Managing neolocalism outside the locale in real ale and craft beer entrepreneurship: The case of Ben Lui Brewery

Abstract

This case focuses on the role played by place and neolocalism in real ale and craft beer entrepreneurship, and the dilemma of how to manage neolocalism when a firm extends into markets beyond its established locale. It examines how a sense of belonging and ‘locatedness’ underpins a small, entrepreneurial brewery's vision, mission and market differentiation, contributing to the firm's brand equity amongst its core audiences. The owner-director, Duncan, is currently considering the brand implications of a possible expansion of sales activities into England and Wales. He expects that English and Welsh stakeholders will derive different meanings from the place-oriented aspects of the firm's brand when compared with his established Scottish stakeholders but is unsure how and to what effect. The case considers the extent to which perceptions of neolocalism and place-specificity can differ between local and non-local stakeholders. The concept is explored in the context of rural entrepreneurship, and in the strategic decision making of a small, independent brewery in rural Scotland.

Intended learning outcomes

Understanding: The case study context helps students to understand neolocalism and place-specificity as potential success factors in small and medium-sized enterprise (SME) brands.

Application: Students participate in evidence-informed discussions in which they apply the theory of neolocalism into the context of small real ale breweries.

Analysis: Students analyse how real ale breweries pursue opportunities to expand sales beyond their local areas.

Evaluation: Students evaluate holistically how entrepreneurs can safeguard the place-specific elements of their brands whilst engaging with new customers who may perceive those elements differently to the firm's core customers.

Creation: Students can create a strategy to consider the impact of distance and cultural unfamiliarity upon stakeholder perceptions of a place-specific brand.

Introduction

Neolocalism is an important and well-recognised phenomenon within small, artisanal enterprises such as real ale breweries. It can help to build an affinity between a firm and its local stakeholders such as customers. However, what happens when a firm has used neolocalism (Honkaniemi et al., 2021; Lamertz et al., 2016) as an entrepreneurial approach but then wishes to expand its sales territory beyond what may be considered ‘local’ or even ‘regional’? The purpose of this case is to explore the roles played by neolocalism, ‘locatedness’ or ‘terroir’ (Melewar and Skinner, 2020) – local or regional identity – in a brewery. The case focuses on the experiences of Duncan, the owner-director of a small, independent brewery in Scotland which is expanding its sales territory to England and Wales. In particular, the case considers how stakeholders can derive brand-related meanings from an SME's place-specific cues and characteristics.

Real ales contain only water, hops, barley and yeast, and undergo secondary fermentation, whilst craft beers may also contain carbon dioxide to add ‘fizz’ (CAMRA, 2023). Both are free of the colourings, flavourings and additives which often define the more generic, neutral-tasting offerings of multinational brewers (Singh et al., 2022). Consequently, they appeal to consumers who consider themselves ‘discerning’ or ‘connoisseurs’, and those who at least seek characterful, flavoursome products. Part of the appeal of real ales and craft beers is a sense of ‘un-corporateness’ – that the brewer prioritises artisanship above excessive profit, and quality above quantity (Gómez-Corona et al., 2016). Due to their smaller sales volumes, many real ale producers sell within a 50 to 100 mile radius of their premises, perhaps with some additional mail order sales. Therefore, they often become strongly associated with a specific location or region (Graefe et al., 2018), and this may underpin the personality of the firm and the brand meanings understood and valued by consumers and other stakeholders (Melewar and Skinner, 2020). To overcome the significant barriers to trade presented during COVID-19 lockdown conditions, many smaller breweries resorted to introducing or increasing online and mail order sales as an alternative route to market (Brown et al., 2022; Singh et al., 2022), transcending traditional geographical sales territories, and many have retained this practice.

The case contributes to the ongoing theoretical debate around neolocalism (e.g. Baker and Prytherch, 2022; Ikäheimo, 2021) by questioning how neolocalism might change when a real ale brewery starts to market itself outside its home region to stakeholders who lack familiarity with the brewery's place-specific meanings (Thurnell-Read, 2019). The aim is to encourage students to challenge the boundaries of extant theory around neolocalism in SMEs by considering neolocalism within the contexts of commercial expansion and stakeholders’ understandings of small entrepreneurial brands. In the field of rural entrepreneurship research, literature has focused on local stakeholders when considering brand perceptions and equity (e.g., Argent, 2018; Thurnell-Read, 2019). In addition, it adopts a relatively uncritical stance towards the effects of neolocalism upon small, place-specific brands, focusing upon the commercial and relational benefits. A key issue in the academic literature is a lack of exploration of the effects of distance upon neolocalism, and upon the perceptions of neolocalism and place-specificity upon an SME's stakeholders. Consequently, SMEs with strong local brand identities have scant guidance on the potential brand-related benefits and risks of expanding geographically.

