Tuesday, 13 October 2015

Where is the real danger?

There are people that think the threat to cask beer is a thing. Others worry about British hops. And there are those that panic that a 50 year old, and largely inefficient and past it's best breed of malting barley being left behind is a huge issue. Some people feel that buildings that are old, draughty, have shitty cellars liable to flooding and often quite disgusting are things worth saving for the good of beer in general, despite the fact punters don't really agree and stay away in droves.

But I'd ask you to think again.


We are a tiny brewery. We struggle to find ways of getting our beer efficiently to the places people drink it. We are remote and really need the help of distributors to get it fairly much out there. But there is a problem, a huge and nasty problem.

The big boys.

"We've got both types of beer in here, Bud AND Bud Light"

Today we here of the agreement in principle to AB Inbev and SAB Miller joining forces to make the biggest beer producer in the world. A global domination that is huge, and to be honest, quite scary. 30% of all beer in the world will be made by one, big, nasty, aggressive and domineering conglomerate. Around 1/3 of all beer will be made by an organisation that doesn't actually care about beer at all. A business that thinks beer can be bought and sold like a commodity, and cares nothing about you, the beer drinker.

Now, you could say, so what? Why does it matter? After all, Craft Beer is booming, there are breweries opening up all over and there is more choice in craft beer bars and independent free houses all over the UK.

Well, yes, but, there are still many pubs, bars, restaurants and the like where the beer choice is narrowed down to a few major beers. Practices that are restrictive are reported to be occurring in USA. I am sure, due to resistance I feel, that the same practices are occurring over here. It might be somewhat less obvious and in a cleverer and less obtrusive way. But equally, a perspective on that could suggest conspiracy. After all, There's A Beer For That.

I think the big beer producers, and their watery, bland, uninteresting beer, along with their nasty, restrictive and domineering control of supply chains are inhibiting great beer getting to great people like you.



18 comments:

Stonch Beer said...

If you weren't being held back by these big beer producers, as you claim in your closing paragraph, would your products really appeal to the wider market you think you'd then be able to access?

Perhaps craft beer like yours already reaches just about everyone who actually wants it (those who do want it seek it out and find it, against the odds)?

Perhaps only those independent breweries who are willing to produce beer that fits what you might consider the lowest common denominator can ever see real growth?

If that's true I sincerely hope your business makes a profit now, and doesn't depend on some future level of expansion that might prove elusive, not due to the actions of the nasty big brewing companies, but instead because extreme craft beer - while not without virtue - is doomed to be forever a minority sport.

Dave Bailey said...

Stonch, I don't think the likes of Azimuth rates as "extreme craft beer" - I do not think it has any less mass appeal than some other notable IPAs in it's class. Indeed, at the moment we are struggling to make enough of it. Additionally, it is true that our efficiency at making it is somewhat hindered by being still terribly small and just a little under-funded. Expansion has become a necessity for survival.

If we need to make some other form of craft beer that is even less extreme than Azimuth, that is less expensive to make, but just as stunning, then obviously, when we do expand, we are more than happy to do that. But to make any sense we need to find ways to get it out, economically.

We've put a lot into building a team, honing the product, and generally putting together what we think is the future of Hardknott. We know people like our beer and want it. The difficulty is often not having drinkers who want the beer, but finding economic ways of getting it to them.

All the way up the chain, those bigger than us are fighting us for market share. And they are fighting those above them, all the way to the top of the food chain. To suggest that we are somehow insulated from any effect at the top seems to me to be naive.

Ron Pattinson said...

I'm not going to complain about the big boys when I can get the excellent Amstel Bok at well under a euro a pop.

Yvan said...

The buying of distribs to stop them selling "craft" seems a bit desperate.

Surely that just creates a market-vacuum into which will pop some other distrib shifting the "craft".

Albeit this may be harder if said distribs have owned/tied lines of course. But that's not too common here. I say that with the "craft" sector in mind, it is of course quite common for big distribs to "own" keg lines - in fact they own most of them out there, and as per your comment on vertical integration it's very much the case that these distribs *are* Heineken, Carlsberg, etc - hell, even Greene King. They have a bit of a seemingly unfair inter-brand lock-in agreement around it in fact where members of the club can trade lines, although I think SIBA may be hooked into that... can't recall the name of the scheme.

This may be the difference between what's reportedly happening with US distribs and what could happen with UK ones. I think even the largest of our tiny "craft distributors" here has little invested in line contracts which would perhaps in the US be the primary "asset" big-beer is wanting to buy? Sensible pubs ought to be more careful who they get contracts with... and ensure they have escape clauses in their contracts.

Stonch Beer said...

"Surely that just creates a market-vacuum into which will pop some other distrib shifting the "craft"."

