Craft brewers, Big Brewers and the future of beer: The Brewers of Europe Forum
Perhaps it was just as well that the Brewers of Europe, a lobby group representing 29 national associations, chose Brussels as the location for its first Forum (7-8 June 2018) to discuss “Beer and Beyond” in 40 seminars. Being home to the European Parliament, Brussels is known for its passionate and controversial political debates. Although ever so civilly, the antagonisms determining relations among Europe’s 8,500 brewers also came to the fore at the two-day forum, which was attended by an estimated 700 delegates.
Europe’s Big Brewers and craft brewers may not be at loggerheads as they seem to be in the US, but the lines are drawn nevertheless.
Craft beer big wigs like America’s Steve Hindy (Brooklyn Brewery), Denmark’s Mikkel Borg Bjergso (Mikkeller) and The Netherland’s Michel Ordeman (Jopenkerk Brewery) shared the stage – alternatingly not simultaneously – with some of Europe’s major brewers like Carlos Brito, CEO of AB-InBev and Cees ‘t Hart, CEO of Carlsberg. As could be expected, the stalwarts of craft brewing did not beat about the bush that theirs is not just a different approach to beer and brewing, right down to their often wobbly business models. It is built on different values too, as reflected by their individual storylines. This point was made most forcefully by Mr Ordeman and Alexandros Kouris, owner of the Greek Cyclades Microbrewery. That values can even override good business sense was the implicit point made by Mr Hindy. He admitted that he and his partner ploughed on for years even when Brooklyn was functionally bankrupt – something you would not expect from the Big Brewers which relentlessly seek to eliminate loss makers.
Like in the US, the buzz word among Europe’s craft brewers and consumers is authenticity. Despite its inflationary use, there is no consensus as to what it means. This was driven home by the first panel discussion, featuring Frank Boon, owner of the Boon Lambic brewery, Katharina Kurz. CEO of Berlin’s BRLO Beer, Jasper Cuppaidge, CEO of London’s Camden Town brewery, and Eduardo Riaza, Director of Cerveza Goose, from Spain. However, the discussion soon turned to the crucial point: ownership.
This left Mr Cuppaidge with no choice but to extoll at length the benefits of his selling his brewery to AB-InBev. Even Mr Boon, whose brewery struggled financially for decades, was made to defend his decision to take on an outsider (another privately-owned Belgian brewer) as a minority investor when his former partner wanted out. Similarly, at a later panel, Michel Moortgat, the CEO of Duvel Moortgat, had to clarify that when he took over craft brewers (Firestone Walker and Boulevard in the US; Ducato in Italy) Duvel did not take volume away from them to brew it at his bigger brewery. Instead Duvel continues to invest in them so that they can grow at their own pace, he argued.
Collaborations, another major issue in the brewing industry, proved surprisingly controversial too. While Mikkeller’s frontman criticised them for being too numerous and done for the wrong reasons – marketing rather than mutual learning – Richard Fuller (Fuller’s Brewery) explained how they helped his family business in its transformation to stay relevant and grow. Fuller’s tactical cozying up to craft beer would have been water on Mikkeller’s mills. But Mr Fuller described quite plausibly how Fuller’s seeks to evolve in sync with customers’ expectations through in-house new product developments as well as collaborations with microbreweries and acquisitions. In order to continue premiumising their portfolio they had to buy Brighton’s Dark Star Brewery in February 2018, he said, because they could not have produced Dark Star’s range of craft beers themselves.
It was Mr Ordeman who summed up the achievements of craft beer: it has given the world new styles; converted people to beer; added a new fan base like Millennials and attracted women. Yet, he did not fail to mention that craft brewers increasingly find their route to market blocked by the Big Brewers. His message to the Big Brewers was: “craft beer is not the enemy”.
This was a timely reminder because he was succeeded on stage by Mr Brito. Arriving with an entourage including a bodyguard (what has the world come to?), Mr Brito proved laid back, charming, even witty as he explained how to continuously build a company that lasts for the next 100 years and how brewing high quality beers can bring people together and instigate real social contact. He mentioned depression as a major global health concern because people meet less often in the flesh than they used to. He also talked about occasions for beer consumption not only widening to include women (!) but also shifting to the home, where women act as gatekeepers (!). Before parting he appealed to the audience to work together as brewers and lobby against the wine industry which pays no excise in many countries because it is connected to agriculture. Whether his call for unity – “us against wine” – will be heeded remains to be seen.
