Consciously or not, new brewers expect that once the beer is finally kegged, bottled, canned and ready to ship, you open the roller door of your brewery and there’ll be a line of bar managers waiting to put your amazing brew on their taps and shelves. The calculation being: I make craft beer, craft beer is currently in demand, so my craft beer will sell. I know I made that assumption to some extent. I know I was busy designing my kit based on output, made projections based on how much beer I can possibly produce with the equipment. That’s by far the biggest mistake new brewers make – thinking that making the beer and selling beer are more or less the same.
I had good starting conditions: When I released my first batch of beer I had been a part of the Wellington beer community for more than two years. I knew most of the bar managers and buyers around town, they knew me and my plans. I had worked very hard for more than a year, sacrificed a lot of time, nerves and cash. I had received feedback on my beers. I thought I was as well prepared as one can be for a one-person company, and now I deserved to usher in some shape of pay-out for all that work. Wrong.
As the new kid on the block you’ll probably land some taps and shelves here and there. The core of the craft beer world is always keen to try something new. Don’t celebrate yet – because without the re-orders your brewery will not make it that far.
Furthermore, the current situation in New Zealand is that the margin in all beer related industries is slim. Because a pint is not cheap, you may think someone’s raking in the cash. But neither the bar, nor the distributor, nor the brewer make a great margin. There’s not a lot of taps, there’s a few more shelves, and there’s plenty of good beer options to you can make it, fill them. Craft beer bars live off variety, so even if you manage to establish relationships with bars around you, and even if your quality is a really high (that’s another story, for another day), they won’t have your beer on all the time.
But hey, there’s plenty of bars across New Zealand and more scenes are growing every day. True, but how are you getting your kegs there? And how do you return your empties? The kegs that you pay lease for every month, or own, and keep paying lease on or can’t re-fill before you have them back, cleaned and sanitised. You need to ship your kegs (cost), keep track of where all kegs go, check in with the bar managers on when kegs are empty (that might take a while, bars don’t usually put kegs straight on), organise to get them back (cost). Did you say that you just really love to brew…?
This is where distribution comes in – another field with scarily low margins. For years, it seems that the distributors who specialised in craft beer mainly make their money in importing beer, not with the local brewers. To find a distributor you need to give a discount on your beers, which will likely dwindle your small margin into oblivion.
The long and the short of it is, in the last year it certainly feels that New Zealand’s craft beer market is reaching a level of the dreaded ‘saturation’ that makes it difficult for existing breweries to get by – and more or less impossible for new breweries to establish remarkable brands that can safely make it through the next years.
That’s unless of course you have a few hundreds of thousands to invest in equipment, packaging, sales, staff, marketing and brand. And not only for your starting phase, but money to keep your brewery going on low sales for the first year or two.
Yes, more Kiwis are drinking craft beers – but the growth in the number of punters has not been in balance with the number of new brewers trying to get into the market. So, getting your product out there and getting paid is a serious piece of work.
NEXT ISSUE: The series concludes with some words of advice.