From a distance it seems that craft beer is booming in South Africa. There are now more than 150 breweries – plus another 50 contract brands – across the country, compared to a total of around 75 just five years ago. But while the number of labels is steadily growing, the craft beer industry still accounts for only around 1% of the country’s total beer market. So what is stopping small South African brewers from selling more beer?
Most breweries produce less than 1000 litres per batch, but even with such modest volumes a lot of breweries are running at capacities of around 50%. Brewery numbers might be growing but it seems that outlets willing to sell craft beers are not growing at the same pace, leaving many brewers struggling to sell their beers.
“I think one of the biggest issues for smaller breweries is the legacy left by SAB that the outlets do not own their own taps,” says Stefan Wiswedel, owner of Little Wolf. “This means that what is served is only partly decided by the venue and those players without the resources to install and maintain a fleet of taps are left out of the game.” It can cost up to R20,000 to install a tap in a bar – and of course there is not much point owning just one tap. A small and slowly increasing number of speciality craft beer venues do own their own taps, but there is great competition to be stocked in such places.
An equally important problem is distribution. South Africa has few distributors and many brewers are unhappy with the service and terms offered, but tend to lack the resources to operate their own distribution. Last month one of the largest distributors of craft beer, The Tap Room, sold its 700 installed taps to Signal Hill Products, a company which owns several craft beer brands including one of the country’s largest microbreweries, Devil’s Peak. The outcry was fast and loud, with many small brewers whose beers were listed with The Tap Room expressing concern that they would lose outlets now that a larger brewer owned the taps their beers were flowing through.
Greg Casey, owner of Afro Caribbean Brewing Company and Banana Jam Café, a popular craft beer hangout, believes that people need to rethink their model in order to be successful in the local beer industry. “There is money in beer, but not in the current model most people are operating,” he says, referring to those that are brewing on a fairly small scale and bottling their beers for sale in liquor stores. “If you want to make money, you need to open a brewpub.” The brewpub model can be tricky in South Africa, since micro-manufacturing licences are usually only issued to premises in industrial areas. Some breweries are thriving in industrial zones, particularly in gentrified suburbs in Cape Town, where old factories are being converted into hip restaurants, designer clothing stores, loft apartments and indeed, microbreweries. In other cities, industrial parks sometimes sit far from suburban areas, in regions that aren’t exactly the sort of place you want to take your family for a Sunday afternoon outing.
Route to market is not the only challenge facing South African brewers. With no tax breaks for smaller brewers as are found in some other countries, excise can be crippling. The country’s economy is hanging in the balance, with the weak rand making it very difficult for a brewer to import ingredients and still sell the end product at a cost that a local drinker can afford. And the imported ingredients are not always in their prime, having sometimes travelled from the US, via Europe before eventually reaching South Africa.
Building a beer culture
Perhaps the biggest problem of all though, is the market for craft beer, which Frontier Beer Company’s owner Brendan Hart describes as “small and still unsophisticated, although it his gradually growing and improving.” South Africa is a developing country and a considerable portion of the population simply cannot afford to spend their hard earned rands on a luxury product such as craft beer. Those involved in the industry are working together to try and build a beer culture in a country where beer has always been seen as something you swig without thinking, a beverage that is thought of as inferior to wine. Convincing restaurants to value beer alongside wine on their menus is a challenge; convincing drinkers to give up the familiar lagers that they have been loyal to for their entire adult lives is often even tougher.
Despite several closures this year, the number of breweries and brands in South Africa continues to grow. Brewery owners need to work together to ensure that the potential audience grows at a similar pace and perhaps the best way to do that is to get back to the notion that craft beer is a local product. Many brewers are trying to send their beers across the district or province or even across the country rather than focusing on the immediate area. Even if a brewpub isn’t feasible, a taproom in a more consumer-friendly area nearby is essential. Local feasibility studies have shown that success is to be found in destination breweries rather than distribution breweries. South Africa has a strong tourism industry servicing both domestic and international travellers. People come here for the history, the wildlife, the food and the wine – there’s no real reason they can’t come for the beer as well.