Europeans are embracing American craft beer. So, why are exports trailing off?

Jason Margolis | PRI.org

Back in 2010, a pivotal moment arrived for American craft beers at Munich's Oktoberfest.

“They announced, ‘The gold medal for the best Oktoberfest in the world went to — gasp — Samuel Adams' Octoberfest.' The air went out of the room,” said Jim Koch, founder of the Boston Beer Company, which brews Samuel Adams beer.

In the years that followed, more and more overseas beer drinkers sought out the bold, often hoppy experiments coming from America. Exports of U.S. craft beers soared. But in the past year, exports, while still growing, have cooled off.

Why? Look to the New Belgium Brewing Company in Fort Collins, Colo. — the company’s Fat Tire Belgian-style ale has become one of the most popular craft beers in the U.S.

“We’re the fourth-largest craft brewer in the country as judged by annual barrel production,” said Jessie Claeys, a spokesperson for New Belgium. “We were founded in 1991 in the basement of a Fort Collins home just a mile away from here.”

Today, the brewer exports to seven nations: Canada, Australia, Japan, South Korea, Sweden and Norway.

New Belgium’s foreign sales remain small, less than 5% of their business. But Casey Kjolhede, who manages export markets for New Belgium and looks for viable new markets, says she gets frequent requests for their beer from across the globe.

“You name it, they’ve probably reached out. I mean, even United Arab Emirates, I hear from them a lot. All of Europe, South Africa, Brazil a lot, Taiwan, Cambodia, you’d be surprised how much the world is looking at American craft (beer),” said Kjolhede.

But when the calls come in, she tells potential customers thanks, but no thanks: “I say, ‘What an honor and thank you so much for wanting our beer and reaching out.’ It just feels like an honor.”

Why turn business away, especially if your job is to grow exports? Kjolhede said they need to take it slow and get things right. The fact is, it’s expensive to ship a heavy liquid overseas. And logistically it’s tricky.

“The biggest challenge is quality. Our beer tastes best — all beer tastes best — fresh. So you've already got time against you going across the ocean,” said Kjolhede.

Beer needs to be refrigerated throughout the entire journey from the brewery in Colorado to the bar in Seoul.

Kjolhede said shipping overseas adds about 75% to their costs. So a six-pack of Fat Tire that sells for $10 in Denver could easily cost $18 in Stockholm. You need to do it the right way, though. If a beer drinker in Oslo or Tokyo picks up a less-than-fresh Fat Tire … there goes a potential customer for life.

American craft brewers have a few other hurdles to overcome, as well.

“One is that the dollar isn’t necessarily in a favorable position,” said economist Bart Watson with the Brewer’s Association in Boulder, Colo., a group that represents American craft brewers. (A stronger dollar makes American beer more expensive overseas.)

Second challenge: There’s just more competition.

“We’ve started to see the same explosion in breweries in other countries that we saw in the United States,” said Watson. “So, suddenly there are a lot of fuller-flavored options in many of the markets that US brewers were exporting into.”

Then there’s this perennial challenge: How do you get noticed in a new market?

“You know, if I knew the perfect answer to this question, we’d be gazillionaires probably,” said Kjolhede.

A few American craft brewers have cracked the export code. Brooklyn Brewery, best known for its amber lager, is among the largest craft beer exporters — roughly half of its revenues now come from exports.

Eric Ottoway, the company’s CEO, says they’ve been able to grow overseas because they were early entrants, so they got a leg up on the competition. And they found a cheaper way to transport their beer. Most exporters ship bottles, cans and kegs; Brooklyn began shipping beer in huge tanks.

“It’s kind of like a giant keg. It’s fully finished beer, fully carbonated, that sits in an insulated tank,” said Ottoway. “It’s 25,000 liters, it’s like 420 kegs.”

Shipping in a tank saves packaging weight and, in turn, costs. Also, you don’t have to ship kegs back home to New York.

Ottaway says the other key to Brooklyn’s export growth has been partnerships with local brewers to make and distribute their beer.

“So we work quite close closely with Karlsberg throughout most of Europe, we’re working with Kirin in Japan, we’re working with Coopers in Australia,” said Ottoway.

Kjolhede, with New Belgium, says she “admires” Brooklyn for finding new ways to tackle international markets, and she says New Belgium is also exploring partnerships with foreign brewers. But, she adds, that carries some risk.

“It's strange that consumers all of a sudden change their mind about your beer if someone else is brewing it — it no longer becomes an authentic American-imported craft," said Kjolhede. “And so we've seen some other breweries falter because they chose to do that, and they're viewed differently in the marketplace now.”

Kona Beer, the one with Hula dancers on the label, isn't brewed in Hawaii. Jamaica's iconic Red Stripe beer was being brewed in Pennsylvania for a while. Both beers faced some serious blowback — and lawsuits — from customers who felt duped.

Eric Ottaway with Brooklyn says they haven’t had many problems … except there were a few Australians who tried a Brooklyn beer — brewed in Australia — then said: Hey, this tastes different!

“My response was, ‘Well, yeah, now it tastes like it actually should as opposed to beer that’s been sitting on the water for six weeks,” Ottoway said.

Add it all up, for beer drinkers in Sydney, or London, or Bangkok who really want an authentic American craft beer straight from the source — and one that’s been chilled to perfection all along the route — for now, they’re going to have to pay a premium.

This article was originally published on PRI.org. Its content is created separately from USA TODAY.

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