Are craft brewers selling out the indies in supermarket move?

With the news this month that Waitrose, Tesco and The Co-op have all upped their range of craft beers, are breweries selling out the independent shops that nurtured them?

Tesco has upped its range of craft beers after seeing 40% growth year-on-year

Last week Waitrose announced it was increasing its range of speciality, craft and international beer by 27%, to a total of 95 beers, the latest in a series of moves by retailers to tap into this ever-growing trend. It follows Tesco boostings its range by a third to around 70 skus across 400 high street stores the previous month, mirroring their boosted offer in Tesco Local convenience estate last October. The retailer said it had allocated an extra 350% of shelf space to its beer aisles, and was now ‘partnered’ with nearly 30 breweries, although it transpired that some mainstream brands had been cut in the revamp.

Both retailers have reported booming sales of craft beer sales, with Waitrose reporting sales up 33% year-on-year and Tesco seeing annual growth of 40%.

Similar moves have been made in by The Co-op, which last year started stocking ales from breweries near to its stores and added 56 new ales to its range across the UK, and Aldi, who added 18 craft beers in 2016, and is rolling out a beer festival in May with 11 new and 3 returning regional beers. Sainsbury’s also boosted its regional beers range in Scotland, while M&S has continued to build on its craft beer range after revamping it entirely in 2015, inspired by the new and different beers in pubs.

But it isn’t only the multiples, specialist wine merchants such as Majestic and Oddbins are also in on the act. Majestic held its own Oktoberfest in store last year, and Oddbins has previously stated plans to open more dedicated beer shops following the success of its first store in Blackheath which opened in March 2015 and stocks around 300 local brews.

However, with craft beers becoming more available in the multiple grocers, where does this leave the independent retailers and specialist beer shops?

Indie appeal

James Hickson, founder of specialist South London beer retailer We Brought Beer, which has shops in Balham, Tooting and Clapham Junction, said the move was likely encroach on the independent and specialist retailer’s traditional territory to a certain degree, but the picture was more complex than breweries ‘selling out’ to the mults.

“If you want to get a good beer you can now find it in Tesco, so people won’t come out of their way to buy from us [independents],” he told db. “It is aggressive on price and that is a shame, as many of the beers are not bad and some are the best. For example Oskar Blues Brewery is twenty-five years old so it is almost a shame seeing its beer being sold ridiculously cheaply in Tesco – but then you shouldn’t discourage access [to craft beer].

“The way I look at it is that it was always going to happen, and in a way it will bring more people to the category,” he added.

Although it was likely that independents would start “phasing out” crafts beers now being stocked in the multiples at aggressive prices in order to differentiate themselves further and provide a point of difference, this opened up new possibilities. As a result of Tesco, Waitrose and The Coop and others increasing their beer ranges, there was likely to see an acceleration in the development of new tiers within the craft beers sector, with an “entry level” craft tier in the mults that could encourage more people into the category.

“There is an element of that anyway,” Hickson noted. “Tesco for example has a good range of decent names that we’ve sold in the past. If these become entry level for people previously drinking Peroni, then these drinkers will trade up to more specialist beers. Something like a Brew Dog’s Punk IPA is a starting point, people will try it from Tesco but then want to try more.”

While breweries would continue to make their “bread and butter” pale ale craft range with good volumes that would help bring overall costs down, they were likely to keep on experimenting and developing seasonal one-offs and exclusives that would be stocked in the independent sector and the on-trade.

“We shouldn’t discourage small breweries from getting economies of scale, we’re all fighting the likes of Ab InBev and Molson Coors,” he noted, adding that although US big brewers were snapping up craft breweries – and there had been a few examples in the UK, notably Meantime Brewing Company by SABMiller and Campden Town Brewery, which is now owned by Ab InBev – he didn’t see this happening on the same scale in the UK.

However he noted that the interesting thing is the case of Tesco was that the move has come at the expense of mainstream beers. “It’s not a bad thing that the breweries that we support are kicking the likes of Heineken off the shelf,” he argued.

“But what supermarkets can’t do is provide that service or specialist knowledge, they won’t know what the newest IPA on the market is – and people want that knowledge,” he argued.

The Society of Independent Brewers’ (SIBA) PR and marketing manager Neil Walker agreed that there would always be a place for independent bottle shops as they offered access to specialist beers and one-off specials that aren’t available in the supermarket, as well as providing specialist knowledge and advice. He argued that it was not necessarily a bad thing for independent brewers that supermarkets were starting to increase the amount of craft beer they sell. “It gives independent craft brewers another route to market, so I think there is place for both,” he told db.

He argued that while it was “great” to see supermarkets recognising the importance of introducing more craft beer, the selection was still too dominated by big craft brands owned by the global beer companies. “We would like to see more prominence for local independent British craft beers. SIBA’s Assured Independent British Craft Brewer initiative aims to help consumers identify beer from quality, local, independent breweries – which SIBA’s research has shown is what consumers consider to be genuine craft beer,” he said.