Selling their beer remains a challenge for craft brewers
How does a craft brewer spoil himself for his 50th birthday? Answer: He builds himself another brewery. Sweden’s major craft brewer Oppigards, owned by husband and wife team Björn and Sylvia Falkeström, is currently putting the finishing touches to a second brewery which is to go on stream in early September. Mr Falkeström’s birthday is in early October.
Both breweries are located in his home village of Ingvallsbenning in central Sweden, where his family owns a farm. Both breweries will have a total capacity of 60,000 hl beer. Because of a change in the law, which now allows breweries to run a taproom that is open to anybody and not just to small pre-booked groups as it was before, Mr Falkeström will install a restaurant and kitchen as well as a beer garden.
Probably hoping for another change in Sweden’s prohibitionist alcohol laws, Mr Falkeström last year started selling his craft beer in supermarkets to enjoy the first-mover advantage should supermarkets eventually be allowed to offer full-strength beers. Currently, supermarkets can only sell beer with an alcohol content of up to 3.5 percent ABV. Mr Falkeström and the other five craft brewers, which supply the supermarkets, have had to comply and brew a special mid-strength craft beer exclusively for them.
Since the law prevents him from doing business with the retailers directly, he has to deal with distributors, who in turn deal with the supermarkets’ central organisations, to the effect that the middle-men eat up all his margins. Exploiting their market muscle, the supermarkets looked at Oppigards’ financials only to tell him that he is making too much money and would have to lower his ex-brewery price until it is to their liking, Mr Falkeström complains.
Ever greedy, Sweden’s food retailers not only pay Oppigards a pittance, they also put such a high mark-up on these mid-strength beers that Oppigards’ light beer retails at almost the same price as his full-strength 5.5 percent ABV craft beer at the Swedish state-owned monopolist retailer Systembolaget: about SEK 20 (USD 2.40) for a 330 ml bottle.
Mr Falkeström calls himself fortunate that he can distribute 85 percent of his output (standing at 20,000 hl) through Systembolaget, which has a lower mark-up than the retailers and far better terms of payment. It makes Mr Falkeström proud that the monopolist has agreed to list nine different Oppigards beers, which means they cover a full shelf at their nation-wide network of 431 stores.
While things seem to work well for Oppigards, which was founded 12 years ago and is amongst the oldest Swedish craft brewers, more recent entrants tend to struggle. There are now 240 microbrewers. They mostly produce between 300 and 500 hl beer per year. For them it is proving an uphill struggle to get shelf-space at Systembolaget.
For its part, Systembolaget is not amused by the explosion of Swedish craft beer SKUs either, considering that in the ale segment domestic craft beers only account for 40 percent of Systembolaget’s sales. Most Swedish consumers, though knowledgeable about craft beer, still prefer an import over a domestic product.
Per capita consumption of beer in Sweden is under 60 litres. Seems like Swedish craft brewers will need to do a lot of consumer education before they can overcome consumers’ reservations. Open-to-all taprooms might help.
