The past season has been difficult and challenging for the craft beer industry due to, among other things, the uncertain economic situation, inflation and price increases, and kraft breweries may see sales declines in 2023, representatives of Mazurska Manufaktura and its affiliate AleBrowar estimate. In their opinion, in the future, small breweries need to bet, among other things, on the development of distribution, creativity and diversification of production, as well as the reduction of production costs.
“There are voices coming from almost every side that the last season was difficult and challenging for the entire beer industry. We continue to face difficulties due to the uncertain economic situation, including inflation and price increases. We are also seeing a number of distribution points escaping us along the way in the form of, for example, local small shops going out of business. Certainly, sales growth is helped by the weather, which, unfortunately, we have no control over. What we do have influence over is other factors. We can fight for customers by diversifying our product portfolio, by being present at mass summer events, such as festivals. In addition, at Mazurska Manufaktura we are closing the season with a large, nationwide competition for our consumers,” said Mazurska Manufaktura, General Director, Jakub Gromek.
“In my opinion, all breweries will score a drop in sales due to the decline in consumption. As you know, beer is not a product of the basic basket. On a daily basis, we are still faced with the rising cost of living, high credit instalments or energy costs, as well as the constant increase in the price of these basic goods. We think twice before buying beer, especially craft beer, which is more expensive. However, I see light at the tunnel – I think the time for increases will come in 2024-2025,” AleBrowar co-founder Arkadiusz Wenta added.
Asked about the dynamics of change in craft beer market value (revenue) in the craft beer industry in 2023 and volume performance, Gromek replied: “I think in both cases we are facing, unfortunately, a market decline. We see a successive decline in beer consumption, including craft beer, which is, however, priced on a different shelf. In my opinion, the overall growth of the market value will also not be significantly affected by the increase in beer prices introduced by most entities,” the General Director of Mazurska Manufaktura assessed.
He also said that Mazurian Manufaktura has been recording year-on-year sales increases for the moment, but these are due, among other things, to intensive work on building distribution, which the company can owe to the market consolidation project. “We try to have an impact on each market segment, so we focus on diversified distribution. By this I mean both the traditional market – wholesalers, national and local chains or catering. This season, we also made our debut in the event industry,” he added.
In turn, Wenta pointed out that after eight months, AleBrowar’s overall sales balance is down by around 15-20% against 2022.
“For the time being, we are recording worse sales results than in the corresponding period of 2022, but we are trying to look at the positives. Amongst them, we can mention the 15% increase in sales we generated in traditional channels (wholesalers, HoReCa). Unfortunately, at the same time we scored declines in sales through retail chains, where it is becoming increasingly difficult to enter with a kraft offer. […] Our main channels remain our domestic wholesalers, HoReCa and our own company-owned premises,” said Wenta.
“On a larger scale, the season may have been difficult for many operators. The day-to-day running of the business is certainly not helped by increases in the price of raw materials and ingredients for production, as well as the increase in excise duties. This effectively hampers the growth of many breweries, including the larger ones. The beer industry is certainly helped by the switch to low and non-alcoholic beers, as well as the diversification of the portfolio with soft drinks,” he added.
Gromek also assessed that when it comes to the future of the craft beer industry in a few years’ time, those who are able to develop distribution despite the falling market will win, although this is a challenge in the current environment.
“Especially in the context of cooperation with retail chains. From my perspective, it makes sense to bet on strong distribution in the local market. This is the place where it is a little easier to compete with the big concerns. This works especially well in tourist areas such as ours. In such conditions, it is worth betting on building loyalty, community around the brand, both among the local community and the seasonal customer,” said the General Manager of Mazurska Manufaktura.
“The future of craft breweries in the near future will depend on several factors, such as flexible response to the needs of the changing market, creativity or diversification of production. The operability of the company’s decision-makers in terms of reducing production costs, as well as the operation of the brewery as a whole, will also have a big impact,” AleBrowar’s Wenta added.
According to the latest data from the Central Statistical Office (GUS), the production of beer obtained from malt fell by 6.8% y-o-y to 21.44 million hl in January-July 2023, while the production of non-alcoholic beer fell by 9.5% y-o-y to PLN 1.64 million.
Earlier, the association Browary Polskie, based on NielsenIQ research, reported that with volume levels comparable to 2021, the value of the beer market increased by 10.1% in 2022 to PLN 21.2bn (from PLN 19.3bn in 2021). According to the CSO, beer production fell by 2.2% to 37.8 million hl in 2022.
Mazurska Manufaktura is a family-owned company founded in 2019, specialising in the production of kraft spirits and regional and craft beers. In March this year, the company acquired a 10% stake in craft brewery AleBrowar.
Source: AleBrowar, Mazurska Manufaktura and ISBnews
