Autor: Lucy Corne
If there’s one thing you don’t need this year, it is another article telling you what an all-round disaster 2020 has been. With a few exceptions – mask makers, those with shares in Netflix or Zoom, marriage guidance councillors perhaps – the pandemic has spelled economic disaster. Undoubtedly one of the worst hit sectors was hospitality. Most countries installed some sort of restrictions when it came to drinking and dining out, whether that meant turning restaurants into takeaways, imposing strict social distancing measures that only allowed them to operate at half capacity, or in some extreme cases, a complete closure of all eateries.
Perhaps nowhere were these restrictions as harsh as in South Africa. Not only were restaurants closed – initially not even permitted to offer takeout as an option – but alcohol was banned for a total of 13 weeks. Early research spelt disaster for the local craft beer scene, with a survey by the Craft Brewers Association of South Africa (CBASA) suggesting that up to 90% of small breweries were in danger of closure. But I did say that you didn’t need to read another article talking about the doom and general depression 2020 has brought. And this is not that article. This is an article about rolling with the punches; about reinvention, innovation and – to utilise one of the most overused words of the year – about pivoting.
Benefits of bootlegging
The worrying results of that CBASA survey were announced five months ago but as yet the predictions have not come to pass. So far this year only ten breweries have closed, representing about 5% of the country’s total. And many of those were either already seeking a buyer or were likely to struggle through the year with or without a pandemic. So what happened?
Well for a start, the ban on alcohol sales turned out to be something of a double edged sword. When you’re suddenly told that your hitherto perfectly legitimate business is suddenly illegal, it doesn’t bode well for your long term success. Brewers naturally panicked and when asked if they saw their breweries and brands surviving, 90% said no. But then the thing happened that always happens when alcohol is prohibited, and many brewers – as well as restaurants and liquor stores – did what was necessary to keep the lights on.
“Bootlegging definitely saw us through the difficult winter months,” says one brewery owner who asked to remain anonymous. “Actually, we had our best July and August on record, not despite alcohol sales being banned but because of it.” Once restaurants, liquor stores and bars had offloaded their supply of mainstream, commercial lagers, an increasingly thirsty public turned to their local craft brewers in search of refreshment. “We had people coming for beer who had never been craft beer customers before. They couldn’t get their usual SAB lagers so they started seeking out their local microbrewery. Perhaps one good thing that has come out of this whole mess is that the craft beer industry has gained a few new customers.”
Not only did drinkers who had previously been loyal to South African Breweries start to dabble in craft beer, they also realised that craft beer perhaps wasn’t as expensive as they had previously thought. Juandre Jeptha is the owner of one of the most recently launched brands in South Africa, Northern Bru. “We have a premium product that sells at a premium price,” he says. “The government’s prohibition of liquor sales during hard lockdown saw people willing to pay high prices for bootlegged liquor. In turn, this created a massive surge in demand. When we launched our first batch of Kuila Lager in September this year, we sold out in a week.” The new brand’s second batch sold out within 24 hours, with customers snapping up every last bottle via online pre-orders before the beer had finished fermenting.
The pandemic pivot
Online sales have been key to the industry’s survival this year. Not all brewers were comfortable circumventing the temporary lockdown laws, and rather than bootlegging, they chose to stockpile, taking advance orders for beer that would be delivered the second it became legal to do so. “Discounted advance sales definitely helped us to keep our focus and to keep our hands in the game,” says Michael Agar of Agar’s Brewery in Johannesburg.
Before this year, online beer sales had only been offered by a few breweries and one or two dedicated online stores. Now, you would struggle to find a South African brewery that doesn’t offer online sales and home deliveries. And it’s not the only way that brewers have adapted to the difficult circumstances they have been faced with. Many used the downtime during the early days of lockdown to step back and reassess their business strategy. Some breweries that had previously focused entirely on their taprooms began to package their beers for off-sales for the first time. Some streamlined their beer range, cutting out the less popular brands while others kept their brands in the social media limelight by brewing only once-off, limited edition beers.
