State of the UK craft beer market in 2016

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With a new brewery opening every 2 days and independent brewers reporting increased production for the seventh year running, the craft beer scene in the UK has continued its explosive growth. The Society of Independent Brewers (SIBA) 2016 report further elaborates and confirms on just how well things are going, with four out of five survey respondents expecting their turnover to increase in 2016, and more than 15 new breweries joining the society in January 2016 alone.

All this growth has created huge choice for consumers; with more than 11,000 beers now available to pick from in almost limitless flavour combinations, it’s hard not to find something for everyone. This has led to increased interest, with many taking their first steps away from mass produced beer and wetting their whistle on the craft side of the fence. There are of course, still a great many out there – including some close friends of mine – who haven’t been brave enough yet to gamble their beer money on brews unknown. But their ranks are falling, thanks to the increasing presence of craft beer around them in more and more conversations, pubs, and even supermarkets.

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Independent craft brewers are enjoying continued growth in the UK, which looks set to continue through 2016 and beyond. But this growth is against a backdrop of relatively flat overall beer sales. Craft beer, collectively, is nabbing market share from “mega brewers”, who will of course be desperate to claw back declining revenues through knee-jerk mergers and acquisitions. We have indeed seen this play out with AB InBev winning board approval for a $104.2 billion takeover of SABMiller in October 2014, and more recently with the successful acquisition of the highly-regarded Camden Town Brewery in December 2015.

If approved by a long list of global regulators, the SABMiller merger will provide AB InBev access to growing beer markets in Africa and Asia.

The big corporates are expending enormous sums of money and effort chasing the easy money abroad through these takeovers of their equals, and the parallel strategy of acquiring existing craft breweries is by no means a quick win either. AB InBev’s acquisition of Camden Town Brewery hasn’t exactly been all sunshine and roses, with a social media backlash quickly following news of the acquisition. This was swiftly followed by influential brewer Brewdog withdrawing all Camden Town Brewery beers from sale at their craft beer bars across the UK and internationally.

Another way to evidence the growth of this sector is by taking a look at the rise of craft beer clubs. In exchange for a monthly fee, beer drinkers are sent a crate of hand-picked craft beer from around the world. The UK’s biggest craft beer discovery club, Beer52, was launched in September 2013 and has been a runaway success. With a subscriber growth spurt from 2,500 in 2014 to more than 10,000 in June 2015, along with being selected for a £45,000 funding grant from Scottish Edge, the company has demonstrated obvious demand for craft beer in the UK. Being a subscriber myself, I can honestly say that I look forward to my monthly delivery, with the rest of the office taking a keen interest with each delivery to see what what’s in that month’s crate.

On-trade remains an important channel for breweries, with SIBA reporting “well over 75%” of their member’s beer being served in this way. Free-trade pubs are purchasing 56% of SIBA member’s total beer production. With the Pubs Code government consultation completed at the start of this year, a draft bill has now been submitted for review on 14 April. If this is passed as law, this should help pubs tied to specific breweries to exit such agreements, potentially opening up additional distribution capacity for craft brewers.

UK consumers are increasingly choosing craft beer over mass produced offerings, and are doing so due to compelling brand stories behind the beer as well as superior flavour, quality and choice – especially with seasonal brews. Fortunately for independent brewers, these qualities are difficult for mega breweries to compete with.

Craft breweries that are able to nail these key fundamentals should be able to buy a ticket to ride in this growing market space. And those brewers that go a step further by connecting with their consumers through effective digital marketing, and traditional marketing, will ultimately see a bigger slice of the action.

2016 is certainly shaping up to be another great year for craft brewers, with increased growth, capacity and consumer interest all coming together, fuelling the success of microbreweries that play their cards right with their product and marketing. If you're a brewery or craft beer business and wondering how your website is helping you drive that success, then request your complimentary website and online marketing audit in the form below, or give us a call on 0203 519 8585.

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