Brits are drinking craft beer as if it were going out of fashion. The number of new brewery openings in the UK surged 55 per cent to a record 520 last year, and between eight and nine per cent of the total beer sold in licensed premises in the UK is craft.
That’s still significantly behind the 21 per cent market share the American craft beer industry has achieved in the US, where sales have hit $22bn (£18bn), according to a report to be published today by UHY Hacker Young.
“We’re only just seeing the beginning of it,” says Jasper Cuppaidge, founder of Camden Town Brewery, one of the UK’s first and most successful craft brewers.
UHY Hacker Young says that more and more entrepreneurs are starting their own craft beer businesses as the segment continues to build its position as an increasingly important part of the drinks industry.
“Craft beer has proved it is no flash in a pan. Both supermarkets and pubs realise they are going to lose sales if they do not make way for some ‘craft’ brands,” says James Simmonds, partner at UHY Hacker Young.
“So far the pricing discipline of cult beer brands has held steady. They have been largely untouched by the supermarket wars that have savaged margins elsewhere in the food and drinks sector.”
Craft labels are associated with locally made beer, but Camden Town Brewery has grown so quickly since it was founded in 2010 that it was forced to outsource the majority of its brewing. Currently, around 70 per cent of its beer is made in Belgium but that is all about to change.
By the end of May, all of that production will have come back to the UK in what Camden has said is the biggest brewing investment London has witnessed in the past 30 years.
The craft brewer has funnelled £30m into a new 57,420 square foot, state-of-the-art brewing facility in Enfield, north London, which will produce 400,000 hectolitres (hl) of beer each year, compared with the 19,500 hl it currently brews under the arches in Camden.
This dramatic expansion was made possible by Anheuser-Busch InBev’s (AB InBev) £85m purchase of Camden in late 2015.
Big drinks companies like AB InBev are snapping up craft brewers due to slow growth of their mainstream brands and by the failure of their own premium brands to achieve as high price points as independent brewers.
While the AB InBev acquisition has allowed Camden to tap into new markets, swelled its number of employees by 40 per cent and paved the way for its new brewery, it led to controversy in the craft brewing scene where much of a company’s reputation is built upon its local ties.
Cuppaidge was shocked by the scale of the backlash Camden received from craft beer diehards in the wake of the deal.
“It was hurtful,” he says. “But it’s great that they’re so passionate about the brand that they wanted to reach out.”
He maintains the relationship with AB InBev has been a valuable tool for the Hells lager maker.
The Brazil-based beer behemoth has a network of experienced brewing professionals available to help out with any issue Camden faces.
“Recent high-profile takeovers by larger breweries have given entrepreneurs and their backers proof of what can be achieved and proper benchmarks of how craft breweries can be valued. It is a long way from the cottage industry of a decade ago,” UHY’s Simmonds says.
Now Camden is preparing to roll out the barrel worldwide. In December, it had its first international launch, in New York.
Sales are nearly double what the firm expected.
Camden carried out a soft launch in Paris last month, and a Boston debut is penciled in for rollout in the next 12 to 18 months. Cuppaidge explained the firm is perfecting its blueprint for new launches that “feel right from a brand perspective”.
Let’s drink to that.