India Pale Ale looks set to continue its outright domination of craft beer in the United States, but Australia’s largest drinks retailer believes price and other factors will stifle the category’s growth back home.
India Pale Ale now has a 26 per cent value share of the independent craft segment in the US, a trend Dogfish Head founder Sam Calagione said has no precedent.
“There’s never been a single impressive – in terms of market share – style moment in the history of our industry, even counting Sierra [Nevada] Pale Ale from 1980 on, that made an impact, an actual dent on market share, to the extent IPA has in the last five years,” he told a Brew Talks event in Philadelphia on Wednesday.
Calagione said he expects further fragmentation of the IPA category into sub-styles including Session IPA, Imperial IPA, Dark IPA, Barrel-Aged IPA, Fruit IPA and more.
Session IPA up 200 per cent
Calagione’s prediction was already borne out in research presented by Brewers Association chief economist Bart Watson in his annual State Of The Industry address at the Craft Brewers Conference 2016 on Thursday morning.
“Session IPA, a relatively new entrant, grew by 200 per cent last year. That’s something that just looking at the [headline] IPA category misses,” Watson said.
“Increasingly just saying that, ‘IPA has a little bit more than a quarter of the category’, doesn’t really tell the story.
“What’s an IPA?… As the people in this room increasingly diversify the beers they are making, these traditional categories are fracturing,” he said.
IPA still a minnow
However, IPA is only the fifth most consumed craft beer style by volume in Dan Murphy’s stores, according to Caitlin Larkins, the retailer’s business manager – craft beer.
“IPA, although it is number five, it is a relatively small part of the craft market in Australia… Under eight per cent of total craft,” she said.
“A lot of that is to do with the fact that the tax that we pay makes it really expensive.
“Ballast Point Sculpin, by the time that hits our shores in Australia… you’re going to be paying almost $30 a six-pack,” Larkin told incredulous American brewers in a CBC seminar.
“It’s kind of the ‘pointy end’ of the market that are able to afford that.”
Unlike the Brewers Association, Dan Murphy’s includes multinational-owned brands in its craft beer data.
IPA may have a more impressive share of Australia’s independent craft segment than the eight per cent called out by Dan Murphy’s, if such data were available.
However, beer industry sources typically estimate independent craft accounts for just one per cent by volume of the Australian beer market, or thereabouts. This compares with Brewers Association members’ 12 per cent volume share in the US.
Drink driving laws
As well as the price barrier, Larkins pointed out that sessionability is more important in the Australian market, where a 0.05 blood alcohol limit is strictly enforced for drivers and the climate largely favours refreshing, lower alcohol beers.
“Easy drinking, low bitterness and probably lower ABV are what plays the biggest role in consumption in Australia,” she said.
“We’re seeing a little bit of experimentation in what we call Session IPAs, which is probably a little bit different to what you’re used to in Session IPAs… lower [in alcohol] – probably 3.5 per cent.”
In contrast to Australia, all 50 American states currently have .08 per cent blood alcohol limit for drivers.
However, Sarah Longwell, managing director of the American Beverage Institute, on Thursday warned US brewers that the health lobby has this generous threshold in its crosshairs.
“You’re going to have to think about what a 0.05 legal limit would do to your business. That is at the beginning of stages now in terms of gestating in Washington,” she told the CBC.
“The fact is, a 120-pound woman… if she drinks one six ounce glass of wine, that’s one IPA [and then] you are about at 0.05 and that allows the public health community to really come down on this industry writ large.”
Positive signs for IPA
Dan Murphy’s Larkins said that while IPA remains small in Australia, the GABS Hottest 100 Craft Beers of 2015 poll – which saw two IPAs make it into the top three – indicates consumers’ tastes are changing.
And the shrewd minds behind Australia’s largest independent craft brewery, Stone & Wood, believe strongly enough in the category’s future that they recently launched an IPA-only brand, Fixation Brewing Co.
Fixation has already graduated to Stone & Wood’s larger production brewery at Murwillumbah and is showing enough promise that it has recently been launched in packaged format.
That IPA will continue to grow in Australia is not in dispute. But will it reach the dizzying heights of the US market, where these full-flavoured, heady brews are ubiquitous even in sports stadia, airports and cinemas?
We look forward to hearing your opinions in the comments below.