Given the Big Brewers’ moats, craft brewers are perhaps rightly wary if they seemingly extend an olive branch to them. When Benet Fité, Director of Quality at Spain’s Mahou San Miguel, which owns stakes in US craft brewers Founders and Avery, boasted of Mahou’s new EUR eleven million Brew Hub in Cordoba, Spain, which will be a “collaborative space for domestic and international gypsy brewers” once it opens next year, critics felt their worst fears confirmed. Mahou’s ostentatious aim is to take start-ups under its wings and provide them with market access as well as top-notch beer quality. But at the same, it will act as a gatekeeper, only allowing those gypsies in so that Mahou can take them over eventually should their beers fit into its own brand portfolio, cynics in the audience mumbled.
Day two of the Forum was devoted to the future of beer and delegates were keen to hear Mr ‘t Hart’s views. He began by stating the obvious: preference for beer among younger people is falling, even if Millennials seem to enjoy the odd craft beer. Self-critically he said that “what got us (brewers) here, ie beer quality, may not get us there (into the future).” Why? He admitted that the drive for better margins has eroded the product’s quality. Well, he should know. Mr ‘t Hart spoke out for beer quality – “stick to the product” – and called upon delegates to “talk positively about beer and other people’s beers.” Ho ho. His appeal was not just directed at craft brewers sniping at the Big Brewers. It would have also been aimed at AB-InBev, whose notorious 2015 Superbowl commercial “Brewed the Hard Way”, took a swipe against craft beer and craft beer consumers. It caused such an outcry that reverberations can still be felt today.
As to future trends, Mr ‘t Hart predicted that an emerging category would be something between beer and soft drinks, aka soft beers. This tied over nicely to the final panel discussion which dealt with non-alcohol beer at length. With non-alcohol beers only controlling a beer market share of four percent globally, they do not represent a competition. Thanks to them people drink beer again at lunchtime, it was pointed out. That brewers themselves have a problem with non-alcohol beer, goes without saying. Mr Moortgat admitted that while non-alcohol beers are a “wonderful alternative to soft drinks, they are hard to make” because “it’s not in our DNA”. He wondered: “Can we make flavoursome beers with low alcohol?”
Others doubted they had tried hard enough to make these beers taste nice. Some even suggested that alcohol-free beers represent a dilemma for brewers. Jokingly one drew an analogy to drugs and said “I have a lovely drug here for you but it’s without all the good stuff.” As a way out, it was proposed to give non-alcohol beers a different name.
The previous day Grant McKenzie, Director Marketing and Strategy at Asahi Breweries Europe, had called the non-alcohol Birell beer, which Asahi produces in the Czech Republic, an “adult soft drink” and a “crafted product”, as it takes 19 days to produce. This prompted some delegates to speculate if brewers, by focusing on non-alcohol beers, are secretly seeking to compensate falling beer sales by entering into competition with the global soft drink giants? And was this a wise strategy?
Perhaps the market potential of non-alcohol beers is exaggerated. Playing devil’s advocate, Spiros Malandrakis of Euromonitor retorted that because of pop culture and Instagram younger people tell pollsters they would like to drink more non-alcohol beer. In truth, they are only afraid that photos of them being drunk will shame them years later, he argued.
Grant Caunter, Heineken’s Global Manager Craft and Variety, gave the debate another twist when he opined that, rather than discussing the future of beer, we should discuss what beer is. Already brewers are experimenting with non-alcohol beer and THC, the psycho-active ingredient in cannabis, to recreate the effect of alcohol. And what about all those hybrids, like beer and wine or beer and cider that are becoming more ubiquitous?
Not unexpectedly, the Forum ended inconclusively and antagonisms were upheld. But it gave participants a wealth of ideas for reflection. To be continued at the next forum, which will take place from 3-4 June 2019 in the Belgian city of Antwerp.
