From the source: Richard Kelsey, Beer Cartel
Australians love a good drink and in recent years, there’s been a rise in creative craft brewers offering a diverse range of beers. Online retailer Beer Cartel specialises in craft beer, and during the pandemic, it experienced record sales. Director Richard Kelsey discusses Australians’ changing alcohol consumption habits and the business’ expansion plans.
IRW: I think it’s well known that booze did particularly well as a category during the peak of the pandemic. What was that period of time like for Beer Cartel?
RK: It’s been hugely hectic in the last couple of months. At the start of March before lockdown, we made the decision to close our bricks and mortar store to reduce the risks to our staff and customers and in a way, it’s been a blessing. We could have continued to operate our store, because alcohol is considered an essential service, but the boom in online orders just went through the roof. In March compared to last year, we had an 88 per cent increase in online orders. For April, it was a 302 per cent increase and May has been very strong with over 200 per cent growth. I think on our busiest day, we sent out 400+ orders, which is quite significant for us.
We’ve divided our workforce into two team teams for the last two-and-a-half months, with half the time spent working from home. With the significant growth, we’ve had to increase the team just to get through everything. We had to hire seven new staff to help with picking and packing orders and we’ve had to really look at our processes to streamline and speed things up. It’s been a good challenge. You learn a lot along the way and you learn where your headaches are, that’s for sure.
IRW: You changed some of your products during the pandemic. Can you tell me about that?
RK: For the short term, we created a number of themed offers and products around COVID. Usually we do a beer advent calendar that we sell at Christmas. That’s a huge seller for us, and we had boxes left over from that. But we also created an isolation advent calendar, which went really well. We sold that out within 48 hours. People have been able to try different beers each day and it’s all hidden away, so you don’t know what you’ll get.
We also created one called the Quarantinnies Beer Pack. When we first started, we were going through a 14-day quarantine, so we had 14 different beers in that pack. Then we had a ‘keep local alive’ pack, and that one is about supporting the local craft breweries in Sydney, where we’re based. The majority of craft brewers have seen a huge reduction in sales. They normally do 50 per cent of their sales in kegs through pubs and restaurants and it’s all been closed, so they’ve taken a massive hit. We’re trying to do what we can to support the local breweries and keep the Australian craft beer industry strong.
IRW: Where are things at with Beer Cartel right now?
RK: We’ve just reopened our store in Sydney. We’ve seen a huge uptick in online orders, so we’ve shortened the store hours to make sure we can keep that focus on online and keep the growth there. One of the things we’ll be doing is keeping themed packs that have had some success. I think there will also probably be a degree of working from home and making use of Zoom, which we’ve been using every day.
IRW: Before the pandemic, how was Beer Cartel doing?
RK: We’ve been growing ever since we began in 2009. Things were going well and we were growing about 25% year on year. We had a number of big projects that we were working on including an e-commerce platform upgrade, moving to a new email marketing platform and also migrating from our current point of sale system. Over the last couple of months, we’ve had to slow down those plans just to keep up with the big increase of demand that we’ve experienced.
IRW: How are you dealing with the new changing peaks and valleys of demand since the pandemic?
RK: For us, our April was bigger than December last year, which is insane. When we look at December, we start planning it in September and we have a very structured approach.
What with the whole pandemic, we didn’t have that planning, we were just thrown straight into the deep end and then, we said, ‘Right, because of the way we split our teams in two, we have half the resources we normally have, so we have that to work with that.’ Then Australia Post had no idea how crazy it was going to be, so there was a huge slowdown in their ability to get things delivered, which then meant that from a support point of view, you have to handle a lot more customer inquiries around parcels.
We were really doing everything on the fly, evaluating things and reacting to any government changes that were coming into place quickly. I think we were being reactive to a point, but we also had to be proactive and go, ‘We could see there was risk in keeping the store open’, so we took a proactive move there and closed the store and split the teams into two. It’s been a huge learning curve, even working from home with little ones. Society’s definitely changed a lot and 2020 has changed a lot from what we were expecting at the start of the year, that’s for sure.
