Craft brewing and financial expansion – a study of the Swedish market

Abstract: Craft brewing has seen a remarkable growth, from the first steps in the late 1960s in the USA until today. Breweries in the USA and Western Europe saw a long period of brewery fusions, concentration and closings from after the 2nd world war until roughly late 1990s/early 2000s. This trend also affected Sweden, where a market with smaller breweries in almost every town or municipality ended up in a situation with a dominating giant. The emerging craft breweries have totally changed this picture. Previous research has shown that craft brewing often starts as a hobby and evolves over time to a commercial business. The process for how these breweries fund themselves at the time of establishment has been researched in several papers, but how breweries that get past the initial step, start to grow and need additional capital to remove some of the bottlenecks that occur is considerably less examined. Since craft brewing is a unique business and the research in Sweden is scarce, theories and practises from small and medium enterprise (SME) financing have been applied. By using semi‐structured interviews and a thematical analysis, six craft beer brewery representatives were interviewed about their own perceptions of the methods they chose to overcome their financial obstacles, both initially but also when experiencing growth and needs for expansion. The breweries were chosen from a combination of size and geographical position in Sweden. Some of the breweries are situated in rural and some in urban areas. All the breweries fulfil certain financial criteria, and experienced production bottlenecks that needed to be solved financially. The thesis arrives at the conclusion that each microbrewery had its unique set of circumstances. The chosen financial solutions were affected by the owner’s perceptions and previous experiences. This supports previous research where new business establishment is highly depending upon the owner or the owner’s own money, which can partly also be explained by how the owners initially looked at their business (hobby/part hobby versus the intention to immediately start a commercial business). Raising capital for further expansion gives a diversified picture meaning that classical financing theory is only partially applicable on the craft brewing industry.