Understanding neolocalism and place-specificity in entrepreneurial rural brands

Entrepreneurial brands, especially rural and artisanal ones, leverage on neolocalism. Neolocalism is a purposeful tethering of a business to its community, both in its marketing and in its broader operations. Neolocalism is routinely embraced by real ale and craft beer breweries to convey a sense of ‘place, story, history, rootedness, and authenticity’ (Honkaniemi et al., 2021, p.326), drawing upon the social capital and kinship (Lamertz et al., 2016) derived from belonging to a specific place.

Neolocalism within real ale producers can take several forms. Small entrepreneurial ventures often collaborate with each other, sometimes collectivistically (Danson et al., 2015) through the sharing of resources (Cunningham and Barclay, 2020), and through a spirit of ‘community entrepreneurship’ (Shepherd and Patzelt, 2011) which involves producers and suppliers (Graefe et al., 2018). As real ale breweries often start as lifestyle side-activities (Danson et al., 2015), even established artisan brewers still perceive themselves – and are perceived by others – as at the competitive fringe (Baker and Welter, 2017). As anti-corporate outsiders, small brewers draw upon local resources (McEvily and Marcus, 2005) and neolocalised characteristics (Bosworth, 2009) as a form of collaborative resistance (Cunningham and Fraser, 2021). Neolocalism can also comprise the use of territorial cues for commercial purposes (Thurnell-Read, 2019) and of regional identities to adopt and display the supposed values associated with their region (Argent, 2018) – such as hospitality, hardiness or quick-wittedness. However, neolocalism is not simply a shallow marketing approach, but a genuine, planned, longitudinal process which runs deep in the firm's DNA (Ikäheimo, 2021).

Flack (1997) observe that the political phenomenon of ‘neolocalism’ – people's disdain for, or rejection of, the national and international – often finds expression through the consumption of self-consciously local breweries’ beers. By invoking the local, producers can evoke authenticity (Melewar and Skinner, 2020), reconnecting consumers with communities, cultures and traditions (Fastigi and Cavanaugh, 2017). As the consumption of real ale and craft beer becomes increasingly intertwined with consumers’ desire to resist mainstream producers (Cunningham and Barclay, 2020) and to assert their self-identities, neolocalism and spatiality (i.e., belonging to a place) become even more central to the artisanal and often rural entrepreneurship of small breweries (Bouette and Magee, 2015). Although real ale and craft beer brewers can signify resistance to the mainstream by using informal and challenging language and imagery which is not location-specific (e.g., Brewdog's ‘punk’ aesthetic), many leverage neolocalism in their broader quests for authenticity, tradition, cultural embeddedness, low-carbon practices and distinctive brand stories.

Maye (2011) and Hasman et al. (2023) observe that craft ale customers often prefer neolocal brands even if they are not familiar with the locale. Several factors may help or hinder the process of neolocal breweries expanding outside their immediate geographical area. It appears inevitable that, as targeted customers become geographically more distant, they become progressively less equipped to understand the brand's place-specific references accurately – although this accuracy may not be necessary to achieve the required commercial outcomes. As culture differs between regions and countries (Minkov and Hofstede, 2011), more distant consumers’ values are likely to diverge from those of local customers and the firm, albeit perhaps minimally, diluting or undermining aspects of the brand's appeal. Ethnocentric consumers may wish to buy products from their home nation to protect its economy and jobs, through an aversion to foreign goods, or because they have a strong national identity (Shimp and Sharma, 1987). Furthermore, Waehning and Filieri (2021) assert that consumers increasingly seek regional goods not through ethnocentricity, but due to perceptions of eco-friendliness, premium quality and territorial identity. Naturally, while these phenomena are likely to give brewers an advantage when selling locally, they may prove disadvantageous when selling further afield.

Ben Lui Brewery

Duncan is the owner-director of Ben Lui Brewery (NB: the individual's name and the brewery name have been changed at his request). It is 1 of 142 Scottish breweries listed by the Campaign for Real Ale (CAMRA, 2023). Founded around 2000, the brewery is in the rural Scottish Highlands and has hitherto sold its produce entirely within Scotland. It makes ale, porter, pale ale and stout, which are sold in casks to selected public houses (‘pubs’), bars, hotels, clubs and restaurants, and in bottles to the aforementioned outlets and to small convenience stores and specialist beer retailers.

