The Cask Report: What is 'craft beer'?

Our new research gives us an idea of the scale of the craft beer boom. And while it may not give us a strict definition, it does give us an idea of what the most widely agreed characteristics of craft beer are, which allows us to describe craft beer in a meaningful way.

• Four out of 10 publicans claim to sell craft beer, and the same number of cask ale drinkers claim to drink it.
• Craft beer transcends format and packaging: while draught is the most popular format, enjoyed by 81% of drinkers, 64% have also drunk it in bottles and 20% have sampled cans. Sales of packaged craft beer in the on-trade have grown by 154% in three years, from 28,000 to 71,000 hectolitres (that is approximately 5m to 12.5m pints).
• There is a view in some quarters that ‘craft beer’ applies solely to strong US-style beers served in keg or bottle.

Our research refutes this:

• Craft beer is characterised as being from a small brewer, and/or beer brewed in small batches or limited editions.
• It is also a beer that is less common than mainstream beers.
• Less than a third of drinkers believe craft beer must contain certain varieties of hops, or be served on keg, or be American in style.

Cask ale and craft beer

It is absolutely correct to say that craft beer has proven that beers served from keg can be flavoursome and of high quality — 19% of SIBA brewers now claim to brew ‘craft keg’ beers, and this format has attracted most notice in the trade.

But as we have already shown, even with the excitement around craft keg, cask is actually accelerating its takeover of on-trade ale from keg ale. While cask ale has a 16% market share of total on-trade beer, craft beer in other formats (keg, bottle, can) scores only 2%.

Craft beer may span all packaging and serving formats, and that includes cask ale:

• Many of the highest-profile ‘craft brewers’ package the same beers in both cask and keg. It would be nonsensical to argue that, say, Thornbridge Jaipur or Magic Rock Human Cannonball were craft beers when packaged in keg but were not craft beers in cask.
• The most common attributes of craft beer defined above also apply to the vast majority of cask ale brewers and brands. Even brands brewed by larger regional brewers rarely have consistent distribution across the UK, and the practice of brewing ‘small batch or limited edition beers’ has long been practised by cask brewers creating seasonal beers.
• On the other hand, we cannot argue — as some people have — that any cask ale, is by definition, a craft beer. Only 5% of ale drinkers and 8% of publicans agree with this statement. So while we cannot say that craft beer and cask ale are synonymous, we can say that craft beer is not defined by format or beer style. Craft beer and cask ale are not exactly the same, but there is a huge degree of overlap between them: many craft beers are cask ales, and many cask ales are craft beers.

The Cask Report​ has consistently argued that cask ale is under-priced versus other draught beers on the bar. Its drinkers are more affluent on the whole, and they consider the product to be more premium than lager. (There is an historical argument that good lager should be more expensive than ale because it has to be conditioned at cool temperatures for several weeks. However, most commercial lager brands are now produced just as quickly as ale.)

Counter to this, cask ale is a fresh product, with live yeast still in the barrel, and demands greater care and attention from the licensee. Even if they do not know this, data from the off-trade shows drinkers regard ale as a premium product compared to mainstream lager.

We have reported research previously that proves cask drinkers already think they’re paying an average of 30p more per pint for cask ale than they actually are. Clearly, the trade is undervaluing cask and could be selling it for more.

Craft keg beer has a significant price premium over craft cask. This has some roots in the scarcity of imported craft keg beers from the US — higher alcohol plus duty, transport and import costs create a steep price differential for, say, a 7% IPA imported from California. But domestically produced craft keg beers of average strength have taken advantage of this to artificially inflate the price of craft keg across the board.

Craft keg is a premium product and drinkers expect to pay a premium. But in our view, the current premium is distorted. The UK average price of craft cask beer is £3.19 a pint. The UK average price of craft keg beer is £4.04 a pint. We believe this differential is far too high:

• Where the price premium is lower, outlets stocking craft keg beer sell more of it.
• As we have shown, craft beer spans both cask and keg. It therefore makes no sense at all for publicans to be selling craft cask beer almost a pound a pint cheaper.
• If the average price of cask were higher and the average price of keg were lower, the publican would sell more craft keg, earn more from craft cask, and therefore sell more beer and make more money overall.
• This also provides craft beer overall with more of an insurance policy against becoming a fad — when the novelty wears off, will people still be happy paying a pound a pint more for it? It makes sense to reduce the differential now.

The opportunity for the publican is to sell more craft beer in all formats — especially cask — by taking advantage of the demand for premium, flavourful beers produced on smaller runs, stocking more of these beers, taking care of them, presenting them attractively (eg, in the correct glassware) and educating both consumers and staff about them.

The above is an extract from the Cask Report, published today​