Liquor - Craft Beer. Lagging 10 – 15 years behind the US, microbrewers often look to the European and USA markets to predict growth paths of
business sectors in South Africa – especially when assessing niche markets such
as craft beer. The current trend in overseas microbrewery markets
has been branded - “hyperlocal”. In short, this refers to a renewed focus on
one’s local market. You would be right
in asking why this is considered a “new” trend – wasn’t microbreweries
conceived by enthusiastic brewers who wanted to share their unique brews with
locals? Well, craft beer’s life cycle
is back where it began, this time driven by profit margins.
How did this
come about? The rapid growth in the
number of microbreweries (US = 2 new breweries per day!) has resulted in
increased competition for shelf space. The number of microbreweries in SA is set to
double in the next two years. Stores
will be squeezing microbrewers for reduced profit margins. Larger brewers will buy smaller breweries,
making it more difficult for the latter to compete effectively. The
fight for space on the beer lists of local bars will intensify. (Contact us for
more statistics)
How should SA
microbrewers react? Small to medium –
sized microbrewers in South Africa have a choice to either follow the same
gradual growth path or to “fast forward” and focus on becoming
“hyperlocal”. Hyperlocal simply means focusing
on selling in-house. Selling R35 beers
in your own taproom will generate R1400
from a small keg for which a distributor or pub will pay you R800. They
should evaluate statistics such as that 52 percent of craft beer drinkers
indicated that locality was an important consideration when buying (2015
Nielsen study). Wineries have
experienced this first hand and many have adapted smartly. In
the Stellenbosch region, for example, one
will often pay more for the same bottle of wine at the wine farm’s tasting room
than in the local supermarket.
Options? The benefit of the growth of the craft beer
market is that it will increase the options available to microbrewers. One obvious, but capital intensive route, is to establish a “franchise brewery” - giving
each franchise a unique local flavour. However,
the idea of commercialising craft beer in this way may have many microbrewers “frothing”! South Africans are an intrepid bunch and we
have no doubt that we will yet see many new, unique and successful business models arising from our turf.
Contact Us for specialist
assistance to help amateur microbrewers to become licensed. We share your passion!
(Article by The Licence Co for all South African microbrewers,
adapted from an article in The Globe)
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