No it doesn't - because InBev (and other multinationals) now own breweries that make perfectly good beer in exactly the craft style - breweries with an authenticity too as they were previously independent and grew organically - and people like those, whatever beer geeks might think. It's a myth that a change in corporate ownership necessarily changes beers, and these days I think it's far less likely to for various reasons.

So basically in the vacuum InBev just flog people more Goose Island IPA - great beer, consistent, good value. They win, consumers win, everyone wins, yes?

Yvan said...

Maybe, maybe not. I didn't actually mean to imply that the mega-multi-nationals were incapable of producing anything decent. As you say, they can just buy that too.

I was thinking more along the lines that the market that these distribs supply doesn't want *just* Goose Island (et al) all the time. If these distribs _are_ into the market of supplying just few brands in large vols then these buys-outs will only impact those few brands - and probably have little impact on the US "craft scene".

It seems normal for US "craft" bars to have stupid-seeming numbers of taps. I just don't think those venues will want 40 taps of AB InBev, regardless of who they buy. Of course AB InBev might be smart about it and maintain supply of more indy stuff whilst using the channel to push and grow volumes of their own stuff.

Yvan said...

Of course, reading over the articles on the US situation the obvious biggie difference is the enforced 3-tier system. Brewers there cannot even sell their own beer to supermarkets like they can here. That'd probably make it near impossible for a brewery such as Hardknott to get beer onto Morrisons shelves... or at least a lot harder... and even less viable.

Dave Bailey said...

I think the situation is a lot more complex, the threats a lot more important than appears to be realised. It should be remembered that we are a very small part of the beer world. I'm a tiny producer, really, tiny, far too tiny to exert real market leverage without drastic action from my remote part of the world.

If there are people like Ron, who actually are quite happy to let the multinationals take over, and they will, because they have the ability to make "craft beer" brewed on the same central plant that they brew their mass produced stuff. They can combine in an economic way the marketing and branding experts that we can't afford.

They can undercut us, out advertise us, they can afford to loss-lead in certain areas if it means we suffer. And they don't care about us, not one little bit. They do not give a single shit about what we do. Indeed, they would like people like me to go under, and without a strong will to make it work we could have disappeared long ago.

Moreover, there are days when I look at my bottom line, look at where we are and where we are going and ponder why I still do it. Why don't I go back to my good job in the Nuclear industry, where I got a good package, much, much better than I have now.

They can control the supply chain, and although we have a market that is more relaxed, it is not as free as you might expect. It's tough gaining market share, even when I win SIBA awards, I still need to do a great deal of work to get my beer out, to get it distributed to whare it needs to be. Doing that is expensive, and difficult, and leaves little margin for me. There are many places we stop distributing to because the costs of getting it there means that it cannot be sold at a price that the punter is happy to buy it. I cannot get my beer to London, get someone to buy it for £70 a firkin, and make a profit. If I had a big enough brew-house, and organised a distribution network that gained me economies of scale I might just be able to do it.

But, where do I find the £100k or more I need to fund the economic brew-house I could do with to get those economies of scale that can make it work? How can I make that jump when my bottom line looks too poor to go to a bank?

So, I'll just have to ramp up what I normally do, park my self awareness for a little bit longer, do some more stupid things, because actually, they work, and I see the general increase in interest in my brand. Doing stupid things works much better, rather than winning an award at a SIBA festival for just making damn fucking good beer.

I want to not only fight for the survival of Hardknott, and other very good British craft breweries, but to strengthen our segment of the market. The only way we can be sure of doing that is to make sure that the large threatening multinationals are fought at every level.

Dave Bailey said...

(Had to split into two because of character count)

Where us craft breweries were making progress, getting not only great cask beer onto bar fronts, but also seeing a movement on keg beers, we are now seeing those big multinational seeing that and wanting a bit of the action.

Meanwhile there are people not seeing what is happening. If a brand like Meantime can now see huge distribution homogenisation, and the general public sees their beer on a bar next to my beer, they have the market leverage, and ability of brand exposure to push me right out of the way in places where we were making progress.

I cannot make my beer, sell through a distributor into London at £70 a firkin and make money. If I expand with a new brew-house and forge deals with distributors, I might if I can expand enough. But the trouble is, looking at my accounts, I cannot fund the expansion I need.

We've build a great team here at Hardknott. We make some of the best beer now we have ever made. Scott and Sarah are just fantastic, but I'm now genuinely scared that we might not be able to keep it going, return a good enough set of accounts to be able to make the next move without seriously drastic action. We're at capacity, and we've done that by working hard, but finding the £100k or more we need to invest to get to the next level is going to need to work even harder.

So, what are we to do? Give up? Disband the skilled team we have built? Should I go back to the Nuclear industry where I got a very nice salary, great holiday entitlement, and generally lived a comfortable life?

