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Venezuela craft brewers rare bright spot in crisis economy
September 27, 2017 / 5:38 AM / 23 days ago

Venezuela craft brewers rare bright spot in crisis economy

CARACAS (Reuters) - With Venezuela’s economic crisis leaving consumers struggling to buy basic staple foods, small Caracas brewery Social Club might seem out of place selling craft beer that costs per bottle what a worker earning the minimum wage makes in two days.

But business is booming.

Demand for Social Club’s beer regularly outstrips the 3,000 litres (793 gallons) it produces a month, according to its owners. Most of it is sold on weekends at a beer garden set up in the garage of its small production facility.

Brewers like Social Club are a reminder that despite the widespread social misery caused by the country’s economic crisis, an appetite remains among well-heeled Venezuelans for high-end niche products like craft beer.

At the same time, these small brewers are carving out a market in preparation for an eventual economic rebound.

“Venezuelans continue to be vain creatures who like to be in the vanguard, who like to keep up with what’s in fashion,” said Victor Querales, 32, one of Social Club’s owners, speaking on a Friday afternoon before clients began arriving. “There’s still a premium market that isn’t very sensitive to prices.”

The country now has around 30 craft brewers with commercial operations that supply high-end liquor stores and restaurants or deliver made-to-order brews for parties or weddings, according to the Craft Beer Association of Venezuela.

Craft brew still represents less than 1 percent of the market, which remains dominated by domestic brewing giant Polar and its smaller rival Regional.

But the last five years has seen the emergence of start-ups such as Norte del Sur and Pisse Des Gottes, both of which have won medals in international brewing contests.

The fortunes of Venezuelan craft brewers contrast with those of most major industries, which operate well below capacity as triple-digit inflation and byzantine currency controls make large-scale production of almost anything nearly impossible.

Social Club offers tours of its small brew facility and an adjacent bar that sells styles ranging from bitter coffee stouts to aromatic Belgian saisons.

Its production volume is tiny, reaching about 2 percent of the 1.8 million litres per year that the Colorado-based Brewers Association describes as the maximum for the denomination “microbrewer” in the United States.

Though Social Club’s fare is exorbitant by local standards, it is among the cheapest craft brews in the world at around $0.80 for a 12-ounce (354 millilitre) glass. U.S. brewpubs would likely charge at least five times that for a similar product.

Francisco Lopez serves craft beer at Cerveza Caleta brewery in Caracas, Venezuela, September 13, 2017. Picture taken September 13, 2017. REUTERS/Marco Bello

NATION OF BEER DRINKERS

Costs are nonetheless a concern.

Malt and hops must be imported because they don’t grow in Venezuela’s tropical climate, leaving brewers at the mercy of the steadily depreciating bolivar currency.

And brewers often say their biggest challenge is winning over Venezuelans unaccustomed to beers with stronger flavours and higher alcohol content than commercial alternatives.

Slideshow (11 Images)

But they believe there is room to grow, in large part because Venezuelans have always been avid beer drinkers.

In 2010, at the height of an oil-fuelled economic boom, the OPEC nation had the highest per capita beer consumption in Latin America and the ninth-highest in the world, according to figures compiled by Japan’s Kirin Holdings Co Ltd (2503.T), which owns breweries in Brazil and Australia.

But per capita beer consumption fell to 25th in the world by 2015 as the drop in oil prices pushed the economy into free-fall.

Such slumping demand means microbreweries are far from a surefire route to success.

Some young would-be entrepreneurs take brewing classes with plans to start up businesses, only to end up selling off their equipment as they raise money to emigrate, according to interviews with brewers involved in such training.

But there are unlikely success stories too.

Architect Gustavo Izarra took up home-brew after visiting his daughter in Belgium in 2012. He set up Caleta brewery in 2015, just as the demand for architectural services was collapsing along with the economy.

He has since become the go-to design consultant for breweries including Social Club that are upgrading their facilities.

“People have limited spending power, so you end up with a product that for most people is out of reach,” said Izarra, 60. “But nonetheless, people keep getting more and more interested in trying craft beer.”

Reporting by Brian Ellsworth; Editing by Christian Plumb and Cynthia Osterman

Our Standards:The Thomson Reuters Trust Principles.
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