I received a great book for my birthday recently – Chris Arnot’s, Britain’s Lost Breweries and Beers. What is more inseparable than beer and England? Filled with entertaining social and economic history, it was also a poignant read as the litany of closures of many traditional brewers and pubs has left a huge gap in our cultural landscape.
For centuries beers were eponymous with the towns and cities of their birth. Boddingtons helped to define Manchester just as the rich, fruity taste of Eldridge Pope’s Thomas Hardy Ale said much about Dorchester, Bass and Burton, and Vaux with Sunderland. But this is no longer the case. Boddies is today not a Manchester brewed ale, nor is Tetley’s brewed in Leeds. Both have joined the growing list of landmark breweries that have been closed, often taking their much-loved beers with them.
The unthinkable happened in 2006, when the last Tetley’s dray horses were put out to grass on the Pennine hillside: Charles, Prince and Jonjo. Once there had been 120. Then in 2011, Carlsberg, the dominant shareholder, called time on the Leeds base established when Joshua Tetley acquired a brewery from William Sykes for £400 in 1832, and founded what became a Leeds institution.
Founded in 1832 by Henry Boddington, the Manchester Strangeways brewery was established on a site set up by two local grain merchants, Thomas Caister and Thomas Fry. Brewing ceased on the site in February 2005, and production of the cask conditioned beer moved to Hydes’ Brewery in Moss Side, Manchester.
Brewing was discontinued in March 2012, ending the beer’s association with the city. The iconic chimney stack at Strangeways was demolished in 2010. The cream of Manchester is still available in cans, a straw-golden, hoppy-bitter, and one of the first beers to be packaged in cans containing a widget, giving it a creamy draught-style head.
Today, we’re consuming less beer than at any time since the Great Depression of the 1930s, and ten thousand pubs have closed since 2000. We’ve lost the local pub as a community hub, where people enjoy a beer and a chat together. Traditional bitters are not on the drinking agendas of the 17-25 year-olds, new lifestyles and consequential shifts in demand have played a part in the decline.
Merger activity has accelerated globalisation of production, driven by the search for increased economies of scale, concentrating market share in four brewers – Anheuser-Busch InBev, SAB Miller, Heineken, and Carlsberg account for over half the global beer market. Back in 2000, the top ten brewers accounted for under 40% of global beer sales.
Before the development of large commercial breweries in the UK, beer was brewed on the premises from which it was sold. Alewives would put out a sign – a hop pole or ale-wand – to show when their beer was ready. The global brewers took over the market, but in recent years in the industrial estates and converted farms of the UK, micro-breweries have emerged and flourished, encouraged by Gordon Brown’s Progressive Beer Duty of 2002 which halved the tax paid by those producing fewer than 3,000 barrels a year.
The term ‘microbrewery’ was originally used in relation to the size of breweries, but gradually came to reflect an alternative attitude and approach to brewing flexibility, adaptability, experimentation, and customer service. They produced superb cask and bottles ales using the best ingredients, reviving ancient recipes in the finest craft traditions of British brewing.
Because many of these once-tiny breweries have grown over the past decade, the term ‘microbrewery’ has slowly faded in favour of the term ‘craft brewery’. Such breweries have an emphasis on new product flavours, and the process takes time and considered an art. We clearly like what they’re brewing – sales of cask-conditioned ales, which ferment a second time in the barrel, have surged by 25% over the past five years.
On the supermarket shelves is a cornucopia of hoppiness, often a wall of shelving is entirely dedicated to British varieties. The small scale of the new breed of brewery gives them flexibility, so they can produce short runs of seasonal or special occasion and bespoke ales.
Craft beer brewers have adopted a strategy that differs from those of the mass-market breweries, offering products that compete on the basis of quality and diversity instead of low price and advertising. Their influence has been much greater than their market share but shows the classic ‘David v Goliath’ thinking and execution by which startups can win.
I use the David v Goliath story as a source of inspiration to startup founders on how they can overcome the odds against incumbent, larger rivals. Startups perpetually play the role of David and just like their biblical counterpart, the insurgents can defeat the large competitors by outmanoeuvring and out-imagining them. The underlying business lesson is this: when underdogs choose not to play by Goliath’s rules, they win.
So, what are startup lessons we can take from the disruption the micro and now craft breweries have brought to a mature market seemingly flat and in long-term decline, dominated by global producers fixated on mass markets and low prices?
1. Maverick branding: The Titanic Brewery in Stoke-on-Trent, birthplace of Edward John Smith, captain of the ill-fated White Star liner, has weathered the storm of the endless jokes about beer going down well and has built on Stoke’s association with the Titanic with a selection of beers called Steerage, Lifeboat, and Iceberg.
