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As I have brought up many times before, Craft Beer is hard to define, however I saw this week a perfect definition which no one can argue about. *Put quite simply craft beer “is like pornography — you know it when you see it.” *These are the words from the head brewer of a Californian craft brewery. *To some a bottle of Sierra Nevada Pale Ale or Samuel Adams in your supermarket will be out of the ordinary, something interesting, to others it is a just another regular day to day beer.
The American craft beer market is more mature than the equivalent UK scene, it is bigger due to the wide geographical area and population factors that the USA brings to the party. *Small producers in the UK only have to ship products 350 miles at most to hit most populated areas in the UK. *In the US, you might do that to reach the neighbouring state capital and in places like Texas to reach the next major city. *To hit the US centres of population on the east and west coasts you are looking at up to 3000 miles a time if you are located on one of them. *So each major city has developed its own healthy craft brewing scene, when you have 1 million to 4 million people living in a city, it can support it.
In the UK we are closer to each other, generally living in far smaller cities and towns where there is no need for each urban conurbation to have its own brewery, with the right production capacity and a chain of distribution partners across the country you can be nationwide without need of investing in major infrastructure. ***If you took a map showing the distribution of UK craft brewers it would show a fairly evenly distribution of dots up from the south coast to the M8 corridor between Glasgow and Edinburgh, with a series of dots running up the east coast to the biggest of them all, Brewdog and a smattering across the rest of Scotland.
I bring up Brewdog and the debate on when they will be too big to be craft, they currently produce 7.2 million litres of beer a year (based on 600,000l production figures from October 2013). *The same debate is brewing at the moment in the USA regarding the Boston Beer Company whose most famous beer in the UK is the aforementioned Samuel Adams. **Last year they were worth $2.9 billion and made $759 million in revenue (£1.7 billion and £443 million). *Their profit was about £40 million. *Brewdogs revenue in the 2013 financial year was £18.9, with a profit of £2.3 million. **You can see that that their margin vs revenue ratio is about the same and both are investing in production and expanding their brands.
In the UK, The Boston Beer Company would be considered a major brewer with production capacity rivalling the British operations of some of the major international brewing companies. *In the US, it is still small fry compared to the likes of Anheuser Busch InBev and Miller Coors who generate £7.24 billion and £5.32 billion in revenue respectively, the former brewing 40 million barrels a year. *These figures include the massive international nature of both these companies and the worldwide distribution of their products, but it shows the disparity in the US market, as we have a similar disparity regarding the money made by small brewers and major brewers in this country.
Samuel Smiths and the Boston Beer Company is in the middle ground of being craft in nature and corporate in practice. *The owner Jim Koch’s description of them being the “tallest pygmy” in the craft beer field is spot on. *They are the first and only “craft brewer” in the US to launch a nationwide TV campaign, but if you are the “biggest pygmy” by a factor of 10 , then you are going to get shot at by the smaller villagers saying you are no longer one of them, and this is happening now to the Boston Beer Company. *Their line that “craft beer is the current big thing, but the Boston Beer Company has been doing this for 30 years and will do so into the future” is probably not the most diplomatic move they have made. *If Brewdog continue their growth at the current rate they will reach a similar position, it is inevitable for those on the border of a market sector.
The move from a big fish in a small pond to a small fish in the sea is never the easiest one.
(original story – http://fivethirtyeight.com/features/...-be-craft-beer)



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