Tuesday, 24 March 2015

The down side of duty reduction

There are many costs that affect a brewery. We've found this year, for instance, that some of the major hop varieties we rely on have been scarce. This inevitably means increasing costs, or alternatively a compromise on recipes. As the economy improves we see, quite rightly, wage rises. This ripples through to increased costs of labour. Fuel may well be low at this present time, but that won't last long, you can bet on that and it's already showing signs of increases again.

RPI falls to zero - but for how long?
(Image curtesy ONS)
Out of all the costs we have to manage, beer duty is the one that is published widely. When it goes down, and the government promise a penny off a pint1, it leaves us brewers wondering what we should do about all the other costs that are rising.

Traditionally a duty increase signalled the time when we could all look at our costings, across the board, and make appropriate price increases. Yes, a penny or two on a pint, by the time it got to your glass, often looked more like 10-15p. The reason for this is that the brewery, and the pubs and shops that stock the beer, rolled their annual price review together into one event, and that was all shrouded by the duty increase.

Now, considering with the recession and all, beer prices at the brewery gate haven't seen much of an increase over the past few years. However, costs, as I've said, are going up. Overall, this is having a detrimental effect on the ability to earn an honest living out of beer.

The reader could be excused for questioning my arguments, based on today's announcement by the ONS of zero inflation. This is making interesting news, but one thing is certain, economic growth is not possible without inflation. As we move from deep and difficult economic times we will see increased economic activity, increased wages and fuller employment and increased inflationary pressures. Many would argue this is essential for economic recovery, but either way, we will see prices increasing for everything, and that includes beer.

In the past I've had pubs we supply ask me how they are going to explain to their customers that they probably can't pass on the duty reduction through to their pint prices. Indeed, some have even said that they should really be looking to put up prices, despite duty reductions.2

Some customers this time around have been asking us if we are going to reduce our prices in response to the budget. I'm quite clear on this. No.

As we are still below the duty threshold, and enjoy a 50% discount, the reduction in duty is only a half of the published amount. This results in the reduction in duty on a bottle of Azimuth to be only a shade over 0.3p. Meanwhile, a cost of living increase for our staff, hop price increases, transport cost increases and heating and power cost increases will put that, plus more, back on the cost of manufacture.

The duty cut will help us keep a level keel, help us to continue to develop our business, to invest in the future and to build a solid and competent team. It will not help us to reduce our prices, overall efficiency elsewhere might, but not a relatively minor duty reduction.

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1Actually, the real shocker is that even at full duty rate it is not even a penny off a pint until you get to 5% beer. Yes, Stella might enjoy that duty cut, but not your pint of 4% session ale, that works out at only 0.85p per pint. Micro-brewed beer will enjoy only be 0.4p on a pint of 4%. A bottle of Azimuth will only see 0.34p off its beer duty. It isn't very much really, is it?

Now, before my friend Keith Bott, or any of any of the other great people who have worked tirelessly to stop the beer duty escalator, and at least reverse the trend a little shout at me, I do appreciate it. We are in a much better situation now than we might have been had the escalator still been in place - except, if I remember correctly, it was linked to inflation.......

{Edit} It has been pointed out in the comments that in fact the duty escalator was 2% above the rate of inflation. So, even with zero inflation, we'd have seen an increase.

2I've known pubs put out a jar with 1p pieces in it with a sign saying "Here's you beer duty reduction, if you can be bothered to take it" - really, a penny? Why are those little copper plated steel things still circulating? they are more bother than they are worth banking, which is why many pubs are happy to give them away.



Tuesday, 17 March 2015

I'm not dead

The first shipment ready to go
I am certainly not dead at all. One could be forgiven for thinking some great tragedy had befallen me, after all it is 6 weeks since I posted on this blog. It is true that Dry January did push us close to the edge, and then, just as we thought it might be getting better, it turned out the great craft hop shortage might threaten to limit our ability to brew stunning beer. I might have been tempted on several occasions to drink myself to oblivion, after all, I probably have enough alcohol in the warehouse to wipe out a small army, should I be able to persuade them to consume it all.


But then, around the middle of January, an email popped up in my inbox that I felt sure would change things forever. It happens every-so-often. Sometimes it might be greetings with an unusual enquiry, which turns out to propagate long and fruitful acquaintanceship. Sometimes it is the offer of a trip to some interesting place all in the name of beer. Sometimes it is just an invite to take part in something fun.

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On this occasion the email started with "Promised I'd be back, and here I am" and proceeded to state that "In theory, we can look to do something with you from April" It was the beer buyer from Morrisons. Ann and I had been to see him at the nice head office way back last Autumn. We thought the meeting went quite well, but knew that these things can take time to happen.

The theory turned fairly quickly into a certainty. We had ramped down all operations due to the evil that is Dry January and stupidity of detox, And fairly quickly I realised we had a lot of work to do. Indeed, so much work that we really were not sure how we would do it.

