E-Malt.com News article: World: SABMiller Executive Chairman discusses craft beer growth and SABMiller’s response to the trend

SABMiller Executive Chairman Graham Mackay explained in an interview to Fortune recently why craft brewers are growing too fast for the Big Beer industry to ignore them, and how his company is responding.

In the US, Craft beer saw a 13% increase in volume in 2011, while overall beer sales were down by about 1.3% by volume during that same period. Despite the fact that craft is a very small segment of the market, large beer companies cannot ignore these growth figures.

According to Mackay, the elimination of harsh and intense flavors has been the central sweet spot of the beer industry for decades, if not generations. If we go back 30 or 40 years and look at the formulations for the big brands that still exist, their bitterness levels in the U.S. are 7 to 9 [measured in International Bitterness Units]. Those brands, 30 or 40 year ago, were up at the 17, 18, 19 kind of level. European lagers are somewhere between 20 and 25.

Today, the consumer has gone back to saying, "Let's get a bit of interest, let's have a bit of difference." So, there's been the growth of craft beer.

To grab a portion of the craft-drinking segment, MillerCoors (a joint venture of SABMiller and Molson Coors (SABMiller’s joint venture with Molson Coors) launched a separate division in 2010 called Tenth and Blake. This operation oversees brands like Blue Moon, Leinenkugels, and it acquired Crispin cider in February 2012.

“We have our own craft brands. We also look selectively to acquire, or form partnerships with, or cozy up to people who have incubated good businesses. It's difficult for big companies to incubate small brands. That, at its heart, is the dilemma. To start a small brand in a credible, consistent, sticking-to-it kind of way is hard for big companies. That's what small entrepreneurs do best,” SABMiller’s executive chairman commented.

"There's a huge debate in the craft world about us, all big brewers, because we're like the enemy," Mackay said. "We're the other guys. They think we're stealing their authenticity. What we say is, 'Let the consumer decide.' If we're authentic enough for the consumer, that's authentic enough for anyone."

"I don't think the craft movement in its current guise will continue to grow indefinitely. I don't think it can. It's not economic. Too many people won't make any money. Too many of them will go out of business. And I think it will become less fashionable. These things are fashion to some extent," Mackay added.

14 December, 2012