Fueled by passion: what microbreweries teach us

With customers preferring passionate, local companies, and shipping economics making less and less sense, microbreweries are onto something big.

“The theory of the Long Tail is that our culture and economy is increasingly shifting away from a focus on a relatively small number of “hits” (mainstream products and markets) at the head of the demand curve and toward a huge number of niches in the tail.”

- From The Long Tail: Why the Future of Business is Selling Less of More, by Chris Anderson

Large commercial breweries, like Anheuser-Busch in the US and Bass in the UK, have made their fortunes using large scale, highly monitored, repeatable processes that result in a highly consistent product. On the marketing side, they have prevailed with mass-market advertising and mastery of national and global distribution.

Their popular beers have been simple, clean tasting, not-very-distinctive products that go down easily, are made quickly, and store and ship well. The formula has worked well, with the same beers, year after year, dominating the market.  However, the explosion of consumer choice in beers, and the profitability of microbreweries, is a new trend in beer. And although this new trend is only accounting for 5% of the market In North America right now, it is a growing, highly profitable market segment. As a result, we’re seeing the large commercial breweries tweaking their ‘lowest common denominator’ approach to manufacturing.

As the Long Tail of the market elongates, we expect to see the trend in niche foods and beverages to change markets permanently. And small food and beverage providers, with their hand crafted, unique brands, have an appeal that the mass market manufacturers may be structurally incapable of matching.

The term “microbrewery” is used loosely, but strictly speaking, it describes companies that produce less than 15,000 barrels/18,000 hectolitres annually. In practice the category has gradually come to reflect an alternative attitude and approach to brewing “of flexibility, adaptability, experimentation and customer service.”

With beer sales growth and beer profits relatively flat worldwide, microbreweries as a category have flourished. The US Association of Brewers reports for 2007:

* Total beer sales growth = 11% by volume in the first half of 2007
* Total annual craft brewing industry dollar volume = $5 billion
* Craft brewer volume share = 3.6%
* Craft brewer dollar share = 5.4%

The response by major manufacturers to changes in demand has been to acquire regional brands ( Japanese giant Sapporo acquires Sleeman’s who in turn acquire small brewery Shaftbury) and experiment with ostensibly similar products of their own. 

Brewer Rick Dellow began his brewing career in 1975 at Whitbread’s, UK. Between him and brewing partner Barry Benson, they have over 40 years of experience working in commercial breweries that include Carlsberg, Molson, and Bass. They also worked as consultants for microbrewery equipment manufacturers, Newlands Services Inc.