Roll on the revolution

Ireland is very much in the early days of what is a craft beer revolution. Craft beers are well established in the UK and America, Europe is well served, but Ireland has been lagging behind the trend in the last few years. Which is surprising when you consider the reputation Ireland has for both food and alcohol.

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It’s hard to pinpoint the reason craft beers are so late coming to Ireland in terms of market share. Having gone through the process of opening a brewery, three things stick out most, in no particular order. First, the cost of shiny stainless steel tanks and equipment in Ireland is off the scale. Literally. The UK and USA are better served by specialist fabricators producing tanks that are someway financially viable for a small brewery. Particularly in the nano brewery range where finances are limited and the brewer really wants to dip their toe in and test their beers on the market first.

Secondly, licensing laws allow for a greater entrepreneurial spirit in the craft beer market in the UK and USA. I’m specifically thinking of the USA where breweries often have an attached ‘bar’ or tasting room which can sell beer direct from the brewery to the public. In Ireland, a tasting room or bar involves a whole new set of licences, including an on-licence, which can cost anything from €70k upwards – which for new breweries is pretty much nailing the coffin shut on that idea and closing down what could be both an important revenue stream and a source of local employment. Imagine being able to visit a small brewery and purchase exciting new beers, giving valuable feedback to the brewer there and then! Encouraging growth in the craft beer market would see more Irish malt and especially more Irish grown hops. Farmers take note – there is a slew of new Irish breweries and hardly anyone (no-one?) producing Irish hops on a commercial scale.

Ireland still operates in the dark ages as regards licences relating to alcohol with the Government pretty much squeezing the life out of what could be a booming craft beer industry. For all the talk from the Government about ‘creating conditions’ that lead to employment they are still pretty much clueless when push comes to shove.

Third, Irish drinkers are only beginning to discover the difference between a mass produced (and ultra filtered, ice cold) beer which pretty much strips all flavour from a beer and a craft beer that has been produced in a labour of love. That isn’t the fault of drinkers – many places just don’t stock craft beers which can be attributed to the first two reasons above. So Big Breweries dominate the market in Ireland.

Despite the craft beer revolutions taking place in the USA and UK for years, the craft beer market still only accounts for approx. 6% of the total beer market. Big Brewing dominates and dominates in a big way. In Ireland, you could be looking at under 2% currently for the craft beer market. It doesn’t take a crystal ball to predict with some confidence that with more craft beer available to a wider audience, that market share will grow.

Nearly every single craft beer will use more malt and hops without exception. For example, Fir Bolg and Blackguard are slow lagered, maturing nicely when big brands are already on the shelves. The difference between craft beer and Big Brewery beer is akin to the difference between the mass produced, cut price, slice pan and an artisan baker pulling something fresh out of the oven. They are worlds apart in terms of taste and quality.

The biggest threat to craft beer stems not from Big Breweries or convincing people to try something new and exciting. The axe hanging over craft beer in Ireland comes from the Government and its drive to extract every last cent in tax from anything that moves – essentially cutting off the hands that feed it. Let’s not even get into where that tax is going, but it sure ain’t being invested back in the country.

Despite the potential for employment and revenue from a fledgling craft beer market, the Government seems determined to over regulate and over tax the segment to death. Already, licences for serving alcohol are in brain fart territory. The Government is now talking of minimum alcohol pricing. dressing it up as saving us from ourselves. We don’t need saving from ourselves, nor do we need to be told when, where and at what price we can drink. Rather, we need to be saved from a Government that believes in the Nanny State and Big Government – the Little People are incapable of making decisions themselves so we’ll regulate every decision they make to ensure they make the one we want. It reminds us of Irish Governments running referendums twice until the Little People vote the right way.

The excise duty from alcohol has already been increased and over 90 cent for an average 4% beer goes to the Government on excise duty alone – that’s not counting the VAT element at 23% or the indirect licencing costs built into every pint of beer. Many craft breweries sell their products at prices similar to Big Breweries. Even doing this, they still manage to pack in more flavoursome malts and hops. Bottom line, small craft breweries are never going to make the same margin as Big Breweries. But that’s ok – for better beer you have to use better ingredients. Period. How minimum pricing will affect craft breweries is a threat that still has to play out but it will essentially eliminate most price competition in the market. If the minimum price is say, 2€, and we want to sell a product at a reduced price, we just won’t be allowed. If minimum pricing regulations insist we sell at some rate over what it costs to produce – well craft breweries costings are higher anyway due to their higher use of malts and hops. It’s a lose, lose for the consumer who’ll pay more and the craft brewery.

Personally, if some brewery wants to sell beer at 50 cent a litre, go right ahead! The quality just won’t be there, nor will it be economically viable for long. But it’s the consumer who should decide whether that beer at 50 cent is worthy of their hard earned money, not a Nanny Government looking to tax everything to death.

Despite all this, the future for craft beer is looking bright. Commentators in the USA are debating if the craft beer segment there is reaching a peak. We doubt it. People are tired of mass produced products and wary of what goes on  – the recent food scandals around the world have done no favours to big food producers, even those that were not embroiled in the controversies. Given the willingness of Irish consumers to embrace locally produced foods with traceability, quality and the knowledge that nothing funny is being done to the food, craft beer should continue enjoying a rebirth over the next decade.

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