From shed to brewery for craft beer firm

[Hoddy]

Not sure about this. Might be the case in some parts of the country, but around where I am there is a huge demand for local beers and plenty of independent pubs and bars looking for new breweries, and the more local the better. I'm not sure the micro breweries were ever eating the macro's market share. Maybe Brewdog and the like might have got on their radar but as big as we think Brewdog is, it's minuscule in scale compared to the big macro's so no chance they were ever worried about them. Just highlighted another market segment the macro's could target to exploit, but so far their offerings have been a bit rubbish.

It might be tougher, if not impossible now if you have ambitions to be the new Brewdog or Thornbridge, but if you just want to set up as a nano or micro brewery and focus on local rather than making the leap too soon to national (seems to be the downfall for most breweries, indeed most businesses of any type, that go bust - expand too fast) then there seems to be plenty of interest in small independent breweries and the craft beer market want and like choice, so I'm not even sure the market is 'saturated'.

I set up commercially mid last year and demand is massively outstripping supply. I'm operating out of my garage and intend to keep it that way so will always likely be the case that my beer is sold before I've even brewed it. The temptation to expand into a unit is strong, but I know that would up the ante considerably both in terms of demands on money and investment and my own time - its time that is most in demand...the money is easy...so many people willing and wanting to invest. I'm always getting offers from people itching to invest, but I'm steering clear of all that. Since this is still primarily a hobby and I have a full time 'proper' job (though the beer is making profit its just a bit of pocket money really and it all goes back into the business), then sticking in my garage is my only option right now.

The biggest worry I can see in the industry are those who seem happy to sit at home on their own and sup cheap supermarket beer instead of going out to their local...OK some people might not have a decent local on their doorstep, but others do..support your local pubs or lose them, then all we'll have is cheap supermarket beer or soulless and flavourless macro beer. And the number of kids out there not even kicking off on beer and going straight to the latest trendy short drink so potentially storing up a big shift in the future.

Also pretty sad that toilet cleaner like Carling is still the biggest seller even in pubs that have a decent offering of cask and keg craft beers. But when the big macro's have annual marketing budgets in the billions, then the small independents don't have much of a chance to reach out to those who are not 'into' beer.

Where I am it seems there has been strong bounce back from COVID - people were itching to get out after COVID, but that might vary across the country and cost of living doesn't seem to be impacting yet. Think most people value their social time and are continuing to prioritise it, certainly my locals seem to still be pretty busy at weekends and ticking over during the week. - but I'm sure Starmer and his StHarmtroopers will do whatever they can to make going to the pub as miserable and expensive as they possibly can - I can't imagine the attack on the hospitality sector will ease off any time soon. Like motorists, it's an easy target for a bit of quick revenue generation under they guise of 'they're protecting our health and saving us from ourselves' and they'll keep on squeezing.

Ok so there are so many things here that tell me you dont actually have a clue about this.

So what your saying is all these breweries that are struggling and working their ***** off to pay themselves and their staff a living wage and battling with a race to the bottom on prices because of macros driving prices down to force them out of business??

Coming from a person knocking a few casks out of their garage with no rent, rates or anyone to pay a living salary to?

Have you actually looked at the peak volume produced by the registered 2,400 breweries in the UK at the peak? And then compared that to the total volume in the premium beer market and draft sales in the uk? Add into that the ever declining number of venues actually open to sell breweries beer then that brings a whole new element of market forces and competition for taps.

Oh thats right. Your doing ok in your garage so everyone else hasn't a clue........

 

[Stu]

Its no surprise really -

I suffer from gout and have done for a few years, when i first got it i found through a process of elimination lager was the main cause so i cut it out altogether which left me with the problem of what do i drink i like a pint of cider in summer but wouldn't drink pint after pint and was no fan of real ale so i asked if people could recommend something to try that is more like a lager than Guinness type beer and IIRC someone suggested Old Speckled Hen and Bishops Finger i liked them then started making my way through our local Bargain Booze offerings, if you had told me back then i would be starting every weekend with one of the below or similar i would have thought you were crazy but that's how much my tastes have changed over the years.

You call lager toilet cleaner because you know there is better beer out there but for most drinkers like me back in the day lager served its purpose it got you pissed on a Friday and Saturday night and it was cheap, people rarely switch because there is no reason to maybe pubs should offer small glasses so people could taste it and see what they are missing.

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As an aside, I think I've mentioned this before, but my Gout is entirely fed by shellfish and game.

