Thursday, 10 May 2018

The Cask Anomaly

Life goes on, and you might be surprised to know; so does Hardknott. We have plans afoot to continue, perhaps against my better judgment, and will be involved with the business of making beer for a while yet I hope.

We have definitely stopped brewing at Millom. The brewhouse is just old, tired and in need of serious upgrade. We simply cannot justify solving that where we are. But we have some nice tanks and a bottling line. It seems there are people out there who believe they could use them, and perhaps use me too. People who might just be able to help me with the issue of lacking a decent brewhouse. It's all top-secret, and I might even be jumping the gun by leaking this little snippet.

That preamble is relevant however. As part of working out what to do for the future I've thought long and hard about a number of aspects of the beer market. My conclusions are that the British beer culture is still largely stuck with a huge number of preconceptions, traditional practices and frankly stupid dogmas that inhibit microbrewing from emerging out of the twentieth century.

I've contemplated the issues regarding cask beer before on several occasions. As part of my review I have considered cask very carefully indeed and have come to some fairly decisive conclusions, key to it is the following point.

The vast majority of draught beer brewed by brewers below 200,000hl/yr production is cask. The vast majority of keg beer is produced by brewers over 200,000hl/yr production and these brewers produce nearly no cask at all.1

Something is very wrong with this situation, very wrong indeed. I do not think one can understate how this is linked to another fairly important point.

Cask beer represents less than 10% of the total beer sales in the UK and around 16% of the total draught sales. The remaining 84% of draught sales are keg beers and the vast majority of that volume is from the big global producers.

The total beer market is shrinking, partly due to overall reductions in alcohol consumption but also critically due to changing customer preference to what are seen as more artisanal products. Cask remains roughly static as a proportion of the overall beer market. Cask in the free trade also appears to remain largely free from dispense equipment ties and this is in itself an interesting observation.

People like cold and fizzy



It is undeniable that people like cold fizzy beer. Only the deluded would try to deny that, and indeed it is important to note that contrary to the message CAMRA have put out for years, people who drink keg beer are not morons simply influenced by the advertising campaigns of large multinational brewers. Drinkers really do prefer beer that is cold and fizzy.

The artificial restriction of microbreweries largely to cask rather weakens their ability to capture a larger market. If a drinker's enjoyment of a beer experience is inferior under certain circumstances then that consumer is likely to be swayed away from that situation.

I have long pondered this situation. A long-time lover of the pub experience, brewer of cask, keg and bottle beers, twice over publican, past lover of cask beers and now a firm believer in keg as the future of great beer has come from observation and thought about the whole market.

What is wrong with cask, surely it's the best?


Have no doubts, cask beer is technically easier to produce, needs less capital investment and is less expensive to produce. It is ideal in many ways as a method for a brewery to gain an entry to the market.

Cask beer has a number of serious disadvantages;
  • ·      Served at a warmer temperature and with less "fizz" making it less palatable to many consumers (this is true, get used to it)
  • ·      The open container results in the beer noticeably deteriorating in a couple of days (actually, in my experience, a few hours)
  • ·      The lack of carbonation inhibits the demonstration of great hop aromas
  • ·      Variability in the quality of dispense resulting in brewer's beer not always being as they'd intended
  • ·      Significantly more skill required by staff to ensure quality is maintained
  • ·      Poor cellar cooling and cleanliness impacts on cask over keg
  • ·      Due to significant over-supply in the market the wholesale price of cask beer is very depressed
  • ·      Simply not funky and trendy enough for youngsters resulting in microbrewed beer losing out to trendy spirits, fruit ciders and fizzy rancid grape juice from Italy

The dichotomy


The beer market is still very much sliced in two by the terrible dogma instilled into the culture of British beer. Whilst there is no denying that some changes have been made and craft keg has become a thing, despite many people being sceptical, it is still very much a niche and confined to craft beer bars and a few very bold progressive pubs.

Mainstream pubs generally have a number of keg fonts almost exclusively for multinational brands. They may well, if free of tie, have handpulls serving locally produced cask beer, if they serve any microbrewed beer at all.

