The Irish Craft Beer Bubble

 
 

Ciaran Busby examines the budding craft alcohol industry and asks whether it’s facing into turbulent times.


WALK into any bar or off–license today, and you will find yourself being treated to a plethora of gins, craft beers, and bespoke cocktails. With over 30 craft distilleries and 62 production micro-breweries operating in Ireland with numerous brands each, the question must be asked, will the craft industry’s bubble burst?

A representative of Foley’s Bar on Merrion Row speaking to the Observer explained that: “the growth we noticed in gin, craft beer, and cocktail sales from 2015-2016 was remarkable. However, in recent months, including the Christmas period, cocktails and craft beers have seen a decline in sales, the same can be said for premium sales but to a lesser extent.”

As of 2015, gin was worth €75 million to the Irish drinks industry. Brands such as Hendrick’s, Brockmans, and the Irish distilled Dingle Gil, lead the premium market. This left less room for craft distilleries to gain appropriate market share. In contrast, Irish brewed craft beer was worth around €40 million in 2015 and has a projected revenue of €59 million in 2016, with similar market share concerns.

“As of November last year, there were 16 whiskey distilleries in Ireland, and a further 13 under construction.”

Between the years of 2012 to 2015, the craft beer industry boomed in Ireland. Consumers drank 197,000 hectolitres of homebrewed stouts, ales and ciders in 2016. Beers with ever stronger alcohol content, distinct flavours, and aromas pierced the general population’s taste buds as an alternative to larger companies’ “average” beers. This includes beers from organisations such as Diageo, C&C, and Heineken. These companies, however, have jumped in with new brands to combat the competition such as Guinness’s Hop House 13 lager as well as their range of craft porters.

As of November last year, there were 16 whiskey distilleries in Ireland, and a further 13 under construction. Many of these distilleries are currently operational but have not yet aged their whiskeys. As said by John Teeling, the owner of the Cooley Distillery in Dundalk, there are plenty of downsides to opening distilleries in Ireland.

“This time leaves it considerably difficult for start-up businesses to break-even.”

For an Irish whiskey to be considered exactly that, it must be contained and aged in barrels for a minimum of three years. This time leaves it considerably difficult for start-up businesses to break-even and even longer to gain a share in the market, when they face increased competition in the whiskey market annually.

On top of all this, a resurgence of cocktails has exploded onto the metropolitan scene. Many bars and restaurants offer unique signature cocktails as well as the standard classics. What started out as bars trying to differentiate themselves from their competition with these drinks, has now evolved into having a cocktail menu as a necessity to be a successful business.

Many people have already got a poison of their choice, so once they’ve sampled all of these drinks, they will most likely return to the standard pint or glass of wine — a trend also noted by Foley’s Bar.

“Back in 1996, North American craft breweries, after seeing growth rates of anywhere from 25% to 75% per annum, saw a rapid decline in both sales and output for six years.”

To consider this phenomenon, examining a comparable instance can provide some insight.

Back in 1996, North American craft breweries, after seeing growth rates of anywhere from 25% to 75% per annum, saw a rapid decline in both sales and output for six years. A slowdown such as this has been attributed to copious young brewers trying to gain a quick buck off the backs of established micro-breweries.

Currently in Ireland, we’re witnessing similar growth rates and trends in the drinking patterns of the population, alongside new entrants flooding the market with heady beers, Irish whiskeys and juniper liquids of various botanicals.

Therefore with an exponentially growing output of beer, and a lessening gap in the market for new entrants, will we observe a crash to these growth figures like those witnessed by many brewers in the U.S. during the mid-1990s? With a current market and development so similar to that which the U.S. has already seen, it’s likely more a case of predicting when this crash will happen.

 

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