Having a barbecue in Texas? You're probably drinking a Lone Star. "Churrasco" in Brazil, which is the Brazilian version of a barbecue, and you're definitely wolfing down a Brahma. In Argentina, it's red wine. "Asado" goes with malbec. Rooftop bars in Buenos Aires go with malbec. It is no wonder the national beer brand, Quilmes, has a whopping 67% of the market. There's no one making and selling beer in this country.
Until you head further south to Patagonia that is. Then there is beer everywhere and the big multinational brewers have to take notice. The Andes tourist destination known for skiing, fly fishing and iceberg gawking is like a separate republic. And there, beer means small business. Big small business.
The region has a long history of craft beer thanks to the rich plant life and abundant supply of fresh water. Over the last 10 years, the micro-brewery business has been growing strong, with a handful of standouts like pioneer brewer Blest that have made this more than a hobby. Blest was the first to go big on merchandising. They're now selling to tourists in airports. They opened a restaurant at their brewery in 1997 just outside of Bariloche.
Cerveceria Blest is a pioneer microbrewery in Patagonia Argentina. Others have followed in their... [+]
Today Bariloche, the hub of Argentine Patagonia, is also the hub of Argentine beer. It is the largest producer and consumer of craft brews, thanks in part to its German and Swiss heritage. With a population of just over 150,000 inhabitants, Bariloche has around 15 micro-breweries producing and selling beer at Blest-inspired brew-pubs. In December, they put their rivalries aside and band together for the annual outdoor beer festival. December is summer-time in the southern hemisphere.
"We've grown double digits ever year since we started out 12 years ago," Francisco Santa Coloma, director of Cerveceria La Cruz tells me. They're not fully bottling yet. They sell primarily in barrels, though three of their beers are bottled. You want to try a home grown Working Man Porter, Patagonia style, and you've got to go deep south and try on your Spanish. La Cruz is making money, Coloma tells me. "We're growing top line between 20% and 25% annually without taking on debt," he says. I plug at the numbers. He resists. "What ever we bring in we are putting right back into the business anyway," he says.
I was there for FORBES in December, but I missed the festival. After ten days in the country and countless pounds of steaks with not a single beer, I was curious to find so many of these brew pubs in one part of the country. I tried a Berlina Pilsen during dinner at Café Patagonia inside the Llao Llao resort in Bariloche. I'm not a connoisseur by a long shot, but I can tell you this much: it tasted like good beer. It didn't get warm in five minutes. It went good with a prosciutto salad.
When it comes to selling beer, producers aren't after the drinker who can tell the difference between a lager and an ale. They're all looking to make good beer that makes them a nice profit.
Che Guevara look-a-like, Bruno Ferrari, is the chief brewmaster at his family owned Berlina... [+]
However, like a good wine, beer lovers appreciate a good beer too. Consumers demand quality from these Patagonians, which has its blessings. It's turned some of them into burgeoning global brands. Considering where they are coming from -- a country steeped in political and economic turmoil -- starting and growing a small business is a major accomplishment. Especially when your rivals are household name brands, and have money to burn on soccer jerseys and lucrative restaurant/bar contracts.
Berlina Patagonia is our outlier. The company has been exporting for four years. It's getting into the franchise business. They started exporting to Canada in 2010, then Italy and Australia, which has become their best overseas market to date, Berlina's founder and chief executive Guido Ferrari says.
"In the future we intend to export to other countries where there is very strong demand for craft beers," he says. Sydney is his latest global hot spot. Ferrari said that Argentina's economic crisis has made it harder to export due to the difference between the official foreign exchange rate of around eight to one, and the market rate, which is closer to 12 pesos to the dollar. For exporters, the forex policy in the country means small businesses are exporting pesos at the higher price of eight, when the market thinks it is really worth 12. Moreover, Argentina's government has slapped limits on dollars entering the country. That makes it harder for companies to bring in cash payments from their foreign clients. Small businesses are waiting for a more rational foreign exchange policy from the new government next year.
For now, Berlina and its competitors have an expanding domestic market to tend to.
"We all are producing more beer every year and there is no end in sight to this growth right now," Ferrari says. "This is the only part of Argentina where the big multinational beer makers have to accept us as competition. In the rest of the country, if you're the lead beer brand sponsor at a bar or restaurant, you don't let your client bring in rivals. But down here, it is different. The consumer, both locals and foreigners, ask their servers at their hotels and bars for our craft beers despite the big brands pressuring the owners not to."
Quilnes and Brazilian owned AB InBev are the big beer players in Argentina, with Stella Artois and Brahma being the top imported brands.
The small business owners in Patagonia have mother nature to thank. Patagonia is considered a mythical Eden in the Southern Cone, with glacial and volcanic waters, a nice climate, and young, educated demographics that beer markets need. The region is also a tourist hub. Nearly a million people come to Bariloche alone each year, with 35% coming from outside Argentina, says Leo Tiberi, the media director for the town's tourist board. That alchemy alone is enough to keep the micro-breweries here buzzing, and the stand-outs growing into what one day may become a national craft beer brand. In the U.S., craft brewers like Blue Moon Brewing Company and the Boston Beer Company's Samuel Adams have grown out of their local niches and expanded into national markets.
Argentine consumers are expected to keep switching towards premium products and specialty beers as they trade brands for quality, according to a research report by Euromonitor International, published back in August 2014. Volume sales will rise for the quality producers even as beer consumption continues to decline in what is essentially red wine country.