The Ben Lui brand emphasises its strong links to the area in which it is produced – the mountainous, culturally rich Scottish Highlands. Real ale is a term given to ales which contain only water, hops, barley and yeast, undergo secondary fermentation, and have no added carbon dioxide. Craft beer is similar but may contain carbon dioxide to produce a more effervescent taste (Singh et al., 2022). Real ales and craft beers are usually produced by relatively small breweries (especially when compared with multinational beer brands such as Heineken, Guinness, Budweiser, Corona, Chang, Asahi, Tiger or Fosters). These small brewers, including Ben Lui, use ‘place’ to position themselves against multinationals (Holtkamp et al., 2016), to inform customers of their brand characteristics (Drakopoulou Dodd et al., 2018) and to build a narrative centred on the symbolism of community (Cipollaro et al., 2021). Consequently, Ben Lui Brewery's consumers are more likely to perceive real ales and craft beers as non-commoditised (Clemons et al., 2006), more ‘natural’ and ‘authentic’ (Donadini and Porretta, 2017; Fastigi and Cavanaugh, 2017; Gómez-Corona et al., 2016), and redolent of local cultures and landscapes (Baker and Prytherch, 2022; Levitt et al., 2023; Schnell and Reese, 2003).

Company background

After 5 years of experimental brewing in his parents’ garage, Chemistry graduate Duncan began supplying his beer at friends’ parties in the Scottish Highlands, where his reputation grew by word of mouth. Encouraged, he invested in increasingly professional equipment and secured a loan to begin full-time production in an industrial unit as Ben Lui Brewery. Having refined an expanded product range, which he sold at festivals and fayres, he attracted custom from local pubs and other licensed retailers, who bought his product as ‘guest beers’ (i.e., to serve to their own customers through hand-pulled bar pumps for a limited period before stocking a different guest beer). A professional operation with eight employees, the Ben Lui brand is respected by Scottish beer aficionados, and its ales, porters, pale ales and stouts are sold in approximately 500 selected bars and stores throughout Scotland.

The brand carries strong associations with its locale. As Duncan explains,

“We’ve got the distinctive shape of [local mountain] Ben Lui on our artwork, and we’ve named beers after local rivers, lochs [lakes] and glens [valleys]. We sometimes humorously reference local talking-points on our labels and pump clips – things like the controversial A82 [local trunk road] roadworks, or the nudist colony on an island of a nearby loch and their battles with the Highland midgie [small biting insect]. We also use Scottish idioms. We once sold a beer called ‘You’ll Have Had Your Tea’, which is a phrase often used by West Coast Scots to poke fun at East Coast Scots’ supposed lack of hospitality. We sometimes have references to local football teams and personalities too.”

A cursory glance at the bracketed explanations within this quotation demonstrates that much of Ben Lui's branding communication is likely to bond local consumers to the brewery through a sense of shared identity, ‘insiderness’ and ‘being in on the joke’ but is unlikely to be fully understood by non-local, or at least non-Scottish, audiences.

Expanding sales beyond the local area

Duncan feels that Ben Lui Brewery cannot increase its sales volumes significantly within its current sales territory while maintaining its high product quality and continuing to select only those retailers who are sufficiently committed to the storage, selling and serving of excellent real ales. Unwilling to compromise on quality, Duncan initially considered a strategy of market consolidation within Scotland but no planned expansion outside Scotland. However, he is confident that English and Welsh real ale fans would appreciate Ben Lui's products, providing additional profit and the economies of scale required to achieve operational efficiencies and greater financial security. As such, he has decided to expand into Wales and England.

Ordinarily, a firm expanding into a foreign territory would choose the extent to which its strategy there constitutes ‘adaptation’ or ‘standardisation’ (Vrontis et al., 2009). Adaptation entails amending elements of the existing home market brand, products and marketing to fit the characteristics of the host market. In Ben Lui's context, they would adapt their Scottish approach to suit the Welsh and English markets. Standardisation entails transferring the home market approach into a host market unchanged. While standardisation is cheaper, easier to manage and ensures that mobile consumers enjoy the same experience wherever they encounter the brand, adaptation shapes a brand to the social, economic and cultural demands of the host market. Most organisations use a hybrid approach – perhaps the most famous example being McDonalds, the US fast-food restaurant chain which retains standardised branding across the globe but adapts its menus locally (e.g., by offering more vegetarian, curry and rice dishes in South Asia rather than products derived from cows, which are considered sacred by many consumers there). However, as Duncan explains, his choice is not so simple as he is not targeting a ‘foreign’ territory:

“I’m expanding into places which share the same language as us, albeit not the words derived from Gaelic [the indigenous, minority language of the Scottish Highlands and Islands]. They also share a lot of our culture – lots of the same tv programmes, films, and music. They’re not fully different countries. It's just certain aspects of what we do that they might not get – our local jokes and references. I don’t have the time and money to do two or three separate things depending on where the products are going. I can’t have labels for Scotland with local mountains and jokes and proverbs on them, and then produce neutral versions for England and Wales. It's got to be one single approach. But do I stick with the local stuff to please my local customers but risk leaving the new customers bewildered by it all? Or do I make everything neutral so the new customers understand, but risk upsetting my loyal local customers?”