I don't think I should. But if I told you I was just a little bit scared of the future. If I told you I see many threats to our future, and to that of many other small breweries who genuinely believe in what they were doing then you'd see just how threatening this recent move is.

We've been through a recent review asking if we should continue. We've decided to have one more go at sorting this job out, because I still have the fire, and I still have the determination and because I truly believe that we have the ability to make really great beer and make it a sustainable business. We are prepared to work our guts out to get it done. And if that does mean parking my self awareness, making a fool out of myself to get that done then I will.

So, give us that chance guys. Remember we care about beer. The vast majority of beer sold is made by multinational conglomerates that only care about beer as a vehicle to improve their share value, to make them their dividend.

We care about a whole lot more than that.

Simon said...

What do you use rather than Maris Otter, then?

Off-topic but non-facetious home brewer question.

Ta.

Dave Bailey said...

Simon,

Well, not really that much off-topic in my view. You see, I think the obsession with Maris Otter is a bit of a distraction to the progression of really great beer. I have talked to a lot of brewers about the subject and the only way in which Maris Otter makes any difference is in beers that use nothing but pale malt and virtually no hops. A beer that has dark malts or any decent hopping rates the advantages flavour wise of Maris Otter will be swamped. Therefore it is just a CAMRA centric thing that propagates the whole business. Breweries that claim to use Maris Otter are favoured by CAMRA and so get put into CBOB. We have never been entered into CBOB. Never.

We use a pale ale malt and pick the exact variety dependant what we need based on performance, both in terms of yield and flavour. We currently are using Pearl, but often in conjunction with other malts to create the base we want before considering hops.

May King Example (Mrs) said...

That's just not so, is it dear? Look at the CBOB voting site and you'll see Hardknott beers listed with all the others. Perhaps you should pop to the GP and see if they can do anything about your paranoid delusions? They've got marvelous tablets for that kind of thing nowadays.

Dave Bailey said...

Mary,

With all due respect, we are a significant brewery in Cumbria. We produce some of the very best beer in the North West of England. We have only had one beer ever at GBBF - Cool Fusion, which doesn't even represent what we do best. We have decided to drop Cool Fusion because CAMRA seem to have some sort of bizarre infatuation with it, despite it making very little commercial sense, and it's ratings on Untappd and Rate beer being very poor.

To only ever have one beer, that is a poor representation of us at GBBF after 10 years of brewing shows a terrible bias.

Azimuth is stunning, simply stunning, but it doesn't fit with the narrow minded ideals of CAMRA - and yet represents the epitome of of progressive British Craft Beer.

I am not deluded for being more than a little bit annoyed with CAMRA for failing to properly represent us at GBBF and seeming to favour beers and breweries that are going nowhere.

Yvan said...

Yeah, CAMRA list-goons always pick bloody Cool Fusion... to tick their "speciality" box, for which there are too few brewers brewing "speciality" beers for. (For the good reason that pubs don't want 'em much... much like the much-lamented dearth of milds in my area. Why brew what don't sell?) That plus everyone's a bit tired of the same old Saltaire fruit beers. (Which are fine if you like that sort of thing, but ever-present and thus not suitable ticker-candy.)

I've done it myself (put Cool Fusion on a fest list)... but I always pick it and one or two others. (I don't do this sort of festy thing any more mind you... my beer lists were deemed not boring enough I think, plus conflict of interest now, innit.)

GBBF is a bit of a randomness... you're basically just lucky to get a beer on in there on the general list. And the CBoB stuff bubbled up from regional comps is a frightfully fucked up process. The whole online voting thing is a clunky mess and few members are aware of how it all works. A handful of on-the-ball breweries load the dice a bit, combined with a bit of old brand-fetishing and we get the same old usual suspects. Used to do the Best Bitter comp for East Anglia. It was depressing. Almost as depressing as the folks who were on the tasting panel.

But rest assured it is no conspiracy. Merely mediocrity. CAMRA innit... sometimes seems a bit of a celebration of the lowest common denominator.

For the Hardknott market CAMRA is probably of decreasing relevance anyway.

Now I do like participating in CAMRA fests, supplying the good stuff to CAMRA fests, and attending the odd one where the cellar folk have half a clue. Just need to be realistic about the actual processes and capabilities of the organisation, especially the lack-of at branch level in most of the country.

Yvan said...

OK, CAMRA-bashing aside... (It wasn't meant to be really, but reading over it it sounds a bit harsh... tough love, tough love... then again my membership expires this month and will not be renewed.)

I've always liked what you do up at Hardknott, long liked the beers - as you know. So I wish you every bit of luck I can... as we all learn, it is a hard market out there where simply brewing (or selling) great beer isn't enough on its own. You've been doing it longer than me... I'm still chipping away at my chosen niche in the industry - hoping that service and quality can carry enough value to make what I (want to) do viable. But with so many folk cutting corners it's hard to believe it is possible sometimes. Scale... what I do needs volume, as with brewing economies of scale are important for me as well.