It has been a slow year when it comes to new breweries opening, although there have been a few new entrants including some contract brands. It was of course a difficult time to launch anything new, particularly in hospitality, but it’s heartening to see these new brands emerge. We have also seen a handful of existing breweries open new taprooms. In fact, having your own taproom has become as essential as having an online platform for beer sales.
Vast numbers of restaurants and bars have closed across South Africa this year and breweries have lost valuable outlets for their beer. Ruan Fouchee of Legends Brewery in Pretoria says he has lost about a quarter of his on consumption outlets this year, although some breweries put that figure as high as 70%. One of the changes Ruan has made is to forge dedicated partnerships with certain restaurants to ensure that their brand is the only one available. “They’re kind of pseudo taprooms,” he says.
Ruan says that overall the year hasn’t been as bad as he had predicted, with fourth quarter sales showing serious promise thanks to a strong marketing drive and a change in sales tactics. He’s not the only one that has seen some positives come out of this long and challenging year. Many people have been forced to fine tune their marketing plans and to rethink their sales strategies and while no-one would have chosen to be forced to reassess their business model in such extreme circumstances, many admit that in the long run their businesses will probably be more productive and more profitable because of it.
Keeping it local
One of the main shifts has been to pull back on distribution and to get back to the roots of the microbrewing scene – that is, to focus on the immediate area around the brewery rather than attempting to sell beers nationwide. “We’ve pulled a lot of our sales outside of the province and scaled back a lot,” say Niall Cook of Richmond Hill Brewing Company in Port Elizabeth. “We are now focusing locally, pushing online sales and trying to make sure we are reaching a larger audience on social media. This way we can ensure that we get beer directly to them at a more affordable price but that is also offering better margins to us.”
Niall has spent much of the year adapting and pivoting, from joining the Brewers Soup Collective to launching homemade cheese to sell alongside his beer, and while it’s been a long, hard slog, he admits that this year hasn’t been all bad. “I don’t think much of this would have happened if it wasn’t for lockdown and being able to sit at home and brainstorm things to keep afloat. I wouldn’t be making cheese, I wouldn’t be making soup, I probably wouldn’t have expanded to include an events section, I wouldn’t be doing a bottle store. I’d just be plodding along in the brewery, trying to push my product further afield. It’s actually a model that doesn’t really make much sense in the craft scene. I don’t want to compete against all these breweries in Cape Town and Johannesburg. I’d rather keep my footprint smaller and having that extra time this year has made me refocus.”
Eben Uys, founder of Mad Giant Brewery in Johannesburg has also changed his business strategy – something which he feels will have a long term benefit for his company. “My focus is now completely on Jo’burg,” he says, going on to explain Mad Giant’s Extra Fresh initiative, unveiled earlier this year. The first of its kind in South Africa, Extra Fresh works much like a traditional milkman would operate – customers in a select area surrounding the brewery can order beers to be delivered. Reusable bottles are filled to order and the empties are later collected by brewery staff. It ticks all of the boxes of how breweries are set to operate in 2020 – it focuses on a local audience, is environmentally friendly and it offers consumers fresh beer at an affordable price.
Of course, South African microbreweries are not out of the woods. A new variant of the virus has recently been recorded here, Covid cases are rising rapidly and restrictions are slowly making a comeback. It is strongly hoped that the government won’t announce a return to a full, hard lockdown, but the possibility lingers in the back of everyone’s mind. However, if that should happen, I think we’ll see a new wave of initiatives and yet more pivoting. In South Africa there is a saying, ’n boer maak ‘n plan – a farmer makes a plan. And if there’s one thing that 2020 has proved, it’s that a brewer is also pretty adept at making one as well.
Pictures: Lucy Corne, Richmond Hill Brewing Co.