South Africa’s craft beer industry has expanded on a massive scale in the past few years going from around 50 breweries in 2012 to over 200 today, as noted in the Spring 2017 issue of On Tap. So where to from here in 2018? Here are 6 predictions from guest contributor, Eben Uys!
1. Established craft brands will push for more shelf space, visibility and exposure in stores. Currently, there are too many brands for the number of willing and interested consumers. Those who want to try a craft beer will struggle to choose and will, most likely, end up buying an expired bottle.
2. The market will be consolidated into two main models:
- Pub type breweries, where most of the beer that is produced is sold on site.
- Distribution breweries, where most of the beer produced is distributed to bottle stores, pubs and restaurants. It takes serious investment, technology and skills to be a distribution brewer. You need to understand the challenges of packaging, consistency, shelf life, distribution, sales and marketing.
3. At least 10 breweries will close. No one is making the money they hope to make when they set out on this adventure. Many brewers will run out of cash and savings and they will, unfortunately, be forced to close shop.
4. At least 1 craft brewery will be sold to a large commercial brewer. Even the large craft brewers are struggling to grow at the required pace so, to enter new markets and be price competitive, they will have to team up with the big boys. Heineken is on a mission – the only way they can try to grow into the SA market is by investing in more premium brands.
5. Craft beer will have to push into new markets to find new customers but 1) SA does not have a massive middle class, with the majority of the South African population earning less than the breadline and 2) big brewers are on a price war to continue growth. These are two core challenges they will face. For new brewers, it is also a terrible time to enter the market because it is highly competitive and there aren’t many early adopters with tons of money willing to take a risk on new brands.
6. The quality and consistency of craft beer will improve, especially from established breweries. If not, they will lose market share to those who continue to improve.
What are your predictions for the South African craft beer industry this year? Let me know! I’m super keen to hear your thoughts!
Eben Uys is the owner of and Head Brewer at Mad Giant based in Johannesburg.