Today we packed up three pallets and loaded them onto a wagon. This is just a pre-order to check that systems are all working, that we get the paperwork via Morrisons systems1, we send it to the right warehouse, and all the barcodes work the way they should. If all is good, next week we ship double figure amounts of pallets. Apparently it should be on the shelves around the beginning of April.

Good job the warehouse is full then.

And so, if the information I'm given is true, we'll have Code Black, Azimuth and Infra Red on the shelves, 4 bottles for £62, alongside some other stunning craft beers. How good are we to you?









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1It didn't work first time. We should have got the order last week, apparently, but there was a field missing in the database, or some such thing.

2The deal started yesterday. It seems many of the supermarkets are turning to great craft beer to try to bolster their trading performance. After all, when it's time to go do that weekly shop for potatoes, pasta, frozen pizza for when you get home from work late, and can't be arsed to cook something proper, at least the drudgery will be eased with the knowledge there is craft beer to be bought. At great prices too.

Wednesday, 4 February 2015

Budweiser's Back-Handed Compliment

I like this, a big nod to the Craft Beer Explosion from a big nasty Macro Brewer.





This is much better than the Theakston's advert, which I also quite liked.

On the other hand, as pointed out in the comments below, there is a humorous retort from the American Craft Beer scene. My friends at Brewers Union 180 are part of that.


Monday, 2 February 2015

Juxta January

Well, that's January out of the way, although we've still to sort out the cash-flow deficit that happens every year around this time. But, let's look forward, we've an awful lot happening this year. Indeed, it might even end up being that the biggest problem is keeping up with demand if things continue to go the way they seem to be.

Today I'm thrown a slight curved ball. Previously I've been quite critical of There's A Beer For That. In summary, my thoughts are that there is no such thing as a free lunch. Why would a campaign funded by the major brewers want to help little annoyances like me?

Well, whatever their reason, and of course I could ask that perhaps this is an attempt to get me on side, they have actually gone out of their way to get me some unique and free publicity. Today we appear in The Telegraph. There is no doubt that this is good publicity. And I did very little to make it happen.

There's A Beer For That have been talking about doing stuff with Juxta for a few weeks. I've been sending pictures of the bottle, and various other information. I hadn't seen anything positive until now, and had been waiting quietly with anticipation for some sort of positive exposure. They have managed to get an article into The Telegraph, and that's no bad thing.

I guess it seems sensible of the major brewers to want to find something positive from the de-tox nonsenses that occurs around this time. I'm still skeptical in my own mind of any benefit to ourselves to jumping on that particular band-waggon.

It leaves me wondering if they have won, got one over on me, played a blinder. Have they very cleverly pulled the rug from under my big-brand objection focused rants? Will the influx of orders for Juxta see me changing my mind about the campaign?

The jury is deliberating right now over a few bottles of said beverage.

Personally I'm still unsure of the whole low ABV thing. In our own experience, despite making what we think is a very tasty low ABV beer, the demand is minuscule compared to the demand for Azimuth. But, at the end of the day, if it takes off I'll be quite happy to continue making it.



Stunning Craft Beer - Juxta from Hardknott Brewery on Vimeo.

Tuesday, 27 January 2015

Metalman in a metal can

When the whole talk of craft beer in a can started, a few years ago, I honestly thought it wouldn't take off. It's just crude to serve beer from a can. Uncouth. Totally unrefined and certainly not the thing that a respectable craft brewer would promote.

Well, it turns out I was wrong. My first realisation came about when I was having a bit of a twitter rant about the subject when well respected brewer type from NZ, Kelly Ryan, listed a few plus points of the format. It seems that oxygen take-up is much lower, headspace less, weight of the packaged product certainly lower per ml and metal cans significantly more recyclable than glass. I remember the put-down quite clearly. "there you go Dave, made a dumb-ass out of yourself again" I thought.

Last year we went over to Ireland and brewed with Metalman. Great fun was had making Yerba and Ireland is such a lovely place. The folks in Waterford are grand, too.

I remember GrĂ¡inne and Tim were looking at canning, and had already made up their minds back then to by-pass completely the idea of packaging into bottle. I have been watching their progress, quietly from a distance, it has to be said with a little bit of envy. I learn today that they have finally got their machine installed and are pushing out cans of their fine Pale Ale.

I still have a few concerns. The whole business of ensuring a gas tight seal, and the fact that the beer surface is so much larger before sealing than with bottle worries me. It doesn't quite stack up in my mind that the risk of oxygen take-up is actually less. I am left to assume that the real danger is from gas diffusion through the seal. In bottles there is a hard and inflexible surface of the glass against which a plastic seal is forced. The seal isn't perfect and despite the CO2 being at pressure there is still a movement of oxygen molecules which are smaller than carbon dioxide molecules. (32 grams per mole, compared to 44). The crimped metal to metal surfaces once must assume are a much tighter seal.

There are other problems, which I wonder how canning brewers manage. For a start, we get between a few hundred and 20,000 labels printed at a time. We get 18,050 bottles delivered per order. We do have to buy branded caps in lots of 110,000 (Next up it's green for us) - but we don't have to have huge stocks of very much.