Which is super annoying, because I absolutely adore the stuff.

 

[Chippy_Tea]

Ok so there are so many things here that tell me you dont actually have a clue about this.

 

[Leon103]

Not sure about this. Might be the case in some parts of the country, but around where I am there is a huge demand for local beers and plenty of independent pubs and bars looking for new breweries, and the more local the better. I'm not sure the micro breweries were ever eating the macro's market share. Maybe Brewdog and the like might have got on their radar but as big as we think Brewdog is, it's minuscule in scale compared to the big macro's so no chance they were ever worried about them. Just highlighted another market segment the macro's could target to exploit, but so far their offerings have been a bit rubbish.

It might be tougher, if not impossible now if you have ambitions to be the new Brewdog or Thornbridge, but if you just want to set up as a nano or micro brewery and focus on local rather than making the leap too soon to national (seems to be the downfall for most breweries, indeed most businesses of any type, that go bust - expand too fast) then there seems to be plenty of interest in small independent breweries and the craft beer market want and like choice, so I'm not even sure the market is 'saturated'.

I set up commercially mid last year and demand is massively outstripping supply. I'm operating out of my garage and intend to keep it that way so will always likely be the case that my beer is sold before I've even brewed it. The temptation to expand into a unit is strong, but I know that would up the ante considerably both in terms of demands on money and investment and my own time - its time that is most in demand...the money is easy...so many people willing and wanting to invest. I'm always getting offers from people itching to invest, but I'm steering clear of all that. Since this is still primarily a hobby and I have a full time 'proper' job (though the beer is making profit its just a bit of pocket money really and it all goes back into the business), then sticking in my garage is my only option right now.

The biggest worry I can see in the industry are those who seem happy to sit at home on their own and sup cheap supermarket beer instead of going out to their local...OK some people might not have a decent local on their doorstep, but others do..support your local pubs or lose them, then all we'll have is cheap supermarket beer or soulless and flavourless macro beer. And the number of kids out there not even kicking off on beer and going straight to the latest trendy short drink so potentially storing up a big shift in the future.

Also pretty sad that toilet cleaner like Carling is still the biggest seller even in pubs that have a decent offering of cask and keg craft beers. But when the big macro's have annual marketing budgets in the billions, then the small independents don't have much of a chance to reach out to those who are not 'into' beer.

Where I am it seems there has been strong bounce back from COVID - people were itching to get out after COVID, but that might vary across the country and cost of living doesn't seem to be impacting yet. Think most people value their social time and are continuing to prioritise it, certainly my locals seem to still be pretty busy at weekends and ticking over during the week. - but I'm sure Starmer and his StHarmtroopers will do whatever they can to make going to the pub as miserable and expensive as they possibly can - I can't imagine the attack on the hospitality sector will ease off any time soon. Like motorists, it's an easy target for a bit of quick revenue generation under they guise of 'they're protecting our health and saving us from ourselves' and they'll keep on squeezing.

Of macros weren't worried about Brewdog why were Heinken looking to purchase all/part of the business?

 

[hoppyscotty]

Ok so there are so many things here that tell me you dont actually have a clue about this.

So what your saying is all these breweries that are struggling and working their ***** off to pay themselves and their staff a living wage and battling with a race to the bottom on prices because of macros driving prices down to force them out of business??

Coming from a person knocking a few casks out of their garage with no rent, rates or anyone to pay a living salary to?

Have you actually looked at the peak volume produced by the registered 2,400 breweries in the UK at the peak? And then compared that to the total volume in the premium beer market and draft sales in the uk? Add into that the ever declining number of venues actually open to sell breweries beer then that brings a whole new element of market forces and competition for taps.

Oh thats right. Your doing ok in your garage so everyone else hasn't a clue........

Not what I said at all. I was merely pointing out that the relative size of brewdog and the big macros is so different that they are not a threat even if brewdog rise continued when at their heirs it would have been years before they got anywhere near the proper big companies. But the big macros will buy up market share wherever they can and where new markets emerge they’ll want to get in there before the other competing Big companies get in there.

Also I was trying to convey that in some parts of the country the craft beer business for small local producers is still very strong with a lot of interest still in locally produced beer.

