A publication of the Centre for Advancing Journalism, University of Melbourne

Getting crafty about selling premium beers

Twenty-five to 29 years-old, professional, inner-city dweller, cashed-up, digital junkie: if this sounds like you, then craft beer may well be your beverage of choice.

Words by Amber Ziye Wang
 

The hip demographic known as the “Metrotech” community, with its taste for quality, is also behind the strong growth in the number of boutique beers in Australia.

According to market researcher IBISWorld, the craft beer industry was expected to have grown by 10 per cent over the five years to June 2015, bucking the downward trend for beer sales overall, with beer consumption at a 65-year low.

Now the ‘in’ drink is not only driving the birth of new craft breweries across the country, but digital marketplaces dedicated to the cause.

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Blair Dowding is one of the two faces behind Merchants of Brew, an online start-up that wants to cash in on the only beer segment that’s growing.

“Is it local? How is it made? These are the questions people are increasingly asking about their beer,” says Mr Dowding, a business student at RMIT University.

Along with best mate Thomas Polson, he wants to help fellow craft lovers access the country’s quality brew via direct delivery, cutting out the distribution middle men who, along with costly overheads, are squeezing small brewers out of the market. The pair plan to launch their website mid-year to put their ambition to the test. 

“A million dollars — that’s what it can cost you to start a brewery of your own,” says Mr Dowding, who worked with industry giant Carlton & United Breweries, producer of many of Australia’s favourites, including Victoria Bitter.

In the retail battleground, small brewers can get caught in the crossfire of cost-cutting giants such as Coles and Dan Murphy’s and find it difficult to gain a foothold, according to Mr Dowding. This means that craft brewers, who by industry definition are those that produce less than 40 million litres of beer a year, struggle to get by with a labour-intensive business model.

Matt Carroll, a brewer with James Squire, agrees that competing for shelf space and fairer distribution can be a losing game for small brewers.

“For start-ups, it costs money that you simply don’t have,” he adds.

However, the distinction between craft and non-craft beers is becoming increasingly blurred, and the image of struggling, cash-strapped brewers doesn’t fit all, according to Mr Carroll, citing his own employer — producer of Australia’s biggest selling craft beer.

“There is James Squire, which is backed by a multi-national corporation,” he continues. “It’s brewed en masse, and in terms of access — you can find it in supermarkets, BWS and so on — it’s a lot easier.”

But it’s the truly local and independent brewers that Blair Dowding and his business partner are targeting and which he believes would have a fairer chance taking their distribution online.

“In the case of our business, more money goes to brewers than if you buy from bottle shops,” he says. “This is because with direct packaging and distribution, we don’t pay for warehouse stock.”

So as to better recognise the “passion, creativity, artistry and authenticity” of the real Aussie beer craft, Mr Dowding says that his start-up was focusing more on what brewers needed to “make it sell”.

“People go for the coolness and the ‘hipster’ factor that’s associated with craft beer production. They are increasingly conscious of their choices and like to put a face on what they buy, whether it be beer, clothes, shoes . . . everything. It’s all about that personal touch.” —Thomas Polson, craft beer entrepreneur

“Facebook campaigns, guerrilla marketing, media — we’ll build by word-of-mouth,” he adds.

The trendy beverage is now increasingly associated with a loyal and distinctive following: it’s known as the ‘Metrotech’ or Leading Lifestyles community — a well-defined demographic that Mr Dowding says is essential to his business model.

“People of the highest value to us may look like this: aged 25-29, young, well-educated, single inner city professionals, typically renting apartments,” says Mr Dowding. “They are cultured, clued-in, cashed up, and well-connected online, making up the largest representation of the digital retail community.”

Mr Carroll agrees that online marketplaces need to succeed on getting seen by the right people, so well-targeted strategies are essential.

“I think you have got to know where and how you advertise, knowing where these people hang out online,” he says, nominating platforms on social media such as Facebook. “Campaigns, pop-ups on newsfeeds, based on the pages people have liked and stuff like that.”

The ease of supporting a good cause from the comfort of their living rooms may be appealing to some potential consumers, but in an equally competitive digital sphere, it takes more than interest for people to actually shell out money, according to the brewer.

“Again, it’s about getting seen by the ‘right people’. Not many would have a pocketful of cash for the extra cost of, say, delivery fees, but those that are well and truly into the [craft beer] scene — home brewers, for example — they will be more than happy to spend $80, $90 on a slab, or $20, $30 on a six-pack.”

What really distinguishes craft beer from mass production is more than the love and dedication of small brewers to the science of brewing, according to the Merchant of Brew partners.

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“People go for the coolness and the ‘hipster’ factor that’s associated with craft beer production,” says Mr Polson. “They are increasingly conscious of their choices and like to put a face on what they buy, whether it be beer, clothes, shoes . . . everything. It’s all about that personal touch.”

So far, the Merchants of Brew partners have been in various pitch competitions in a bid to be spotted by the right business hunters. Looking into the future, the two hope to create a network of quality brewers and consumers as they build solid connections with the industry.

“With the help of beer judges, we’re curating a list of local and independent brewers based on assessments of their beer,” says Mr Dowding. “Right now, we are also working out a tailored delivery solution with Australia Post, and a detailed business plan.”

The duo also foresees many challenges: operating a user-friendly website, building a technical team and so forth. But beyond that they see a future flavoured with opportunity.

“Looking at the growing industry, it’s exciting times for us,” said Mr Dowding.

About The Citizen

THE CITIZEN is a publication of the Centre for Advancing Journalism. It has several aims. Foremost, it is a teaching tool that showcases the work of the students in the University of Melbourne’s Master of Journalism and Master of International Journalism programs, giving them real-world experience in working for publication and to deadline. Find out more →

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