04 Jun, 2019

Craft beer - fad or the future? Making craft beers a profitable part of your establishment

Craig Hese has been with H&L for over 6 years working with local hospitality venues in Adelaide. In this Q&A, he talks about the rise of the craft beer market and how venues can use this trend to increase revenue overall.

How have pubs traditionally managed their beer taps and what’s changing?

“Most pubs have between six to ten main beers on tap representing the bigger brands in Australia, which are still the most popular. Beer drinking has been a tradition in Australia for a long time, people never talked about the flavour so much as they did about what brand they were drinking, and preferences were passed down from generation to generation.

However, over the last ten years or so, there has been a rise of craft beers in the marketplace and people are talking more about the flavour and the story behind the brewery.

Even though beer in general is being consumed less, with more people opting for wine, cider and spirits, the craft beer market continues to rise.

For pubs, it is always a balance between profitability and revenue and keeping customers happy. On average there is one micro-brewery opening every week across Australia and there are now around 600 micro-breweries in Australia which make up about 5% of the total beer market. Even though 5% may not sound like a lot, you cannot ignore the rising trend in craft beers.”

What does the marketplace want?

“Australia’s beer drinkers are well aware of their choices in beer and the majority want to support the craft beer market and the majority of craft beer drinkers want to try new beers. Almost 50% of beers purchased are for brands that people have not tried before.

Even though people are paying up to $6 per pint more for a craft beer, they are willing to spend it because there is strong support for independent breweries who are making an art out of their beer-making – that’s how the craft beer market started. Some of these smaller craft beer breweries end up getting bought out by the bigger ones, but they are still craft beers. However, right on their tail are new micro-breweries launching a new flavour.

In the recent 2018 Australian Craft Beer Survey, a venue that does not have a good selection of craft beer is not popular among 85% of craft beer drinkers in Australia and about 32% believe that beer pairs better with food than wine. And who says you can’t offer a pairing service for food and beer? We’ve been doing it with wine for aeons.

For people who like craft beers, it is more about the experience – the story behind the brewery, the technique, where it’s made and the flavour.”

How do you recommend pubs bring craft beers into their operational and keep them profitable?

  • Know your customers and marketplace – how much do they like artisan/craft beers? Are they willing to pay more? Do they like trying new flavours? In most cases, converting a staunch old beer drinker isn’t the play. More catering to those already keen on Craft beers.
  • If you’re new to craft beers, start with the 80/20 rule – keep 80% of the well known brands as your main beers and rotate 20% of your craft beers.
  • If you have 10 beer taps and 2 of these are dedicated to craft beers, change them over every month or so and see what your customers respond to.
  • Craft beers are an excellent way to get customers into your venue – invite the brewery to do a tasting and advertise the event on social media, this demonstrates innovation.
  • Promote the fact that you support your local market and lean toward local craft beer makers – it shows your customers you support your local community.

With the trends in craft beer, by having a good selection on tap your customers are more likely to come in and try other drinks, bring their friends and have a meal. Craft beers can be a very effective draw card to bring more customers into your venue and increase your revenue overall.”

Are craft beers here to stay? How will this change the buying decisions/patterns and profitability of pub managers?

“I believe they are here to stay. The craft beer market is not a novelty or a fad. It’s like wine, it’s a craft that is unique to the maker. Now that we have all developed a taste for it, we want more.

The brewery will always be there (in most cases) but the beer types will change just like wines do, so there will always be new flavours and brands to stay up to date with.”

Use H&L’s inventory management to stay across your craft beers sales and profits

Using H&L’s inventory management system, you will be able to track how many craft beers you are selling, what time of the day and week you are selling them, which staff are selling the most. Importantly you’ll be able to track profits. With our membership software, you’ll also be able to see which member profiles are buying craft beers and target market to them accordingly.

This information is at your fingertips so you can make the right decisions about what craft beers to keep on tap and which ones are trending downwards. The craft beer market changes from month to month, regular tap changes keeps the craft beer lover coming back. The right information means you can keep your customers happy and your profits healthy.

If you’re in Adelaide, you can call Craig directly on 0420348947, or if you’re in another state of Australia, please call our office on 1800 778 340.