To attract consumers that are looking for that point of difference and novelty, micro-breweries have been unconventional in their messaging. Using rebellious, humorous, or even counter-intuitive language in the beer category created a disruptive difference.
Takeaway: be bold in your branding and messaging
2. Go to market strategy: Fuelling a trend away from the big national chains and back towards the traditionally close local pub – local brewery relationship, a success story comes from Moorhouses Brewery in Burnley. It started life in the C19th making non-alcoholic beer for pubs run by the Temperance movement and switched to cask beer in the 1970s. In recent years it has won Champion Beer of Britain award for its Black Cat mild, and latterly the premium bitter Pendle Witches Brew.
Moorhouse’s has met the demand for its beers by buying six pubs. The integration of the retail outlets has given the company strategic and cost advantages, and it has built on its local identity and heritage.
Takeaway: be bold in your go to market thinking
3. Development of innovative products: Craft-breweries are experimenting with new styles and reviving old ones: smooth, highly hopped best and premium bitters; potent pale ales; dark, sweet porters, softer milds; heavy, grainy, creamy stouts; fruity, pale amber golden pale ales. Product innovation is a key driver of craft-breweries’ competitive edge, they are meeting the need for authenticity, and enhance the experiential nature of their brands, as well as those looking for something more individual.
Takeaway: be bold in your product development
4. Distribution: With more people drinking at home, there was an opportunity to take the product into supermarkets, but this made it less attractive and exclusive when people go to the pub. The solution was to start selling a bottled range through independent retailers in the local community, which is more in keeping with the ethos than the big supermarkets.
Takeaway: partnership strategies are a good route to customers for startups
5. Expect to win The craft breweries had to hold faith their product was better, simply the ability to act despite tremendous doubt. They dared to believe they could win.As an entrepreneur, you must never see your competitors as infallible, nut you must see a possibility to outperform them.
Takeaway: If you execute and implement with this mind-set, success will be yours
6. Leverage Give me a lever and a place to stand and I will move the earth, said Archimedes.Leverage is simply the ability to do more with less, and ask yourself: how can I position my business to compete favourably with fewer resources?
The global brewers are stronger, bit not more skilled. Craft brewers win by leveraging the collective effort, determination and focus of a team by product leverage, brand leverage, personality leverage and intellectual leverage.
Takeaway: there are many ways to surpass your competitors using leverage as a tool
7. Velocity Your greatest and most powerful business survival strategy is going to be the speed at which you handle the speed of change. Global brewers have the potential to dominate, but the difference emerged in the pace of craft brewers’ movement. They are lighter and smaller, hold the ability to reach customers with faster decision making.
Takeaway: How fast is your plan and strategy to reach customers?
8. Agile Strategy Aligned to the above, strategy and tactics are important. Craft brewers’ strategy and tactics surprise the incumbents with their audacity, product and marketing. They outsmart them. In business, it’s often said that the company with a smarter strategy rather than a bigger strategy will emerge the winner.
Takeaway: avoid competing with larger incumbents on their strategic terms, be an insurgent
9. Focus Bigger companies suffer when they lose touch with the granularity and simplicity of their business, they become complacent and lazy about their customers. Often, they’re not close enough to their customer. Some distant manager adjusts a few numbers on a spreadsheet, but customers react and in a click of decimal points, they switch to a rival.
The value of an individual customer is always greater for startups. Your business is important to me. The stores, restaurants, and other small businesses that we use are more in touch with our needs. The primary reason is that small businesses are able to feel their own pulse – they feel the impact of the stream of day-to-day events as they occur and sensitivity to customers.
Takeaway: know your customer touchpoints and check your pulse everyday
10. Be product niche Large companies expect to confront competitors. They build enormous corporate strongholds and fill them with assets of all sorts in anticipation of large-scale engagements. But, despite their size and strength, they are rarely prepared to confront nimble and fast-moving adversaries that challenge them at the margins.
Large companies are often scaled to compete in the mass market, often paying less attention to niches, which can still be lucrative. All you have to do is take advantage of their ego, serve these small niches with passion and customer service, and you’ll win business.
Takeaway: be famous for something, make it special, and make it your thing.
Startups need an edge, providing a product to customers which incumbents can’t replicate, serving a distinct market segment. This captures the essence of the craft-breweries in a global market dominated by just four companies. Let’s raise a glass to the rise of the UK’s beautiful brewers, which represents a stunning 15% of all beers sold. This is a nod to the founders and entrepreneurs as to what can be achieved in a mature, established market with a vibrant, intelligent and disruptive business strategy.
