America high – the US craft beer market
Craft beer in America is still buzzing. The number of breweries is increasing at a rate of more than two a day and the movement now accounts for 12.3% of the national beer market. It’s a remarkable success story, given that it has grown from nothing in less than 40 years.
The industry has changed the way people drink in the US and across the world, as brewers in other countries seek to emulate the pioneering approach that characterises US craft brewers. But, as the international community catches up, what future is there for American exports?
Recent figures released by the Brewers Association trade body reveal that beer shipments from the country, for the moment, continue to grow. Indeed, exports to the UK were up 4.4% in 2016, a considerable improvement on the 0.1% the year before.
This means that the UK – with 10.1% of the export share – is now the second most important market for US beer after Canada. This sounds fine and dandy but one has to question whether this buoyancy is likely to persist, given that there are a number of obvious challenges US brewers will need to overcome in coming years.
The first challenge is financial. Brexit and its economic consequences mean that importing goods into the UK is already less profitable than before. The immediate slump in the value of the pound that took place as soon as the referendum result became clear has not been reversed, so beers sold in dollars are more expensive for UK importers to handle. This has already led to price increases here.
Nigel Garlick, managing director of Left Coast Distribution – which began importing beers from US breweries such as Scuttlebutt, North Coast and Silver City four years ago – explains the impact of the deteriorating exchange rate.
“When we started Left Coast it was $1.60 to the pound. After Brexit it went down to around $1.20,” he says. “That’s more than our profit margin was so we’ve had to redo the way we do business. We’ve had to put prices up, which is tough, but we tried to do it as keenly as possible.”
Helpfully mitigating this price increase is the idea that the consumer is still willing to pay a bit more for a quality drink, according to Bob Pease, president and chief executive of the Brewers Association. “The craft beer market is driven by the beer drinker,” he says. “If he or she is willing to pay a premium for a quality product then US exports to the UK will continue to thrive.”
Price is one issue, competition is another. The UK beer market is becoming ever more crowded, with the number of brewers expanding rapidly and the battle for shelf space already fierce. “The market hasn’t grown at the same rate as [the number of ] UK brewers and European craft brewers so there is a lot more competition out there for a quite small market share,” says Garlick.
But Pease is not troubled by this development. “We recognise the emergence of a thriving new craft beer scene in the UK and we are totally comfortable with that because what we’re after
is more beer drinkers discovering the plethora of styles available and enjoying more full-flavoured, authentic craft beer styles on more occasions,” he says. “A rising tide floats all boats.”
Peter Sherry of Edinburgh drinks retailer The Beerhive notes the issues that face US imports in a crowded market and has some concerns that freshness may be lost if beers are not moving off the shelves. “I don’t think the US section is in too much trouble,” he says, “but there will be wastage and beers will be out of date. This will drive people to re-craft their buying strategy but never will the American section disappear.”
Possibly the most difficult challenge, however, comes from UK brewers widely producing beers that have been heavily inspired by their US counterparts, in particular American pale ales and IPAs, laced with fragrant American hops. They have also adopted American kegging techniques and the use of growlers and cans for off-trade dispense. Imitation may be the sincerest form of flattery but is it a problem for the export balance sheet? Not according to Pease.
“The UK and US beer industries complement one another,” he says. “A UK beer drinker who enjoys high quality, distinctive and full-flavoured beers is more likely to appreciate the huge range and quality of US beer styles. It’s all positive.”
Garlick suggests that this diversity of styles can help maintain the allure of the US import. “The biggest ones that sell are hoppy IPAs, but there are some great sour beers from America, some great Belgian-style beers,” he says.
He also highlights one significant advantage he thinks Americans have over our own brewers. “We have lots of people in the UK making really good beers but I just think we’re a little bit behind the American quality and consistency. We’ve come a long way but the technology being used in America and the amount invested in the brewing industry is much more advanced. Because of that, the quality of the beer is always very high.”
For Sherry, the sheer exoticness of the American import is also fundamental to its continued success.
“A lot of the longstanding breweries over there have a certain magic for some of the more avid beer fans,” he says. “Getting your hands on some of these beers in the UK can feel like quite an achievement.”
So, assuming American craft brewing does have a future here, what sort of beers are we likely to see? Garlick says many of the brewers he’s dealing with are now into lagers while, according to Pease, “we are also seeing a rise in sessionable, lighter styles that appeal to those beer drinkers coming into the market for the first time”. The future is bright, he insists: “American brewers are always looking to explore and innovate.”