Beer drinking customers can be broadly divided into two types; the cask drinker, who might default onto smooth-flow if desperate and the solid keg drinker who wouldn't wash their socks in that cask stuff.

Admittedly, there is a group of wise and discerning people who are much less blinkered, and who will drink based on their mood, thirst, level of sunshine or just because they are curious, but I'd suggest this group of people are in fact a small proportion of drinkers.

The future really is keg beer

A bold statement you might think, and indeed it is only part of the future, but a very significant part of it. It's not an easy road though. Much investment is needed along with working out the route to market.

Equally there is the task of convincing cask-only drinkers, who are only so in my view due to the pressure from CAMRA, to love microbrewed keg along with gaining trust of the keg-only brigade to try new beers. Changing that is likely to be a bit of an uphill battle, CAMRA AGM voting continues to prove this point.

Not only that, we have to tackle the stranglehold of the multinationals on the bar front. Various "soft ties" that effectively prohibit microbreweries from even being permitted to sell their keg beers to pubs in fact tie much of the market even where a pub is apparently free of tie. This last point is important. Many observers are getting their knickers in a twist about PubCos and brewery owned estates forgetting that this is actually not the really big issue we have to deal with.

And for Hardknott?


It is almost certain that in whatever form we finally re-emerge we will be focusing on keg much more than cask, very probably eliminating cask all together. For a start, the most likely solution to continuing would be to join with an existing cask producer thereby possibly forming a conflict.

My task then for the next few months is to work out how to tackle the various barriers to getting really great keg beers available and better accepted by the beer drinking public.

I think a return to a much more combative, confrontational and outspoken ethos for Hardknott is required; there is a lot to change in the minds of the public if we are to see microbrewed beers on keg fonts in many more regular pubs. I do not think there is any good reason for this not to happen other than inappropriate inertia emanating from a Luddite attitude.

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1OK, so I expect I'll get some challenges here. Yes, there are the likes of Fullers and Marstons who put quite a lot of beer into cask, but even so, that vast majority of beer produced by breweries over 200,000hl/yr is keg beer.

10 comments:

Unknown said...

Right now I find it hard to see a future in cask outside of "very local" (so small-scale and a slave to local prices and market) and "very huge" (economies of scale allowing them to get "good" prices out across nationally). I see the economies-of-scale impact at both brewery and wholesale/distro level... (and perhaps a "small local" niche for wholesale if you're a 1 or 2 person operation without rent/mortgage overheads and like a lot of driving).

I started out (wholesale) mainly cask... 4 years ago that was the natural "free of tie" market to get the sort of beer/brewers I wanted to drink into the sorts of local pubs that could buy them. But from day one fostering keg format was part of my agenda (because I like cold fizzy beer, sorry) and now cask is maybe 15% of our sales four years later (with the rest about 50/50 smallpack/keg).

In the 4 years we have seen many cask customers drift away (or shut up shop) claiming they need to buy cheaper beer to support the overheads of wage and rates rises and do not dare to increase prices on the pumps more than fractionally. (Costs of operating a pub business vs cost of a pint is another huge issue for cask.) And we've basically seen very little pick-up of new cask customers - new cask venues have a tendency to be super-local and/or super-price focused, with a rarer third type that is super-ticker (so not really how we play the game, but we get enough new stuff to lob them the odd good cask).

At the same time we have seen a huge pick-up of keg (and can) by on-trade venues mixed from pretty mainstream to new-ubercraft. Those new venues drive a lot of the volume as does a spread of new off-trade that has build the smallpack market, especially cans (70%+ of our smallpack) - and more and more off-trade venues take kegs now too for growler-fill of a bit of cheeky on-trade on the side. The market is developing and diversifying... but where does cask fit into that? Several of these on/off mixed type venues I have observed started with cask feeling it as mandatory, and maybe half of them continue to do the odd cask whilst the others have given the space over to something else now.

... PART 1... TBH in PART 2...

Unknown said...

PART 2...

