brewer; in others they don’t mind so long as the taste doesn’t change,” Kosmal says.

Meanwhile back in Mississippi, Mr. McLaughlin was this month invited by the state’s Economic Development Council to chair a session at its annual conference on expanding the craft beer industry.

“I am immensely grateful that the conversation is being had — it has taken many years of hard work to make craft beer relevant in Mississippi,” McLaughlin says.


19 August, 2015