And you’re right I know nothing but putting myself out there and seeing what’s what. Everyday is a school day and all that. And who knows in a few years I might have expanded a bit and be in a position to be employing people and I’m not the only small producer in this area. Quite a few and all doing very well. Im just happy to be part of the scene and contributing by supplying beer to local pubs and bars who are trying to give the punters what they want and provide variety and showcase local breweries. But hey. Somehow that’s bad apparently

The key is for people to get out there to their local pubs and support them.

 

[hoppyscotty]

Of macros weren't worried about Brewdog why were Heinken looking to purchase all/part of the business?

Put it this way…the value of brewdog is about the same as Molson Coors’ annual marketing budget. And the value of Heineken is well over ten times that of Brewdog. Brewdog is not a threat. The big companies are always looking to grab market share and are competing with each other. The market is only a finite size so easier to grow market share by acquiring smaller companies rather than compete with the other big companies.

 

[Leon103]

Put it this way…the value of brewdog is about the same as Molson Coors’ annual marketing budget. And the value of Heineken is well over ten times that of Brewdog. Brewdog is not a threat. The big companies are always looking to grab market share and are competing with each other. The market is only a finite size so easier to grow market share by acquiring smaller companies rather than compete with the other big companies.

Would like to see these figures you mention.
Didn't really answer my question though. They grow their market share by buying and eliminating the brewery they buy. Many smaller (than brewdog) companies have fallen that way.
It certainly feels like we have crested the peak in terms of craft beers,any well established breweries have failed recently. Yes there will always be a market for locally produced real ale, but as you say, anyone can make a success out it, even from their garage.

 

[Druncan]

We are a seasonal business, tourist led but got loads of locals. Our restaurant is not practicable in the winter.

So, we tried a new initiative after we closed our restaurant '@ end Oct. We have full pub licence and off sales.

We had started a 'bread club' with my missus baking up to 70 x 400g loaves (wholemeal, Parmesan and jalapeno, semidry tomato, date and walnut. Our friends register interest in quantity/type by messanger. Of course the yeast is from our completed brews. We sell out. Works great and no-one talks about 'the bread club',,,,,, First rule

Then we thought about having a bread and brews event. 2-5pm collect bread, drink brews have a blether. Get a take-away brew as well!

Done three so far. Great additional turnover and great atmosphere + a damn site easier than trying to keep the restaurant open.

Next plan is to add a games afternoon in the mix.

We have found another variation in our niche market and it's good fun.

 

[Hoddy]

Put it this way…the value of brewdog is about the same as Molson Coors’ annual marketing budget. And the value of Heineken is well over ten times that of Brewdog. Brewdog is not a threat. The big companies are always looking to grab market share and are competing with each other. The market is only a finite size so easier to grow market share by acquiring smaller companies rather than compete with the other big companies.

You don't get basic business finance do you?

If Carlsberg say have a market share of 50% and there overall profit to share holders is 2% of their annual turnover. I suspect its lower than this but lets go for some round numbers. Lets say their turnover is £775m a year it would mean their profit annually is £15,500,000.

So if Carlsberg lost say 5% of their market share to small micro breweries (this was the current estimate of total UK Micro market share in 2024) then this would mean a reduction in Turnover to £736m and a reduction in bottom line profit to £14,720,000

If you then base that thinking against a shrinking market as well then to begin with the macros wouldn't have noticed. But when the figures started to get into 5% of their bottom line then you can be sure it got peoples attention.

Especially when Carlsberg made a £25m loss in the last financial year.

 

[hoppyscotty]

Would like to see these figures you mention.
Didn't really answer my question though. They grow their market share by buying and eliminating the brewery they buy. Many smaller (than brewdog) companies have fallen that way.
It certainly feels like we have crested the peak in terms of craft beers,any well established breweries have failed recently. Yes there will always be a market for locally produced real ale, but as you say, anyone can make a success out it, even from their garage.

the figures are out there as a matter of public record...Well the relative sizes of the companies.I got the Molson Coors marketing budget from a mate who works for Moslon Coors marketing department.

I did answer your question...the big companies are buying up some small companies..of course, but not because they are a competitive threat but because it is cheaper to buy market share by buying up smaller companies that to win market share from your real competitors which is insanely expensive.

So I agree they grow market share buy being companies but they're not buying at random, they dont buy a company and eliminate them entirely...they might eliminate the physical company but they buy the company because they have the right brand that fits in with their brands, they have the right demographics within their customer base and other business synergies that make them a good fit. And they're not buying them because they are a threat, they are buying them to enhance their product offering (as far as brands go at least) whilst growing their market share. Its not a practice that is unique to the beer industry.

