Tuesday 11 December 2018

'We can't compete with the big guys, all we can do is be different' - how this brewing company is setting itself apart

 

Tom Cronin of Rye River Brewing Company which was founded in 2013 and, having made its mark on the home market, is looking to European expansion.
Tom Cronin of Rye River Brewing Company which was founded in 2013 and, having made its mark on the home market, is looking to European expansion.
Ellie Donnelly

Ellie Donnelly

In an increasingly saturated craft beer market, Rye River Brewing Company has set itself apart by offering consumers something different.

The proof is in the pudding - or in this case the beer - as the Celbridge-based company now finds itself growing year-on-year - this year at a rate of 45pc.

Quite the change after some sobering early years. Founded in 2013 by Tom Cronin, Niall Phelan and Alan Wolfe, today Cronin heads up the company following the departures of Phelan and Wolfe in early 2017.

In the early days, Rye River struggled with a number of problems including managing cash flow. In hindsight, Cronin says that the business "probably got a little distracted".

"Like all startups, we found ourselves migrating in turbulent waters, and with that came challenges and opportunities. In hindsight we probably got a little distracted, we took in some agency brands."

Two years ago the company underwent restructuring, part of which saw it part ways with third parties it was producing beer for, and it is now an exclusively craft-producing facility.

"We had to make some very tough decisions. In 2017 we amicably ended all our contacts and contracts with third-party brands, and that was the right thing, we had to focus on ourselves.

"We downsized in line, but we grew the production, and it worked. We had a profitable year in 2017 coming from a loss-making position in the previous two years."

Cronin says that today they "only produce the highest quality award-winning beer".

Coming from the relative comfort of a multinational brewing company, the biggest challenge for Cronin in going from being a big company to being out on your own is that there is very little room for mistakes.

"You are reliant on managing cash on an extremely tight basis, yet trying to generate growth in a business, and then you have to determine at what point you make further investment and capitalise on that growth opportunity and then reinvest again," he says.

"Craft beer is a capital-intensive sector. All our tanks and our brew house are 100pc Irish-manufactured and that is a nice thing to give back, but every tank has a huge capital outlay."

Rye River, which to date has received investment of €10m - primarily from alternative lender Bluebay - currently has three new tanks on order to arrive in December.

"As you grow, you need more capacity and as you grow into that capacity, you have to start thinking down the line about expansion again," Cronin adds.

The demand and appeal for Rye River products is both domestic and in export markets, with about 50pc of the beer produced sold in Ireland and the other half exported. "The market in Ireland is small, at a point in time you tend to lose the headroom that is available because it becomes quite saturated, fortunately we have really good brands," Cronin says.

"Our core brand is obviously McGargles and domestically that would be a consistent large volume player within the main retailers in Ireland.

"We hold our own in Dublin city centre which we consider our back yard. In terms of retail in Ireland we have very good partners."

While Cronin says that there is "huge room" for growth in the craft beer market in Ireland, he adds that there is "constant pressure" from the bigger players, "not just in Ireland, but internationally as well, so you just really fight for every percentage growth gain".

The big opportunity for Rye River, he says, is in Europe, where craft beer accounts for only 1.4pc of all beers sold in the market.

"The domestic market is extremely important and we have done very well in it, but now it is time to really start looking outwards.

"We are in most countries in Europe with one or other brands - we do exceptionally well in Italy with the McGargles brand.

"That consumer in Italy or France, or Belgium or Germany, he or she is looking for something that is more artisanal. They want to know the provenance of the product - be it a cheese, a beer, or wine - and they are savouring the experience more, so what we find is that we are able to charge that little bit more because we go to the efforts we do to give that consistently high-grade Irish craft beer."

With international brewing giants such as Diageo and Heineken now producing their own range of craft beers, Cronin admits that Rye River "can never compete" with such players.

"I come from big beer, and I have a real realisation as to how the market works, we have to focus on our offering, we can never compete that's a given. I produce in 2,500 litre batches and I produce 30 of those on any given week, it's a very different process, what we try and do, and I believe we are doing it very well."

However he says that the business has received "great support" from pubs and bars in Ireland. "We are giving them a product that caters to the 3pc that want something different. The challenge for us against some of the bigger companies and some of our counterparts is to produce the best beer possible.

"We are there because they want our products and their consumers want our products. We can't compete with the big guys, all we can do is be different."

The craft brewing industry here is booming and, with more than 100 craft brewers in Ireland, it can feel like there are new breweries opening up each month. However the rapid explosion of competitors in the sector is not something that concerns Cronin.

"If you focus on quality and consistency and garner to that space you have every chance of having a successful business," he says.

"The challenge is cutting through what is a competitive market, in a market that in the context or Europe or the world is just a drop in the ocean.

"Is it difficult to cut through? You have to be louder and better than your competitors and that's where we take confidence, we believe we are at the top end of the offering in terms of Irish craft beer."

Cronin adds that making sure that the standards are high for every single brew takes real effort.

"We are 47 people in Rye River Company ensuring that happens and we are very focused on that. When I see a new brewery opening does it really give me any concerns? No, because I believe that with what we are doing we will rise to the top and stay at the top."

Earlier this month, the Drinks Industry Group of Ireland said that the impact of a hard Brexit on Ireland's drinks and hospitality sector could cost the Exchequer €135m a year.

In addition, the lobby group warned that many Irish drinks products are heavily reliant on the British market.

For Rye River, all the bottles that its beer is sold in are made in the UK, in addition it sources some its raw materials from Britain.

"The bottle supplied to the majority of Irish craft brewers is coming from the UK and that is a concern," Cronin says.

However, given the challenges that the business has already overcome, he is pragmatic about the possible challenges that Brexit will bring.

"Coming from where have come from in the past five years in this company we take nothing to chance. If [a hard] Brexit comes through it will hurt us - it will hurt a lot of Irish SMEs, I think."

Looking forwards, he says the company is focusing on continued growth.

"We are growing year-on-year, this year at 45pc, which is phenomenal, and to complement that, we got a further €2m investment last year to help grow in scale.

"We currently brew 22 different recipes here. There is always innovation required and we believe now there is a play for a more premium craft offering. We have had four releases this year within that range and we are putting our fifth into market in December."

Fresh from winning 19 awards at the 2018 World Beer Awards, Cronin certainly has a lot to toast.

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