Craft beer resilience — key factors for success

Location and innovation have been revealed as key factors for shaping strategies for resilience and future growth in the UK craft beer sector, according to new research studies led by Northumbria University that investigated the impact the pandemic had on UK breweries.

In one study, published in academic journal Regional Studies, researchers identified how UK craft breweries adapted and responded to the pandemic crisis and explained how location shaped, and indeed is still shaping, breweries’ strategies in a ‘new normal’ world.

In a second study, published in International Journal of Entrepreneurial Behavior & Research, it was revealed that independent craft brewers were able to weather the pandemic by taking risks, embracing creativity and being innovative.

Location matters

During the pandemic, urban breweries were found to be more effective in capturing support provided by the government and in adapting to changes required by lockdowns and restriction to movements, quickly moving packaging from casks and kegs to cans and bottles.

Overall, rural breweries felt the impact of crisis much more compared to breweries located in towns and cities, due to their demand being concentrated in reduced catchment areas and smaller networks supplying aid at a local level.

Research lead Professor Ignazio Cabras, from Northumbria University’s Newcastle Business School, said: “Being located in an urban or rural area made a difference for breweries during the height of the pandemic. Urban breweries reacted more promptly to the crisis and adapted to changes faster than rural breweries. While our research demonstrated the cruciality of financial support provided by the government to breweries during lockdowns and movement limitations, support by local people and other local businesses were equally significant factors in how craft brewers, in the absence of pubs being open to supply products to, survived the crisis.”

Professor of Rural Entrepreneurship at Northumbria Dr Gary Bosworth said: “What surprised us most was just how many strategies these brewers discovered to strengthen their resilience in the face of unprecedented challenges. We found that it wasn’t changing business strategy that put businesses on the right foot to move forward in the initial stages of the crisis, but individual attitudes to the pandemic — those who felt the crisis would pass were less likely to make investments during the period and slower to innovate.”

Raising the bar on innovation

The second study found that individual resilience must come ahead of evolving company strategy, in order for small businesses to face the challenges of unexpected events, such as the pandemic.

Dr Ekaterina Shakina, Assistant Professor at Newcastle Business School, said: “COVID-19 changed perspectives for craft breweries. Before the crisis, for instance, craft breweries tended to brew a much wider range of beers; however, now many refocused their efforts on core and flagship beers, cutting seasonal beers to achieve economies of scales. Compared to pre-COVID-19 times, much investment has been also redirected from capital infrastructure to marketing and social media, to maintain and keep up with the customers base acquired during the pandemic.”

The study highlighted examples of innovation in the craft brewing industry that could be adopted into the future, such as a craft brewing company that offered free same-day local delivery and collaborated with local beer venues for ‘tap takeovers’, giving something back to the places affected by COVID-19.

Ben Cleary, Founder of Full Circle Brew Co, based in Newcastle, said: “As a brand new startup we launched our first batch of beer right as the pandemic hit, which had its positives and negatives. We didn’t have well-established routes to market, so we were completely flexible and could adapt very quickly. We moved all of our production from keg to cans, set up a website within two weeks and launched FCBC Now — our free same-day local delivery service. Export became a lifeline to us — by October 2020, export made up 70% of our sales — until Brexit was implemented!

Image credit: Full Circle Brew Co, Newcastle upon Tyne.

“Community engagement was also a key driver for us. In the early days of the pandemic, with many people furloughed and unable to go anywhere, we put on online tasting sessions. As restrictions eased, we teamed up with some of the best North East craft beer bars, to launch our Full Circle North East Revival Tour, hosting tap takeover events at their venues to bolster sales and providing some free kegs to each of the bars to encourage people to support local, and enjoy great beer.

“Supporting communities both locally and further afield remains as important to us as we move to a post-COVID economy. We’ve run initiatives to fund brewing qualifications to support women looking to work in the sector, created beer packs with a portion of the profits going to Women’s Street Watch Newcastle and collaborated with Medical Aid Ukraine Northeast and Ukrainian brewery Varvar to help get essential first-aid equipment across to Ukraine. Using the brewery as a force for good has helped us to establish our business through a really difficult time.”

This kind of collaborative working, along with making changes to packaging, increasing digital presence, making efficiencies and cost savings, as well as the willingness of local people to buy from small businesses, all meant that craft brewers who employed these methods were more successful than those who took fewer risks and decided to ‘wait for the storm to pass’.

Researchers said that further studies are needed to understand the full extent of how impactful individual resilience is to achieve whole company resilience, but it was a clear factor in how craft breweries progressed through the pandemic.

Top image credit: iStock.com/Nastasic