 

[Hoddy]

the figures are out there as a matter of public record...Well the relative sizes of the companies.I got the Molson Coors marketing budget from a mate who works for Moslon Coors marketing department.

I did answer your question...the big companies are buying up some small companies..of course, but not because they are a competitive threat but because it is cheaper to buy market share by buying up smaller companies that to win market share from your real competitors which is insanely expensive.

So I agree they grow market share buy being companies but they're not buying at random, they dont buy a company and eliminate them entirely...they might eliminate the physical company but they buy the company because they have the right brand that fits in with their brands, they have the right demographics within their customer base and other business synergies that make them a good fit. And they're not buying them because they are a threat, they are buying them to enhance their product offering (as far as brands go at least) whilst growing their market share. Its not a practice that is unique to the beer industry.

Do you not think that the "market share" was lost to the micro in the first place? And hence why they wanted it back? Or does the market volumes magically increase?

And just to help you. I would look into every single macro acquisition of a small/medium brewery that's been completed by AB, Molson Coors, Asahi etc and you see how long that "brand" was kept alive for.......

 

[hoppyscotty]

You don't get basic business finance do you?

If Carlsberg say have a market share of 50% and there overall profit to share holders is 2% of their annual turnover. I suspect its lower than this but lets go for some round numbers. Lets say their turnover is £775m a year it would mean their profit annually is £15,500,000.

So if Carlsberg lost say 5% of their market share to small micro breweries (this was the current estimate of total UK Micro market share in 2024) then this would mean a reduction in Turnover to £736m and a reduction in bottom line profit to £14,720,000

If you then base that thinking against a shrinking market as well then to begin with the macros wouldn't have noticed. But when the figures started to get into 5% of their bottom line then you can be sure it got peoples attention.

Especially when Carlsberg made a £25m loss in the last financial year.

If the market is ten pints large and Heineken sell 5 of those pints then they have 50% market share. If they buy a smaller brewery that sells 1 pint then their market share increases to 60%. Their financial performance off the back of their market share is a completely different thing.

Not taking about finances...just taking about market share. Market share is important because you have to get your product out there and sometimes growing market share costs money and you might make a loss in buying that market share, but you will reap the rewards further down the track.

Yes the size of the market might change and the actual market share might fluctuate from year to year and companies certainly make profits some years and losses in other years but it remain a fact that Heineken is well over ten times the size of Brewdog.

Anyway the point I was trying to make (thought It was perfectly clear but obviously not) is that it's not a consistent picture everywhere. Any small business can only work within the market it is actually in and in some parts of the country craft beer is in decline, some parts it's steady and others it's growing. Where I live it's pretty strong and booming with plenty of room for small nano and micro breweries. that is precisely why I decided to throw my hat in the ring and am not going to be tempted into expansion...And talking to the pubs...which is what is important if the pubs are thriving (the craft bee pubs) then the breweries will thrive, they are desperate for new breweries and new beers and the more local the better. So that is the space I'm operating in.

 

[Hoddy]

If the market is ten pints large and Heineken sell 5 of those pints then they have 50% market share. If they buy a smaller brewery that sells 1 pint then their market share increases to 60%. Their financial performance off the back of their market share is a completely different thing.

Not taking about finances...just taking about market share. Market share is important because you have to get your product out there and sometimes growing market share costs money and you might make a loss in buying that market share, but you will reap the rewards further down the track.

Yes the size of the market might change and the actual market share might fluctuate from year to year and companies certainly make profits some years and losses in other years but it remain a fact that Heineken is well over ten times the size of Brewdog.

Anyway the point I was trying to make (thought It was perfectly clear but obviously not) is that it's not a consistent picture everywhere. Any small business can only work within the market it is actually in and in some parts of the country craft beer is in decline, some parts it's steady and others it's growing. Where I live it's pretty strong and booming with plenty of room for small nano and micro breweries. that is precisely why I decided to throw my hat in the ring and am not going to be tempted into expansion...And talking to the pubs...which is what is important if the pubs are thriving (the craft bee pubs) then the breweries will thrive, they are desperate for new breweries and new beers and the more local the better. So that is the space I'm operating in.

But shifting a few casks a month to a few local pubs isn’t representative of the industry locally or nationally and trends overall. You’re always going to hear pubs want a cask for £59 from a nano as your not calling them every week to sell.

You do know market share (volume) is directly related to turnover and therefor profit right?