For cask the numbers just don't make sense any more and at least once every week I consider dropping it entirely. For the prices people are willing to pay a van load of good cask on a 20% GP doesn't pay for the operation of the business and fulfilment. We would be out of business if we were more than 50% cask still. Or we'd need to be buying all the seriously cheap stuff I am offered, getting a 25-50% higher _cash_ GP and offer lower prices. I'm regularly offered beer below £50 a firkin. (And there a lots of little distros that do this, and it's probably good bread-and-butter to the big ones too (who *also* benefit from significant economies of scale... ah... the whole "guest ale" market.)

But there are still a few good customers out there who appreciate great modern cask beer... so we persevere with it for now.

Don't get me wrong... there is LOADS of cask volume going out out there... "trad" cask isn't in danger. But it's looking like it'll have to stay pretty trad and pretty price-constrained... which limits what the beer can actually be. Plenty of cask drinkers won't care and won't bat an eyelid at this however as they're happy with the status quo. (And fair dos to them, I'm not in the business of telling people what they should drink.)

For now our focus on top-quality, full-coldstore, carefully-chosen breweries is working our sorta OK (still not paying myself a wage, but unlike other operations we're also not bleeding investor funds like we've been stabbed in a cashflow artery).

I fully support a keg-only Hardknott. I think it should be a project that involves a better location and a taproom. (Obviously a better modern brewplant is a given.) I think it can work. But you're going to need investment - and that's just the first hurdle.

[Shit, this comment got a bit out of hand... it's been edited in parts over the last 2 hours and I'm not going to re-review it... apologies for any errors, etc.]

Here endeth the epic comment...

Rob Nicholson said...

I've posted the blog article on the CAMRA Discourse forum. Should provoke a bit of debate. Hard to argue with some of the facts here.

I've always maintained that CAMRA was really about fighting a loss of choice caused by an increasingly powerful handful of large breweries shutting down local brewing. Reversing that trend, albeit on maybe a small scale, was their biggest success. Real ale was the weapon which was useful at the time - but it wasn't the reason CAMRA existed. But somehow many have got transfixed on real ale being the only good beer.

Which it clearly isn't.

A question - when you say 84% is keg beer, does this include keg lager?

Mark Enderby said...

An interesting and thought provoking blog (as I would expect from Dave). I couldn't disagree ... as can be seen, the big boys are opening up the cask lines but trying to keep the biggest threat - craft keg - out. However, the danger of going the keg route is you then enter the battle with the off trade. There is less difference between keg and packaged so many drinkers can now drink well at home ... like I'm doing now. Every supermarket is squeezing deals from good micros (including 3 for a fiver Hardknott at Morrisons) ... is this sustainable?

Unknown said...

Rob,

Thanks for the posting on CAMRA forum. Seems people still want to argue with or ignore the facts I present!

Agree, CAMRA really started with the aim you suggest, and at the time it was right to focus on a hook easily understood; Real Ale. Also, as I've always said, cask beer is a technically easy route for a start-up to take.

Yes, the figure of 84% is all keg beer, including lager. Lager is a style of beer, that's all, and indeed we could argue till the cows come home regarding what is and what is not a true lager.

Mark,

Our deal with Morrisons is probably the best thing we ever did, and is likely to remain core to continuation, provided the current hiatus doesn't scupper things.

You see, although the price we get for our beer is low, the costs to us of delivering are low. It costs less than £50 per £1000 of beer delivered to Morrisons, that's 5% of turnover. It can cost £200 or more to deliver the same value of cask beer locally, depending on how much is on the van and how stupid the run ends up being, more than 20% of the revenue from selling beer locally goes into transport. So, we save roughly 15% on the route to market to supermarkets, we pass some of that saving on which ultimately benefits the beer drinker.

If we didn't do it, someone else would.

Curmudgeon said...

Can't disagree that a there is a genuine demand for cold fizzy beer, something many CAMRA diehards dismiss as an advertising-induced false consciousness.

