Tag Archives: Beavertown

As the big get bigger, what do the small get?

The potential acquisition of South African Breweries (SAB) by their larger rival Anheuser Busch Inbev (ABI) has got many commentators gasping for breath: not at the audacity of it – that was reserved for when InBev (as was) took down Anheuser Busch – but rather the implications of the sheer scale. The scale, both of the deal (the fourth biggest corporate takeover) and the ultimate beast it will become (who we shall call ABSAB).

Interestingly, a stock response of commentators is ‘Don’t Panic Mr Mainwaring!’ The deal, as these deals do, will create opportunities for smaller operators. Drinkers, reviled by the deal and the inevitable consolidation / loss of brands in the shake-up, will vote with their wallets and support the little guy. New market niches will open up, too small for a goliath like ABSAB to spot, yet alone exploit. David will win the day! Fleet of footedness, quick decision-making will out!

And there will be some of this. Of course there will. But on balance, it’s a romantic notion and one that, in truth, isn’t borne out by precedent.

The first issue is growth. In most western, mature consumer markets beer is flat-lining or declining. Drinkers are drinking less. This pressure rolls through to licensees: what to stock; how much space they can give to beer and ultimately what brands end up on the bar. What licensees want is a range of guaranteed strong sellers and a ‘something interesting’ selection. ABSAB (Stella, Peroni, Budweiser) can fulfil one side, craft can fulfil the other (in fact, increasingly, ABSAB can fulfil this other side too). In less mature markets, there is underlying growth in beer consumption – in central and South America for example – and that growth is driven by brands. Big brands; famous brands, foreign brands; often American or European: brands that are a status symbol. ABI and SAB are getting together because growth in their core markets is slowing (or has stopped). They’re getting together because in emerging markets it’s about brands. The deal allows more consumers to access their brands in more markets, efficiently and cost effectively. And most consumers won’t react negatively. They won’t even think about it.

The second issue is craft. Craft beer, however you define it, is exciting, interesting and inspiring. It’s been brilliant for beer in many markets. But craft beer is, what? At best 10 – 15% of market volume. Most of us, most consumers, simply aren’t in the franchise or drink it infrequently. Most of us, in short, drink the sorts of beers that ABI and SAB make.   Now, clearly there is growth and clearly craft is slowly, steadily impacting consumer perceptions of the market. But if we assume that the basis of the ‘Innovation-Adoption Curve’ is correct, then most of us are fairly unadventurous. We’ll follow. And what will this mean in terms of brands? It won’t mean opportunities for spontaneous fermented wild beers hitting the mainstream. It will mean the likes of Blue Moon, Goose Island, Meantime, Lagunitas, Kona becoming more widely available, and if we’re lucky the larger – independent – craft brewers – Sierra Nevada, Brooklyn, Boston Beer will be available too. But the real opportunity if for the crafty beers under the umbrella of brewers like ABSAB. They offer the rationale of differentiated choice, with the convenience of a single and efficient point of supply.

What ABSAB appreciate is that currently global brewing is over-supplied. There are two responses. One, consolidate to ensure supply over time reduces and is done cost effectively. Two, build brands. This deal does both and will be successful.

For smaller brewers, given that they can’t consolidate to the same level, the real opportunity is the second option. To build brands. Take the UK beer market. There are now 1,700 breweries. The UK is the most breweried-per-head country in the world. Yet the beer market has been declining at about 4% a year since 2005. Per capita consumption of beer is falling, despite the noise of craft. There will be a fall out, even with the UK Government’s small brewer duty relief (perhaps because of it). Now is the time to build brands not supply product. Look at Camden Town, only three years old, but already widely available throughout the capital. Why? Good beers (with broad appeal); tremendous branding. Look at Beavertown. Good beers (with more challenge to them), impactful branding.

No, the opportunities presented by ABSAB getting together are twofold. For consumers, it’s in the truly niche operators, who make more complex, highly differentiated and challenging beer styles that they can supply effectively to the market. For small brewers who don’t, the real opportunity is to build your brand. And the real money is to be made when the likes of ABSAB buy them from you.

Small beers

There’s a ‘born again’ zeal of enthusiasm about cans amongst the craft beer fraternity; it’s intriguing and amusing. For years, brands of beer that put their product in cans were deemed in some way cheap or sold out. There was a lingering perception of ‘tinniness’ but also associations of ‘13½ Free!’ or ‘500ml extra value’ or even the faintly ridiculous pint cans that you still see in the UK, which seem to be tottering along on super high heels, just waiting to ‘do a Naomi Campbell’.   It’s been a source of frustration for can makers for years and their industry body, which is imaginatively titled the ‘Can Makers’. Because, cutting through any of their potential bias, cans really have been a brilliant beer package for donkey’s years. They are incredibly light to transport (filled and unfilled); rugged, despite the incredible thinness of the can walls; efficient conductors of heat so they chill down quickly. And they are also flavour fast: the cans are lined with a food grade film which prevents any contact with the steel or aluminium walls and of course, no light is going to sneak through, eliminating the threat of light strike.

