Little Bullies?

In my last article, I wrote about alleged bully like activities among the big three brewers in Ireland towards small independent Irish breweries. I wanted to look at it from the other side today.

Craft beer has taken off all over the world and the big drinks companies are taking notice. Some of them buy small breweries to add to their portfolio. Others release new products either under their own brand or a new faux craft brand. The big 3 in Ireland are no exception. Here's the thing, two of the big 3 are foreign based multinationals. One is Irish and known more for cider than beer but has recently started to get more involved in the Irish beer market.

All of them have new products that they have started pushing heavily recently. Could it be in retaliation? Craft brewers have been nibbling at their feet for the last few years and maybe they have decided to fight back.

Consider this. In 2010, the island of Ireland had 27 pubs serving Irish craft beer. A tiny number of pubs out of the thousands. By 2014, that number was in excess of 600 that we know of and that number was growing all the time and still is. While many of those pubs might only sell bottled Irish craft beer, plenty of them had draught. Those lines had to come from somewhere as tap space tends to be finite in pubs. In some cases, new lines would have been run but in others, something had to go and that meant that a well known brand was taken out and an independent local beer served in its place. For the most part, the beer that was taken out was probably not selling so it makes sense for the publican to try something new.

In the last couple of years though, new brands have emerged from the big 3 in response to the craft beer movement. To give an example, Diageo first brought out the new Smithwicks beers like the pale ale, winter spirit and so on. That was a number of years ago. More recently, they released Guinness branded beers such as Dublin porter, west Indies porter and the new Hop House 13. These taps need to go somewhere and I doubt they will want existing products of theirs taken out of pubs so that leaves a competitor's tap space.

Heineken have just announced that they are launching a new cider in Ireland from May. I don't know if this will be draught or bottle at the moment but if it's draught, things will get interesting. There's really only one major cider brand in Ireland on draught in every pub so will they be targeting that or craft cider taps?

So, what's the difference between a craft brewery replacing a big brand in a pub with a big brand replacing a small one? Is it all just business?

The way I see it is that a craft brewery can only replace a big brand in a pub if that big brand isn't making the pub enough money or if the publican wants to give consumers what they want. They also can't offer the publican any special deals of free kegs or the like. Their margins are already too tight.

When it's in reverse, the same can be true yes. Perhaps the craft beer isn't selling and the publican knows that people want the big brands products instead. It's more likely that the craft beer was selling just fine but the offer of a golden egg laying goose is too good to refuse.

Craft breweries have been buzzing around the big boys like flies for a few years. It sounds like they have started to reach for the fly swatter.