IRW: Beyond the pandemic, what are some of your plans for the business?
RK: We’re moving up to BigCommerce’s newer framework, which we’re going through at the moment. Hopefully that will go live at the end of June. Then it’s a focus on how we can deliver to our customers as much as possible and give them a degree of personalisation within the site, improving the site’s speed, the site offering and just looking for ways that we can make it easier for customers to shop with us.
IRW: How would you describe what Australian alcohol drinkers are like at the moment?
RK: It’s pretty fragmented. Alcohol is slowing down from the highs of the early ’90s now, and there was a shift to premiumisation and a higher-end product. There’s been huge growth in craft beer over the last 10 years.
In Australia, there are 700 craft breweries now. Four or five years ago, we had fewer than 200. We’re seeing 100 breweries launch each year, which is absolutely massive and the beers they create are of a much, much higher quality than they were even if you went back five to 10 years.
At the same time, you’re seeing the same thing happen with spirits – there are a lot more craft distillers. Gin is taking off, craft gin, whiskies. We’re seeing some amazing things come out of Tasmania.
We have a hugely fragmented alcohol industry and people are swapping higher rates of consumption for higher-quality products. It’s something that sits with us. We’ve always been purely around craft beer – we’ve not focused on mainstream beer. We’ve understood you could get that from your local pub and bottle shop. We offer something for those people who want to go on a craft beer journey.
In the world of craft beer, you can have some crazy flavours, like smoky beers, different kinds of fruit or even beers that have oysters in them. There’s a huge trend in what they call hazy beers or hazy IPAs – they’re quite bitter but with low bitterness and quite strong fruit characteristics. So, from an Instagram point of view, they look amazing. They can look like fruit juice, where they’re quite opaque and the colour can be a vibrant yellow. That’s becoming very popular and something that most craft brewers in Australia are embracing.
The craft beer industry and craft spirits are naturally quite creative areas. The people are artisans and really like the freedom to create, and you see it in the huge gamut of styles and flavours of beers that are out there, right through to the labels. In the last five years, we’ve seen a massive change from bottles to cans. The can is a fantastic platform for great can art. If you look around these breweries and distilleries, they all have a real personality to them. They’re not a big box retailer, they’re all unique with a point of difference and a personality. I think that’s an expression of the brand.
IRW: I’d say that craft beer and hipsters go hand-in-hand, wouldn’t you?
RK: I’m as far away from a hipster as you possibly could be but I think hipsters can foresee things a bit. They’ve definitely helped with the growth of craft beer, for sure. The inner west in Sydney has an amazing number of breweries.
IRW: I’ve noticed a huge rise in online booze retailers lately. What are some of the challenges of operating in that space?
RK: The proliferation of beverage businesses that operate online has been massive. I think in the last six months, Kogan has started selling alcohol through its marketplace; eBay and Catch have been for some time, but I’m sure they’ve increased. There’s one group called Liquor Legends which has made a move to online. Then basically every craft brewer has been launching its own sites through the pandemic to cater for their customers.
I imagine that the number of players going online in the last six months has probably doubled, tripled or quadrupled – it’s really high.
I think if everyone competing online is one big challenge, then the other challenge is around freight. Beer is a heavy product that’s expensive to ship around the country. If you send a case of beer to Western Australia from Sydney, it costs around $30 to deliver. We need to be able to still offer great beer at great value to customers, while being able to manage the costs of logistics.
IRW: You’ve got the one store for now. Do you see yourself expanding the network?
RK: At this stage, we’re happy with having just the one physical store. We know online is growing significantly and there’s been growth online particularly in the last year, as well as the last three to four months. There’s so much opportunity in the online space, so our focus is largely on that at the moment. That way, we don’t have to worry about rent and managing lots of different stores, we can just focus on the key things about growing the business. We’ve got a great platform, so it’s about using it and making it even bigger.
We want to turn that platform from a small store to a massive warehouse.