The business of Philippine craft beer

MANILA, Philippines – When most people think of products that represent the Philippines on the world stage, few of them arrive at beer. Brett Lim is not one of them.

“Filipinos should be proud of Filipino products that can stand up against global competition. I believe beer is one of those products,” said Lim, who co-founded craft beermaker Katipunan Craft Ales more than 3 years ago.

Lim said that plenty of local craft beers are world-class. As proof, Katipunan Craft Ales gets inquiries from many countries outside of the Philippines. He was in Hong Kong recently, where he was making small talk with the staff at a local craft beer bar. After mentioning that he was a part of the team behind Katipunan Craft Ales, the bartender’s face lit up.

“The bartender said he had tried ours before,” Lim said. “One of their patrons brought back a bottle from Manila for them to try. He said there were requests for them to stock us there.”

This anecdote highlights why Lim and his co-founding team decided to establish Katipunan Craft Ales. While they were toying with different ideas, they liked the universal appeal of beer. As it did for them, beer could connect people – and even cultures – together

“We always thought it would be cool to be part of that ritual of bringing people together,” Lim said.

Building a brewing scene

According to Lim, they sold their first bottle of beer in July 2012, then proceeded to sell two dozen bottles that same month at a pop up event. They have since grown dramatically. Now, you can find Katipunan Craft Ales at more than 40 bars and restaurants in Metro Manila.

As the business has grown, they have naturally had to scale up their production systems. “When we first started, we were brewing out of homemade setup of old industrial pots,” Lim said. “Now we have a full warehouse and professional brewing system.”

Such growth did not come easy. Lim said that the biggest challenge was operating without role models. His team talked to brewers in other countries and even read books about the brewing revolution in the US. “But nothing can really prepare you for starting up a new company and building a new brewing scene,” Lim confided.

Where Katipunan Craft Ales is now has exceeded the team’s wildest expectations, but they still try to take everything one day at a time. For Lim, craft side of the business can itself be an outlet during times of stress.

“When things get tough, I like to free up a morning and just take in a brewing session,” he said and afterward, he is ready to take on any challenge that comes his way.

One ongoing challenge is the common misconception that craft beermakers like Katipunan Craft Ales tack on high margins to make the product feel luxurious. Lim said that this is done out of necessity, since small brewers lack scale, and not as a marketing gimmick.

Lim said that craft beer is expensive because it is expensive to make. For Katipunan Craft Ales, for example, all their raw materials are sourced outside the Philippines.

“As we grow, we’ll be able to lower our costs,” he said. “Hopefully, we’ll be able to make our beer more affordable so more people can enjoy the happiness we brew in every bottle.”

Growing Philippine craft beer

Lim and the Katipunan Craft Ales team are focused on growth. In addition to trying to get more restaurants in Metro Manila to carry their beer, they want to expand into the provinces, which Lim says is a huge untapped market.

“I also have a dream to start a brewing incubator within the company, but that will come later,” Lim said. He also highlighted the fact that many of his aspirations are not only for Katipunan Craft Ales, but for the industry as a whole.

To this end, Lim said that he wants craft beer in the Philippines to reach the same scale as it has in the US. According to Lim, craft beer is approximately 10% of the total beer market in the US.

“Beer is a $4 billion industry here at home,” Lim said. “If craft beer could get to $400 million it would help bring new brewers into the scene and help get more beer out to more people.” – Rappler.com

Rappler Business columnist Ezra Ferraz brings you Philippine business leaders, their insights, and their secrets via Executive Edge. Connect with him on Twitter: @EzraFerraz