But I don't fear AB InBev and their ilk. I think more danger comes from the small end of the industry. Folks selling shite beer in craft clothes cheap (and hell, it is "craft" if you judge by brewery scale). Some pubs lap it up, eyes alight with the £-signs of massive GPs... hell, I'd possibly do well to take on beers from some of these folk but have so far refused. But they give the whole concept a bad name, leave a sour tastes in drinkers' mouths - they turn back to their Stella. It is bad quality & inconsistency that will lead people to turn to the less-fun but more-consistent and better-priced beers of big brewing. Why wander into a minefield?*

The old IT industry is a constant temptation... good money, reliable, no sweat. Nobody accusing you of profiteering... profiteering? Profit? Ho ho. Oh the angst. I'd write more on this but it'll get angry.

[Business is good FWIW, personal targets being met, growth like cancer, cash flow a constant pain as for all, and my own physical health being destroyed in the process... growing pains, a hump JGB will hopefully get through. Next summer I hope I may even be able to have my 1st actual week off in 3 years... that's another business goal.]

* I paint a grim picture perhaps. But there really is some shite about. Those who know what's what can navigate it - the range and quality that was available at IMBC reflects this. Those folk know their stuff... but not all have their standards.



This all a bit of a random stream-of-conciousness as I distract myself from firing up an invoice for today's beer delivery. Sunday? Yes, Sunday... but at least it is just one today and not an 8-hour delivery round like Saturday was.

Dave Bailey said...

Thanks Yvan,

You are probably right, it is stretching the point to say it is conspiracy. However, there are biases for sure. Even if the biases are generated by the breweries and pubs who want to play along with the game. I recently had a publican mention to me that it seemed that pubs that got into the GBG are often the ones that offer CAMRA discounts. I hadn't primed him into that conclusion.

The best point you make is the decreasing relevance of CAMRA to our market. And really, this is the thing I'm really trying to point out in a lot of things I write; we make beer that wins SIBA awards, for instance, not ones that win CAMRA awards. We make beer that interests the export markets, and rates reasonably well on Rate Beer etc.

It's not really about complaining, it's about explaining the difference between the markets, and which way it all goes.

However, one thing that excites me, and it's a shame actually that it's been lost a little amount all the other noise on here. I have been told that CAMRA are now actively seeking to accept KeyKegs into festivals for British beers (BSF has been doing it for ages). This would be such a huge step forward, and in my view does not mean it will be the start of the end for cask - not by a long way actually.

KeyKeg, as has been said many times, is possible to be classed as Real Ale. There are issues, but the basic premise that it is dispensed from a container that has live yeast and without the use of extraneous CO2 is perfectly achievable. It might be difficult for GBBF, as BrewDog found out, they need kils for that. The biggest KeyKeg is 30l and despite the hype surrounding the famous BrewDog/CAMRA spat, I believe it was this, and late payment of the bill for the BrewDog sponsored bar, that caused the fallout.

There are issues with KeyKeg that need to be resolved, including the problem of over-conditioning. Secondary in very difficult to control in such situations. We've had issues, so have other breweries. Some still do. We think we've got ours cracked, but the secondary works at a rate that might not fit with the time between racking and serving. It is out of the control of the brewer. Temperature, time, cell count and residual fermentables varies the amount of condition. In cask this is corrected by venting. Venting KeyKegs is a pain, and not at all easy. The only real answer is to ensure complete fermentation and condition in tank with just enough yeast to satisfy the Real Ale specification. However, we then have the problem that secondary isn't occurring in the KeyKeg, so would that satisfy CAMRA?

Anyway, despite my reservations, I'm really excited to hear how it progresses, and would love to be involved with looking seriously at how it might work for CAMRA.

Dave Bailey said...

Jeez Yvan, I'm replying to your first post and you are writing another essay!!

So, all good what you say, now stop getting distracted by my blog and go do some real work. I have a tank to clean so we should be here.

TTFN

Yvan said...

I believe a big CAMRA fest, Manchester I think, is working towards having a KeyKeg bar. (I have been consulted on the subject of dispense.)

I believe they are "doing it right" too - chillers and compressors, keg fonts. Not the faff and idiocy of trying to hook it up to a Handpump. Real keg... ho ho.

I have of course pointed out that there is no way to detect/measure if said KeyKeg has had "extraneous CO2" added... nor, for that matter, tank-conditioned cask ale. Elephant in the "real ale" room here. All we can go by is: does it contain viable yeast. Yes: it's "real", innit. Anything else requires trusting the brewer... and who'd trust a brewer? ;)