Cans, now, as best I can tell they are printed in lots of at least 100,000 at a time. That is a shit-load. I know what 18,050 glass bottles look like. 5-6 times that is going to need a big warehouse, and that would be for each and every product. At least we don't have to buy our bottles with the label already on them. We're bottling tomorrow, I will probably decide which beer when I get in to the brewery, safe in the knowledge that the bottles don't care. It only takes a few minutes of swearing to get the labelling machine to work properly.

And then there is the little nightmare of paying for the damn things. Cash-flow, it's a real bastard, really it is. Just in time is the way forward, not having a great big warehouse.


However, as a firm convert to the idea of microbreweries pushing out keg, with various advantages, why should any format be the preserve of big breweries? If cans provide a route to market for smaller breweries then why shouldn't we have a slice of that particular cake?

Cans are indeed light. Around 30% of the weight of our bottles is glass. This becomes significant when considering transport. Whether posting our from our webshop, of for that matter any of the on-line places you can get our beer, there are weight restrictions that impact on the costs of getting it to the customer. We can only put a maximum of 1,200kg on a pallet. If a third is glass there is less room for beer.

The recycling thing is much more important though. Metal is relatively easy to recycle. Cans can easily be sorted into aluminium and ferrous with simple magnetism. They can be crushed and transported in an economic form.

Glass is harder to sort. Apparently there is technology that can deal with it, but one can assume this has to be done before any crushing occurs. For certain it's much more complex than just waving a magnet next to the stuff. The nearest place to Cumbria that can automatically sort glass I believe is in Liverpool.

We have to pay about the same to send any waste glass into re-cycling as we do sending it into the land-fill route. At the other end I am told by our glass supplier that they cannot get enough waste re-cyclable glass. My local re-cycling entrepreneur tells me it is the transport that kills the economics. All down to weight again, you see.

So, is Hardknott going to start canning? I know Thornbridge have decided to stear clear for now. I'm keeping an open mind, although more and more these days, on a whole range of subjects, it seems this is the best strategy, at least up until the point of saying "yes".


Monday, 26 January 2015

#Tryanuary

It's still January. Don't worry, there isn't much of it left. You can all come out of your self-inflicted, miserable, demoralising de-tox programs soon, and life can get back to it's cheerful norm.

We've been busy. Very, very busy indeed. We should have some really exciting news before long. We are told that three of our beers, Azimuth, Code Black and Infra Red into a major national supermarket really soon. Looks like around a doubling of our machine throughput. Best get the cogs of that bottling machine greased and some more hops and malt ordered.

Last week we got to Manchester Beer and Cider festival. It was good to catch up with people there. In particular the guys behind the Tryanuary initiative. It is good to see some real enthusiasm in January, when so much of the world is looking down and miserable.

Keep up the good work guys, sorry I didn't get a link on here sooner.


Meanwhile we can look forward to an enjoyable year as we start to approach spring. It makes me wonder what good it does to have self-inflicted abstinence in January, when we are already suffering the withdrawal of the fun of Christmas. Surly we should just get ourselves down to the pub and have a couple of pints to relax.

Tuesday, 20 January 2015

Elixir of Invincibility

Some time ago Vitesse Noir was banned by The Portman Group. The award winning duo Boak and Bailey, in their book, 1suggested that we had contrived it as a publicity prank.

"(Hardknott) even had its own rather contrived dispute with The Portman Group"

Elixir of Invincibility
Now, it is important to me to take this opportunity to state that we did not, on that occasion, intend to poke The Portman Group with a pointy stick. They genuinely got a complaint from a member of the public, we simply milked the PR opportunity. It was all a bit of fun for us. Sport, even.

Yes, this however, is a contrived attempt to bait The Portman Group. If it works, we'll get some free PR.  There is no doubt that last time the positives significantly outweighed the negatives. If they don't bite then we can be satisfied that they have learnt their lesson and will leave us alone.

When we recently decided to make a 7.3% double IPA we wanted to catch the attention of people. The beer itself was to be made all with Southern Hemisphere hops, Scott had researched the optimum dry hopping rate, and we got along with brewing it. This beer is now ready to send out in bottles and kegs.

Meanwhile a talented young artist, who is doing A level art, drew me a picture reminiscent of various fantasy type stories. The various Middle Earth movies were shot in part in New Zealand, which has stunning scenery. I'm a fan of The Disk World stories myself. A load of tenuous links perhaps, but we came up with the name "Elixir of Invincibility" and got our very good friends at Lemon Top to finish off the design of the label.

And then we decided to go up into our local mountains and film a sort of adventure, a tenuous story, and some great views. I was going to try to incorporate wizards, dwarfs, trolls and magic into the video, but as it happened, The Chinese New Year has resulted in the resident Cumbrian dragon being unavailable for filming.



Elixir of Invincibility from Hardknott Brewery on Vimeo.

1It is important to note that I am not in anyway upset at the comments in their excellent book. Indeed, if anything, I am quite flattered.