In my previous article, I set out to discuss definitions of a craft brewery.

Based on insights from craft brewers here in New Zealand, I concluded that craft breweries were independent, innovative, small, and community-oriented. As I mentioned in that story, community could be defined in two ways. The first was based on a commitment to the craft brewery’s local community. The second was based on an intangible community of craft brewers willing to cooperate with one another. In this article, I want to discuss the role of corporation breweries in maintaining that sense of community. But first I want to address some wider points concerning corporations in craft brewing.

See, I am not the type of person to disparage corporation breweries simply for the sake of doing so. Yes, I would take a craft beer over a corporately-brewed beer any day. But I also recognise that corporately=owned breweries pull off impressive feats of technical brewing. For example, a Heineken brewed here in New Zealand tastes virtually identical to a Heineken brewed anywhere else in the world. I also recognise that corporate acquisition of craft breweries, while controversial for some, allows craft breweries to scale-up production and penetrate foreign markets. But perhaps the most direct contribution of corporate breweries to craft breweries, is that they have provided commercial brewing training to some of New Zealand’s favourite craft brewers. That wee disclaimer out of the way, I will get into the indirect role of corporate breweries.

At a reasonable estimate, corporate breweries in New Zealand have an 80-90% share of the market. That means craft breweries are left vying for the remaining 10-20%. And that, as I found while conducting my PhD research, makes for some interesting effects. Operating in a small share of the market means competition between craft breweries can be intense. In many traditional markets, intense competition leads to a race to the bottom on price. But in craft brewing, it seems to promote increased levels of product innovation. Generally, that means more creative, hoppy, and wonderfully different beers on the market. Craft breweries captivate us consumers with the continued promise of something new. This is a response to the competitive environment in which they operate. And, in a weirdly indirect way, we have the market dominance of corporations to thank for that. Not only that, in attempting to gain market share from corporation breweries, craft breweries continue to innovate in the product space.

You have likely heard the term gateway beer thrown around in some select Facebook groups and beer forums. In some circles, a gateway beer can be viewed as a corporately owned beer brand, such as Monteith’s, that entices consumers to try beer from other corporately owned breweries, like Tuatara. However, here I refer to gateway beers as those beers used by independent craft breweries to entice consumers way from mainstream, corporately produced beer. To a seasoned craft beer drinker, gateway beers are not always the most exciting of tipples. That is because they are not, primarily at least, intended for the seasoned craft beer drinker. Gateway beers have been cleverly designed to closely resemble a beer produced by a corporation but be different enough to pique the interest of a previously non-craft beer drinker. They are an innovative tool, used to chip away at the monolithic 80-90% of the beer market controlled by corporations. Innovation, however, can be a challenge.

Helping create innovation

Knowing that innovation is the sword with which to combat the proverbial corporate brewery dragon, the next issue for the craft brewery is figuring out how to be innovative. Being innovative involves leaning heavily on originality. It involves consistently coming up with something new for the beer market. But most importantly, it involves leveraging new knowledge. And knowledge, despite what we might like to believe, is not always a public good. Valuable knowledge anyway.

The question for the craft brewery then becomes: where can such exquisite knowledge be sourced? The answer is obvious. Who knows more about brewing than experienced brewers? Craft brewers sharing knowledge with other craft brewers. The concept seems counterintuitive in most competitive consumer markets. Imagine, KFC sharing that oh-so-secret range of herbs and spices with other fast-food outlets. Madness. Yet, while conducting research into the New Zealand craft brewing industry, I was continually confronted with instances of knowledge-sharing and collaboration between competing craft breweries. ‘Hey, I have just opened a new brewery down the road from you, can you help me make a West Coast IPA like yours?’. ‘Sure’ would be the reply. Now, dear reader, you might ask, why would competing brewers help each other in such a way? Well, there is an ancient Sanskrit proverb that goes:

The enemy of my enemy is my friend.

Craft brewers in New Zealand, and likely overseas, recognise that when the tide comes in all the boats float. This means every inch of the beer market that craft breweries capture from the corporates is good for all craft breweries. The very dominance of corporate breweries in New Zealand gives craft breweries a motivation to work together, to share knowledge, allowing them to innovate. However, that is not to say that the presence of corporations alone is enough to foster all the knowledge-sharing and collaboration that goes on between craft breweries.

There are matters of trust, friendship, and capability to deal with. They are matters I will address in the next iteration of these articles. But the ultimate driver for craft brewery cooperation and collaboration is a shared desire to capture market share from the corporations. After all, that is where the greatest opportunity for market growth lies. So, if you are a craft beer drinker bemoaning the dominance of corporation breweries in New Zealand, you might consider introducing a non-craft beer drinking friend to a couple of gateway beers.

Jamie O’Hare’s PhD thesis aims to understand the relationship between geographic proximity and craft brewery innovation in New Zealand.