After 160 years of operating, a brewery in South Australia called West End is due to close. The brewery is home to a chunk of large Australian beer brands, all owned by Lion, a subsidiary company of Japanese beverage giant Kirin. (Not the species of feline. Imagine though.)
Sad times for beautiful buildings
The same big beer brands have dominated the market for almost 40 years. Some even for 100 years. But, as the craft-brewery scene has exploded, the declines in sales of large-scale producers have forced corporate giants to restructure.
In the case of Lion, the company has had to cut overheads by further centralizing production into one massive international beer-making facility. (Think Charlie’s Chocolate Factory but with beer and less jovial, orange employees.)
In turn, smaller facilities are closing. Small is relative of course. West End is still bigger than 1000 home brewers combined. Probably.
Sad times for big beer brands too
In Australia, beer brands make great t.v. ads. They’ve had to. Throughout the late 20th century, every successful producer has had the same story.
Make a lager that tastes like every other lager. Then make more, until a corporate (like Lion) buys you out. Lion proceeds to put your beer on billboards, t.v.s, and at bus stops.
Over time, everyone starts going, “Let’s buy that beer I keep seeing at bus stops,” and the brewery you previously owned becomes one of the biggest in the country.
This is what is called the industrial-marketing-complex. Sell a generic product, spend 10 million on advertising to get your product in front of the masses’ eyeballs, watch sales go up.
When everyone tuned into the same channels, read the same magazines, and went to the same bus stops, industrial marketing was very effective. Then the internet came along.
The number of ads exponentially increased and everyone’s eyeballs got tired from more and more brands asking them to buy their beer.
But good times for beer drinkers
Meanwhile, people with nose rings and beards began brewing beers at home. Unlike the big brands, they didn’t make lagers for the masses. They made New England Double IPA Rasberry Sours made with the yeast of a Portland hipster’s pubes for other beer enthusiasts on the forward-thinking fringes of the beer world.
The fringe is what the marketing world calls the long-tail, as in the long-tail of a bell curve. In a flooded beer market, microbrewers couldn’t penetrate the masses with a generic lager anymore (the middle bit of the bell curve). Instead, to create difference and inspire word-of-mouth, they made crazy beers aimed at small, but loyal, communities on the longtail.
Plus, now they had the internet, they didn’t need lots of money to let everyone know about their beer. They could connect with people online for cheap.
Beers made with the yeast of hipster’s pubes go viral
Viral in the market, I mean. Although, from a hygiene viewpoint, I’m sure some sort of virus from the pubes went viral too.
Shortly after the first microbreweries opened, other beer aficionados with nose rings were like, “Hey, we too should start a local brewery too.” The market caught on as well. People realized there was more to life than watery lagers. In fact, now there are literally over 700 craft breweries in Australia, which means there’s approximately a one-to-one ratio of breweries and people in the country. (This needs fact-checking.) But the point is this. There are quite a few beer brands now, all fighting for the same audience.
Initially, big brands responded to losing market share by spending more money. Still, sales didn’t go up, at least not as much as before. Hence, West End.
But craft breweries are feeling the pinch of a flooded market too. Everyone is. So what’s the solution?
Going full circle
In 1862, a stonemason called Thomas Cooper had a sick wife. Naturally he thought, “I know what will make her feel better: Beer.” He found a recipe someone brought over from England and, in his garage (or stable, or whatever shelter for transportation he had), he brewed the first Cooper’s Pale Ale, one of the most recognizable beers in Australia today.
He was right too. His wife did feel better. Though she remained sick. He liked the brew too. So did his friends. Quickly, the beer became popular among the fledging colony in Adelaide, South Australia, and, eventually, the operation turned into a small business.
Let’s state the obvious here. This was a horse-stable operation in 1862. The beer probably tasted like cat urine. Yet, Thomas Cooper was a local and he was serving a need for his local community. This is how every brewery—and business, for that matter—began in the 1900s.
Today, the industrial model—which includes centralizing large-scale operations to maximize profits and creating complicated supply-chain systems to distribute to thousands of consumer-facing venues—does not work anymore for new brewers.
What does work, though, is Thomas Cooper’s model. Craft brewers are going back to direct-to-market sales by opening a brewery in the local community and almost exclusively selling their beers there.
This way, they can increase margins and focus on quality, not quantity. They can create scarcity in a flooded market. And they can build connection and loyalty—two of the most scarce things we have today.
So here’s a final prediction. As we move further into uncertainty, as there are more fads, more businesses coming and going, the beer brands that focus on their community and promise they are here to stay are the ones who will eventually come out on top.
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