So it must be down to the craft brewers. They have stepped in and reversed the decline in cans’  perception, because otherwise, nothing is different.

Except, no. There are a few differences this time round. And it’s the craft brewers who have seized them.

Camden Hells: great design, right size. It all feels, well, right.

Camden Hells: great design, right size. It all feels, well…. just right.

The first is size. The craft brewers have embraced small cans – better, for the often more challenging styles of beer they’re brewing, but also, just a more enjoyable portion. 330mls are hand sized and the volume fits in a wider range of glassware; they’re less likely to warm up as you drink too (it’s gone). Truly, it’s always baffled me why UK beer consumers simply wouldn’t accept a can size in beer that is totally acceptable to them in soft drinks and totally accepted when they travel abroad. Different beer in a different pack – that seems to have done it.

The second is finish. The craft brewers are embracing the material and its potential in a way that few of the more established players have done or are attempting now. More often than not, a brand’s design is simply ‘applied’ to the can and disharmony is the result (I know, been responsible for a couple myself). Where the design joins – tricky; the way the logo works with the curved face – a challenge. Brand owners and design agencies have broadly given up, resulting in something…  just not right. But some of the craft brewers have said: how can we use the shape of the can to enhance our brand? To take it on and improve it? Beavertown is the notable example here: their cans are art, quite literally. There are no issues with worrying about facing them forward, as they can be faced anyhow and make a panoramic comic book shot working along the shelf. Magic.

And there’s feel too: varnishes and textured finished have been around for a few years, but it’s taken the craft brewers to use them to their potential. Why? Because they’re not scrimping for savings, worried about the added ‘on cost’. The value built into their inherent proposition allows them to buy slightly more expensive cans and reap the reward. Look out for stippled matt finishes and spot varnish. Little touches yes, but in the hand, they transform how the can feels and even – gasp – make you think about drinking from it.

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Can design mastery from Beavertown. Wonderful stuff.

But one issue is overlooked. Unlike bottling, canning your beer is a more serious financial proposition. Can lines aren’t cheap – and they’re certainly more expensive than bottling lines. They’re also a bugger to run – the tolerances compared with bottling are much tighter – think Formula 1 car vs rally car. Both high performance, but one takes it to another level.

And then there’s the cans. This isn’t like buying a run of labels for bottles: there’s no writing them off by popping the old labels down to the local recycling tip. Buying a run of cans is a major undertaking and if you buy them, by god, you use them.   And finally, there’s a structural question. Whilst bottling lines are – broadly speaking – ten a penny, canning lines are something else. There are fewer of them; they’re largely fully employed and also, and this is a big issue if you brew 10 barrels a week, massive. There are whole canning lines dedicated to Coke. Not Coca-Cola’s range of products, just Coke. 24 hours a day. All year. Picture it: “’Scuse me mate, can we fit in a run of 8 Ball Rye next Tuesday?” “Er…. no”. So what’s happened? Well, the incredible thing is that some of the brewers have taken on the challenge and have bought canning lines. That takes big balls. Big balls of lead. But there’s beautiful commercial creativity too: there are operators now running mobile canning lines. They come to you. Fill. Clean down. Offski. That is brilliant.

And the even better news is that it’s just begun. Tinted was responsible for bringing thermochromic – temperature sensitive – ink onto cans 10 or so years ago. But 5 years from now, that is going to look – aptly you may feel – like very small beer.

© Beer Tinted Spectacles, 2015

Tinted Shorts: Beavertown Gamma Ray IPA, 5.4%

Dollar Bill_fotor

“It got me wondering. Why is the all seeing eye of Lucifer both on their beer bottles and on U.S. Dollar Bills?”

Euston Tap, London, 25th June 2014, draught.

I had an hour to spare before my train back north. Time for one beer and just a half: not enough time for a pint to be confident it would have cleared the system by the time I needed to drive. A beer that needed to count; a beer I had been looking out for: Gamma Ray from the fêted Beavertown Brewery in Hackney (soon to be Tottenham Hale).

It’s a slightly hazy, conker brown India Pale Ale with a sweet, malty nose layered with gooseberry hops (a blend of Columbus, Amarillo, Magnum and Bravo apparently – the latter being a new one to me). To taste, full on bitterness (I learnt later, 45 IBU) that reaches from the first taste through to the aftertaste. It’s a choppy, savoury bitterness: not sophisticated, nor lithe, but punchy and drinkable for such a bitter beer.  Oh. And it got me wondering. Why is the all seeing eye of Lucifer both on their beer bottles and on U.S. Dollar Bills?  Is there some communion of Ley Lines in East London? Does this influence the beer?

© Beer Tinted Spectacles, 2014