Promoting the “Irishness” of craft beer

Bord Bia, the Irish Food Board, has seriously stepped up its support for Irish craft beer. In the not so distant past, the agency was perceived to be more interested in promoting food rather than drink, save for a few token appearances of the likes of Jameson or Baileys. Of course this ignores the support for the occasional brewer like Carlow Brewing or Galway Hooker accessing export market data, making contacts or attending international events over the years. There has also been research reports and seminars conducted in the past. However, the inclusion of brewers in the Origin Green initiative and the focus in the Food Wise 2025 strategy underpin the renewed emphasis on Ireland’s drinks industry. Let’s not forget that newer breweries are now looking to really develop their export markets as part of their overall business strategy.

I have written on Bord Bia and the strategy of the government on various occasions on the blog. It is interesting to watch how craft beer is being promoted alongside our other food and drink offerings. There’s a trend to officially connect craft beer to other products. We have been doing so locally and independently for years but it’s great to see government channels exploiting the “Irishness” of craft beer. They’ve realises that these beers are interesting, new and have stories of their own.

Just a week ago Carlow Brewing, Boyne Brewing, Clever Man, Galway Hooker, The White Hag Brewery and Wicklow Wolf joined other drinks producers at the inaugural “Spirit of Sharing” event in London. The event was hosted in the Irish Embassy, which is a stones-throw from Buckingham Palace. It’s an impressive venue and no doubt would’ve helped attract potential customers the event. It was a somewhat regal trade event. The setting has been used effectively in the past to build export links for other industries so it’s positive that our alcoholic beverage producers can tap the same support. Let’s hope it can be replicated in other countries.

With St. Patrick’s Day upon us, initiatives ranging from greening monuments around the world to the traditional presentation of the bowl of Shamrock to the President of the USA show that we have unprecedented access for a country of our size in a ‘one week only’ sort of way. Bord Bia will of course use official events this week to promote food and drink. However, it went one step further this year by securing agreement to present both President Obama and Vice President Biden hampers fully-loaded with Irish produce. Taking pride of place in each hamper, was a bottle of O’Hara’s barrel-aged Leann Folláin. I’m sure POTUS, as a homebrewer, will appreciate this excellent beer. I have no doubt the VEEP will do so likewise and hopefully he’ll sip whilst reading one of his many collections of Yeats’ work.

Let’s see this trend continue. Enterprise Ireland is also stepping up to the mark by supporting a few craft brewers and having a new team looking at promoting food and drink exports. Even established investment funds are look at beer and whiskey as growth markets. Things are certainly on the up and I’ll drink to that.

 

Turning us into a nation of beer sellers

The Government is stepping up its support for craft beer these days. On the back of the 50% increase in the excise rebate ceiling for brewers in Budget 2015, state agencies are looking to craft beer and cider to join the “usuals” food and whiskey to help sell Ireland. Earlier this year we had six breweries participating in Bord Bia’s Marketplace International 2015. Then in July, Tourism Ireland supported the participation of nine breweries and one cider maker in Toronto’s Festival of Beer. This week saw another high profile event where craft beer was showcased.

Blending beer, cider, music & food to sell Ireland
Blending beer, cider, music & food to sell Ireland

Sixteen Irish food producers were given the opportunity by Bord Bia to exhibit at the Speciality & Fine Food Fair in London. The event takes place in Olympia, well known in beer circles as the home of the Great British Beer Festival. In the weeks leading up to the fair, Ireland’s food marketing agency put in plenty of legwork drumming up interest amongst leading food and drink buyers from the speciality food industry.

Galway Hooker was the sole brewery representing Ireland and was given prominent space amongst the Irish exhibitors. From the looks of it there doesn’t seem to have been a lot beer at the fair – Crazy Mountain Brewery from Colorado; Delicias de Burgos and Pasion de Duero, S.L. from Spain; and a Scottish honey beer from Plan Bee. The lack of beer could be a sign that the work of winning over space on dining tables from wine is painstakingly slow. Regardless, the fair was a real opportunity for the Galway lads. Their beers are great for pairing with food. They’re not overpowering and are well-balanced. You only have to look at their eponymous pale ale and how versatile it can be thanks to its distinctive malt base. I can only hope that for Aidan and Ronan, the brewery’s first appearance at the fair proves to be a success in the long-term.

Can more be expected? We can only hope so. Food Wise 2025, the new national food strategy, has identified the need to develop a specific strategy to help craft breweries to go and views exports as key. Marketing support and attendance at international food events is a start but more can be done. We need to examine new ways of helping breweries to get products to foreign markets. Could brewers pool together to share space in containers? Are KeyKegs the best way of exporting draught or are there other ways that could be considered? Should canning be the choice for exporting packaged beers because they save on weight, more reliable for shipping and can more compact (i.e. more beer per pallet)? Given the desire of our enterprise agencies to prioritise exporting companies, they should examine areas like these and more in order to help Irish craft breweries grow.

Perfect timing for crafting an export strategy for beer

Back in January, I wrote about the effects the European Central Bank’s quantitative easing (QE) programme will have on beer. The Euro exchange rate has, for want of a better word, tanked. We’re on course for parity against the US dollar and sterling is strong and only getting stronger. This could bad news for imports of US and UK craft beer into the Eurozone but great news for Irish breweries exporting or looking to export.

