Pandemic lessons vital for future of craft beer industry

Lessons learned during the Covid-19 pandemic could make the difference between craft brewers withstanding the cost-of-living crisis or going out of business, according to a University of Dundee academic researching the industry.

Dr Daniel Clarke, from Dundee’s School of Business, co-edited the newly published book, ‘Researching Craft Beer: Understanding Production, Community and Culture in an Evolving Sector’ along with colleagues from Edinburgh Napier University and the University of Huddersfield.

One of the chapters, co-authored by Dr Clarke, specifically explores the impact of the pandemic on craft beer producers, with a range of brewers invited to share their experiences of keeping the beer flowing during Government restrictions on the hospitality and retail trades.

The British Beer & Pub Association reported that pub beer sales plunged by 40% in March 2019 compared to a year before. By May 2020, 70 million pints of spoilt British beer had to be poured down the drain after pubs were forced to close due to Covid-19.

Previous research showed that 65% of small independent brewers in the UK ceased brewing completely while 31% slowed production and only 1% reported an increase in brewing. While government support for businesses impacted by Covid supported larger commercial brewers, small craft brewers were often unable to access meaningful support due to factors such as tax status and low profit levels.

Sales were initially hampered by an inability to reach consumers via traditional sales routes such as pubs, restaurants and local markets, but some brewers reported a boom in online sales. One brewer told the researchers that the whole of 2019 online sales were matched in April 2020 alone. Another reported that online sales went from around £100 a week to £15,000 in the first week of lockdown.

Dr Clarke and his colleagues found that Covid-19, while posing an existential threat to brewers, also created new opportunities for some. The biggest of these was identified as being the way in which connections with the local community were strengthened as customers reassessed their values during the pandemic.

People were drawn towards buying locally and direct from producers, and this helped offset the loss of business caused by the restrictions. Sales ebbed and flowed as pubs opened and closed so the ability to pivot proved crucial to a brewer’s chances of emerging from lockdown.

The added emphasis on direct sales has also meant that more producers have either created their own brewery taproom or are planning to do so. Learning from these and other experiences of the past two years will be vital to those brewers seeking to prosper at a time of growing inflation and squeezed customer income, according to Dr Clarke.

He said, “We wanted to explore the impact of Covid-19 on craft beer to determine both what the pandemic did to the sector, and what it can do for it.

“The picture that has emerged is one in which craft brewers raced to repurpose and innovate, turning physical spaces within the brewery into opportunities to generate alternative revenue streams. They have also sought to find new ways to use their customers’ spaces as marketing spaces and to change their own approaches to decision making.

“Craft beer brewers are themselves consumers, and passionate ones at that. It is a scene in which the line between production and consumption is often blurred. That led to brewers collaborating with each other and with other local business to bring down the cost of production and distribution. They also developed new ways of marketing and selling their products.

“Whilst brewers were designing new taprooms and brewery layouts, creating online shops and devising new distribution channels, consumers were not only being physically moved to transact online but also being emotionally moved to reassess their spending habits in favour of new local products that resonate with their own values.

“It remains to be seen whether these consumer habits will hold up as the cost-of-living crisis leads to a rise in prices and disposable income shrinks. What is clear, however, is that craft brewers possess incredible resilience. Having faced down one existential threat, they can use the lessons learned from Covid to survive this latest challenge.”

The editors of ‘Researching Craft Beer’ summarise that:

• Social media became more important than ever during the pandemic, allowing brewers to remain connected with their consumers whilst creating a shop window or a full-fledged online store
• Consumers reassessed their spending habits and values, challenging traditional and established business models and creating opportunities for those with flexibility and diverse portfolios
• Restrictions sparked innovative ways of getting products to customers, bringing small independent business owners closer together
• The pandemic helped brewers connect with local audiences and buyers, bringing new customers to the brewery and strengthening existing relationships with the kinds of consumers brewers want to connect with

The book enhances theoretical and practical understandings of craft beer within the UK and beyond by exploring the industry from a range of perspectives. The editors bring their collective expertise in business, law, economics and sociology to offer insights for those working within the sector or aspiring to, as well as assessing historic, present, and likely future developments within the sector.

Dr Holly Patrick, from Edinburgh Napier University and one of the co-editors of ‘Researching Craft Beer’ said, “While Covid has undoubtedly had a hugely negative effect on the diverse craft brewing community in Scotland and further afield, necessity has been the mother of invention for many of the brewers we spoke to.

“The lack of traditional sales routes created by the pandemic encouraged many craft brewers to build stronger direct ties with local customers through direct sales and even home delivery services.

“As brewers become more embedded in their communities, the localism of the product and the economic benefit of small brewers to their communities will increase. There is reason to hope that this might inspire a further growth in US-style beer tourism, we are likely to hear more of what is now being dubbed the ‘beercation’.”