The craft brewery industry in both the US and UK has seen unprecedented levels of growth over the past seven years. In the UK, The Society of Independent Brewers’ 2016 report details some amazing growth statistics:
- Four out of five respondents expect their turnover to increase in 2016
- One in three forecast over 25% growth in turnover in 2015
- 37% of respondents turned over £50k–£250k in 2015.
In the US, the Brewers Association reports that small and independent craft brewers now represent 12% of the overall beer market. Last year, they produced 24.5 million barrels (a 13% rise in volume) and saw a 16% increase in retail dollar value to $22.3 billion.
Unsurprisingly, this kind of performance has piqued the interest of the major global breweries. The world’s biggest, Anheuser-Busch InBev, was one of the first to step into the market with the acquisition of the Goose Island Brewery in 2011; subsequently followed by another seven major acquisitions:
- Goose Island - March 2011
- Blue Point Brewing - Feb 2014
- 10 Barrel Brewing - Nov 2014
- Elysian Brewing - Jan 2015
- Golden Road Brewing - Sept 2015
- Breckenridge Brewing - Dec 2015
- Four Peaks Brewing - Dec 2015
- Devil’s Backbone Brewing - April 2016
But the global conglomerates aren’t the only ones to have spotted the market’s potential; there are also opportunists out there looking to bypass the industry’s regulatory framework, and in some instances cross over to illegal alcohol production.
Flashbacks to the bootleg era of Prohibition conjures up many images of the time…
But bootlegging remains a very serious problem – be that illicit production, counterfeiting or the abuse of cross-border shopping rules. According to a 2012 report by HM Revenue & Customs, alcohol fraud results in losses of up to £1.2bn a year to the UK taxpayer.
Beer fraud is currently the most significant of all the alcohol frauds affecting the UK, with recent estimates indicating between 5% and 14% of total beer consumption is illicit. However, the most commonly sold counterfeit alcohol in the UK is vodka. This is an issue of major concern because some of this illegally made vodka has been found to contain high levels of methanol, which is used to make anti-freeze and some fuels. Drinking high doses of methanol can cause dizziness, breathing difficulties, blindness and even death. In September 2012 in the Czech Republic, there were 38 deaths caused from methanol poisoning, with many more being hospitalized.
Although the threat to craft brewers remains contained to an extent due to the production volumes involved, some of the larger breweries have been exposed to campaigns against them. In 2013, Heineken was subjected to organized counterfeit beer production, with the suspects mixing original Heineken branded beers with other low-cost beer and sold to the restaurant market.
In summary, counterfeiting remains a significant cause of concern for breweries and brand holders alike. Happy National Beer Lovers’ Day everyone. Bottoms up!