How craft beer can succeed in the premium on-trade - Interview, Harviestoun Brewery MD Toby Knowles

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Scotland, already well-known for the quality of its whisky, is carving out a reputation as a centre of craft beer excellence. According to Nielsen data, craft beer consumers in Scotland drink more per head than almost anywhere else in the UK, and every year an increasing number of new breweries open to accommodate this thirst. Last year, the country boasted 93 breweries, the Campaign for Real Ale says, with 20 of them opening over the past 12 months.

Harviestoun Brewery was founded in 1983 in Alva

Harviestoun Brewery was founded in 1983 in Alva

"Scotland over-indexes on craft beer," says Toby Knowles, MD of Harviestoun Brewery, which at 33 years old is one of the longest-standing breweries in Scotland. "It is very vibrant. Lots of little guys are making some great beers to all sorts of scale."

What the privately-held Harviestoun has been able to do better than most in Scotland, however, is expand beyond its borders. Twenty percent of the brewer's sales come from outside the UK, and in England it is carving a niche in high-end hotels and restaurants and London. In fact, the company is increasingly targeting this profitable channel as it ups investment in sales and continues to add new tanks at its site in Alva, a small town a few miles east of Stirling.

The reason? "We didn't want to be Dad at the disco," says Knowles, who acknowledges that his company - which brewed its first IPA in the 1980s - leaves the trendy, punky side of craft beer to fellow Scottish brewer BrewDog. "We wanted to be about premium quality, so I felt that would best lend itself to premium on-trade."

The idea came about from Knowles' own experience in hotel bars, and what he describes as their "depressing" selection of beers. The project took off, and Knowles says the company has grown 20% a year for the past two years, doubling turnover in the past three. Today, the on-trade accounts for about 80% of Harviestoun's sales.

But the success with the high-end on-trade has been noted and Knowles is seeing an increasing fight for tap handles from bigger and better-resourced competitors. Earlier this year, just-drinks sat down with Knowles in London to hear more.

Harviestoun Brewery's managing director, Toby Knowles

just-drinks: What are the pressures you're seeing in the premium hotel and restaurant space? 

Toby Knowles, Harviestoun Brewery MD: It's getting tougher. The big guys are playing hardball, there's a lot of money changing hands. We've got close to quite a few big deals and been gazumped because one of the big groups have got their cheque book out at the last minute. As a small brewer, we can't compete with that.

j-d: How difficult was it to enter the channel at the beginning?

TK: A little bit difficult. Some of the sommeliers got it, but a lot of them didn't. Now, however, some of the big hotel groups are realising you need to put the same kind of effort into the beer lists as they do into wine. It used to be you had eight types of water, seven types of butter and two beers on the list. Beer was the very last consideration for sommeliers - that's changed.

j-d: Can others follow you down the on-trade route?

TK: Definitely. The biggest challenge in what I call prestige on-trade is you have to have very good back-of-house production efficiency because the customer has to trust your quality to the utmost. Also, you have to have consistency not only of quality but of supply.

j-d: Is that not the case with other brewers?

TK: I'd say there's only a small handful of craft brewers who can meet that quality and volume demand.

j-d: Why?

TK: They just don't have the scale to do it. We have a 60-barrel-run brewery whereas a lot of craft brewers will be 20. But also you have to have the room and the capacity in your brewery to have these things. It's taken us a lot of years to get to this point.

j-d: The UK craft beer industry is far behind the US. How do you see its evolution in the UK?

TK: Actually, I see wine companies as our competitors now because I'm trying to steal share from them and bring beer to the table as part of a dining experience. The way dining is going in this country, moving to a much more casual style, then beer fits into that very well. How good a glass of wine can you get for GBP9 (US$13)? Because you can sure as hell get a good beer for that. Once people understand that, then I see it going from strength to strength.

j-d: There is an increasingly crowded market in UK craft beer. What do you see happening?

TK: There's going to be a big shake-out in the next three or four years. We see guys who are investing millions in new bottling lines. I don't know how they will make that pay. I think there are a lot of people over-reaching, a lot of beer where the quality control isn't there. There will be a lot of consolidation and inevitably the level of interest in craft beer will plateau. But, what I don't think will happen is we will go back to drinking generic, mass-produced lager. Once you get into drinking better styles, you don't go back to the cheaper stuff.

j-d: You make a lot of what could be described as 'sessionable' beers. Is that the direction you see the market heading in?

TK: We have the [barrel-aged, higher abv] Ola Dubh, but its mostly sold in the US, where the palate is that bit further on. In the UK, Harviestoun's style is drinkability. One of my big bugbears is you go into craft beer bars and you see half-left pints everywhere, because someone has gone to try it but it's so crazy they can't actually drink it. Our goal is to make beers people want two, three, four pints of.

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