How should Ben Lui Brewery manage its neolocalism when expanding beyond its locale?

A key issue presented to Ben Lui Brewery is that, like most real ale breweries, it embraces neolocalism, which will be understood differently amongst English and Welsh consumers and stakeholders than amongst its native Scots. Owner-director Duncan is concerned that he cannot predict whether the difference will be helpful or damaging in either home or host markets and is unable to use different marketing approaches in each. ‘Local’ products are transported up to 50 miles within one country (Megicks et al., 2012), and ‘regional’ products within a 100-mile radius (Onozaka et al., 2010), cultural area (Charton-Vachet et al., 2020) or geopolitical region (Paasi and Metzger, 2017; Waehning and Filieri, 2021).

There is, however, some cause for optimism: Consumer ethnocentricity varies across product categories (Balabanis & Siamagka, 2022) and this may also apply to ‘regiocentricity’ (Waehning and Filieri, 2021) and consumer attitudes towards brands which identify with a specific locale – those using neolocalism. As Duncan observes,

“Lots of real ale fans, myself included, demand that our beer has a back-story tied to a place, so that we feel we’re getting something grounded in tradition, not something faceless that's been invented by a food scientist in some anonymous factory somewhere. And yes, we do like brands that speak to us about ourselves, our culture, our heritage. But we’re also generally open to beer brands that play upon other areas’ identities. I know lots of people in the Highlands who drink Riggwelter but don’t fully understand the brand. It's from North Yorkshire. The brewery's called Black Sheep because it was set up by someone from Theakston's Brewery who left the family firm. The labels and cans show a sheep that's stranded on its back, which Yorkshire farmers call ‘riggwelted’. The joke is that the beer can end up putting drinkers on their backs due to its strength. Scottish drinkers don’t get these references because they’re specific to North Yorkshire, but they still like the fact that the product belongs to a specific place, even if it's not their place. And that's what I hope will happen to Ben Lui.”

Given this example, the geographically broad appeal of locality-defined products such as cheeses, and the importance of ‘terroir’ – place-specific environment – to wine brands and some beer brands (Melewar and Skinner, 2020), it is possible that all aspects of the Ben Lui brand will help to establish it in England and Wales as consumers apply their own meanings to culturally ingrained messages (Dey et al., 2023). However, if this does not happen, valuable resources will be wasted on a failed expansion.

Summary

Duncan now has a weighty decision to make regarding the management of Ben Lui Brewery's neolocalism when attempting to expand into England and Wales. Should he leave all aspects of its neolocalism unchanged, or should he deemphasise or reframe its neolocal aspects to increase the brand's transparency to non-local consumers? By making no change, the brewery is almost certain to retain elevated levels of brand recognition, affinity and appeal amongst its core, local customers, but the opacity of certain brand elements to English and Welsh consumers may hinder the brand's establishment in those markets. On the other hand, diluting or deemphasising Ben Lui's neolocalism may increase the transferability of the brand, but also risks alienating local customers and stakeholders. Furthermore, this sacrifice may be unnecessary or even damaging if English and Welsh consumers would find Ben Lui's neolocalism appealing regardless of their ability to understand the brand's cultural references.

This case is useful in highlighting the strategic dilemma faced by small entrepreneurs – and particularly rural and artisanal entrepreneurs – when expanding the commercial territories of their place-specific enterprises. It advances our understanding of the sociocultural factors which can affect the appeal and success of entrepreneurial ventures which leverage neolocalism.

Questions

1. To what extent does neolocalism and place-specificity contribute to the Ben Lui Brewery business and brand?

2. What are the potential threats to Ben Lui Brewery if Duncan decides to place less emphasis on its local identity?

3. How could Duncan mitigate those potential threats and capitalise upon those potential opportunities if he chooses to deemphasise Ben Lui Brewery's local identity?

4. How commercially appropriate would it be for Duncan to retain the current strong emphasis on its local identity when attempting to enter the English and Welsh markets?

5. Compile a list of actions which Duncan might take to build and protect place-based brand equity when marketing to local and non-local consumers and stakeholders simultaneously.