However, I think there are two different propositions here:

1. Keg beer represents a big opportunity for small brewers. There may be some truth in this, but it overlooks the fact that most people drink keg because it is reliable and familiar.

2. Keg beer is actually better than cask. Well, I can't agree there. For British-style ales, cask, when done properly, is much preferable. To argue otherwise is to say that CAMRA has basically been barking up the wrong tree for forty-five years.

Rob said...

I think it was the Beer Nouveau blog from last year that went into the profit difference between packaging options and their conclusion was that keg and cask were pretty similar. BUT, I'm guessing that at their level of supply they probably aren't competing with the low end cask market and were only going to beer specialist type pubs (could well be wrong). Small pack was massively more profitable for them, but again they are probably going to specialist retailers. Overall though, and given what you say about the Morrison's deal, it does seem that small pack is keeping a lot of brewers in business, and keg/cask is covering costs or acting as marketing.

Unknown said...

There have been several comments which I have not allowed through moderation which echo the old "people who like keg beer are stupid" or "I've tried the BrewDog beers on keg and they are nothing like what their cask beers were"

Guys, you miss the point, so don't bother wasting internet bandwidth.

Mudgie however puts things a bit more eloquently and succinctly and I agree at least with point 1.

Point 2 though? Well. Not sure I do agree. Cask better than the same thing in KeyKeg for instance? Doubt it.

Has CAMRA been barking up the wrong tree for 45 years? No, the first 30 were OK, made sense. Now? Yes, they are definitely missing a big point.

Benjamin Nunn said...

A whole lot to digest here, both in Dave's post and the considered responses. My general views on the topic are fairly well known and probably don't need reiterating, but a couple of specific points:

1. I don't buy the argument that CAMRA was somehow right to begin with and is wrong now.

There is no reason why this country couldn't have allowed cask beer to die out, just as the rest of the planet did, and then enjoyed a US-style craft beer movement based around keg, which would arguably have brought us to the same end-point towards which we are heading anyway, though perhaps 10-20 years earlier. (There is a curious perception that a pro-cask CAMRA 40 years ago was somehow a necessary prerequisite to the good beer from cask-sceptics that is around now, which smacks of faint praise and is like giving a Lifetime Achievement award to a washed-up old entertainer who hasn't done anything worthwhile in years.)

Either CAMRA were (and are) onto something and cask is specifically worth preserving and campaigning for as a mainstream interest OR they got their objectives fundamentally wrong and were as guilty of holding back progress in the 70s as they are now. The middle ground is a bit disingenuous here.

2. Some people like beer that isn't cold and fizzy. Some (me) like beer cold but not very fizzy. There may even be some that like beer warm and fizzy. It takes all sorts and nobodies personal preference is inherently wrong. It's perhaps a little unfair to suggest that those who do like cold and fizzy don't do so because of mass advertising, but those who don't are the victims of brainwashing by CAMRA HQ.

People have different preferences for temperature and mouthfeel just as they do for hoppiness, maltiness, strength etc. It's just the way people are. Yep, maybe those who don't like a keg-style serve are in a small minority. But is this minority any smaller than those who don't like beers over 10% ABV? Those who don't like Sours? Those who don't like 150 IBU Hop Monsters etc.

3. I don't believe the motivations of many microbreweries for taking the cask route is because it is easy or cheap. It's because most people who choose to get into the game in this country come from a pro-cask background and have a genuine belief that this is the right way to go about things. Some will diversify into other packaging for commercial reasons and more recently we've seen a lot of folk get into brewing - often highly successfully - who don't come from this tradition. But for now, small brewers who aspire to produce mostly or exclusively keg are still surely in the minority.

So, if Hardknott never puts its name to any cask ever again, I'd consider it a shame, though perhaps not a surprise - Dave was probably the most pro-keg craft brewer still putting out a reasonable % of cask after others had proactively ceased.

I will always be particularly grateful for Juxta and Granite, both of which have provided me with unique ABV ticks.

Pastey said...

The conclusion between the difference of cask and keg was that you get a 30l keg for about the same price as a 40l cask if the beer going into them is the same.