Exports of Irish beers could be boosted further by positive indicators within the Eurozone. Consumer sentiment for March 2015 is at its highest levels since 2007. Confidence has been boosted by the QE programme combined with falling unemployment and low oil prices. What does this mean? Quite simply private consumption is expected to rise by 2% this year and 1.5% in 2016 (source: Capital Economics). People will socialise with confidence and in economic terms this could involve boosts to nondurable goods (e.g. off licences) and services (e.g. bars, restaurants etc). This would underpin economic recovery within the Eurozone but sadly it’s one that will not be felt equally across all countries/regions.

Global finance and trade

So Irish breweries can benefit from the weak Euro currency to export to the US, UK and further afield and they can take advantage of the recovering consumer demand in the Eurozone. Irish exports would not only match quality but they could also be competitive alongside US and UK products exported to these markets. The costs associated with small batch exports may be offset by the strong dollar and sterling.

It is timely then that two significant events took place last week that hopefully will result in Irish breweries delivering on their export potential. Bord Bia’s Marketplace International 2015 saw 150+ Irish food and drink companies having access to 400+ buyers from over 25 countries. They could showcase their offerings in a sort of speed-dating format (i.e. a series of 20 minute one-on-one meetings). It was great to see Brú Brewery, Jack Cody’s, Metalman, Rye River and Trouble Brewing involved. Franciscan Well was also there as Bord Bia promotes all food and beverage products produced in Ireland. By and large each of the breweries have limited exports to date (e.g. average 5% of total sales) with the exception of Rye River reporting 40% export sales.

The other event was IFE 2015, a biannual food and drink event held in London. It brings together approximately 27,000 buyers and suppliers of food & drink products and takes over the entire Excel Arena in London. I worked at this event in 2005 and the scale is simply staggering. Whilst there was no Irish brewery exhibiting this year, the event is extremely useful for networking in the trade and meeting potential buyers and distributors. It was great to see the likes of Cotton Ball in Cork making it over to the expo.

Breweries at Bord Bia's Marketplace 2015
Breweries at Bord Bia’s Marketplace 2015

Hopefully events such as these can help these breweries and the others in Ireland take advantage of the extremely favourable export conditions. Irish breweries should be confident that they can follow in the footsteps of Carlow, the Porterhouse, Eight Degrees, Rye River and White Hag in having a significant export strategy. They should also aim to build on one-off or limited exports if it’s in keeping with their own business strategies. Isn’t it great to see the likes of Kelly’s Mountain on sale in Russia?

Scale’s obviously going to be an issue but improved market access can help attract additional finance. They may need ongoing help from Government agencies and the sector could benefit from more hands-on support from Enterprise Ireland. If negotiations on the Trans-Atlantic Trade and Investment Partnership (TTIP) are concluded, Irish SMEs are expected to benefit most from the new EU-US trade deal. This is some time off however and while it would make it easier to do general business in the US, the peculiar post-prohibition regulatory regime will remain in place.

This is not to forget that the market is still growing at home and the weak Euro may have a positive knock-on effect on consumer demand for Irish produced beers over UK and US imports. So far their prices have been steady but for how long can Irish distributors keep them steady? It will be interesting to watch effect, if any, does the exchange rates have on Wetherspoons’ prices as well.

What the European Central Bank has done to beer

In order to boost the Eurozone economy, the European Central Bank finally announced its plan for quantitative easing (QE), much to the chagrin of the Germans. Between now and September 2016, the ECB is to print some €1.14 trillion in new money to buy government bonds from banks and other investors. So what has all of this to got to do with beer?

Well quite a lot actually, the value of the Euro against other currencies has taken a significant dive over recent weeks and is expected to remain weak during the course of the QE initiative. This will make exports from Ireland cheaper. There’s a real advantage for Irish breweries (and indeed those from other Eurozone countries) to export to the likes of the UK and the US at seriously competitive prices. The likes of O’Hara’s, the Porterhouse and recent exporters to the US like White Hag and Rye River could really extend their reach in the US. But our near neighbours in Britain will also be a market that Irish breweries can be competitive in terms of price to match the flavour. We just have to ensure that craft breweries get the support they need through access to credit and support from enterprise agencies to take advantage of this.

German Chancellor Angela Merkel not happy with the ECB and taking the glass-half-full approach Photo: REUTERS/Fabrizio Bensch
German Chancellor Angela Merkel not happy with the ECB and taking the glass-half-full approach Photo: REUTERS/Fabrizio Bensch

It’s not all sunshine and roses though. Ignore that fact that Britain, the US and non-Eurozone countries will be now more expensive for beer trips. Imports from these countries will also become pricier. This is also potentially bad news for those that like beers from Northern Ireland. It’ll be hard for the brewers to absorb the exchange rate differences so they’re not passed on to customers. Will they forget exporting to the rest of the island in favour of focusing on Ulster and Britain?

Separate to the import and export of beer, are there any other things we should be aware of that could affect the price of beer and the craft brewing industry generally? Well the cost of imported raw materials will increase. Ireland is a small market and generally sources a lot of raw materials through the larger suppliers in the UK and elsewhere. However, this could be a further fillip to the indigenous grain industry. On the other hand, fans of West Coast or other US hops could be in for a shock as some are expecting the dollar to reach parity with the Euro in a few short months. Will brewers absorb these increases into existing prices or will we even see changes to offerings in the form of producing more European-style offerings using German hops for instance?

Only time will tell what the effects of Mario Draghi’s efforts will be. One thing for sure is that it will give a boost to Ireland and other Eurozone economies. This will boost consumer demand at home and no doubt help the further growth of the craft beer sector.