Best Supermarket for Craft Beer?

If you have been following Hardknott for any length of time you'll know we've had great success with our beers into Morrisons. Certainly most of the supermarkets are now realising they need to add some craft beer to their line-up. Morrisons have certainly upped their game and are pushing to have better beers. We are part of that push.

Nothing can ever stay the same. We started with three beers in Morrisons, Azimuth, obviously, as our staple, Infra Red, which is a bit of a darling for us, and Code Black, which if I were honest is a bit extreme in the favour profile for most people.

Code Black didn't make the sales needed to justify the shelf space. It's a fairly hard costing issue. Shelf space costs the retailer money. Turnover per shelf metre is a key indicator of performance. Not surprisingly Code Black got the chop quite early. A shame, but hardly surprising given a microsecond of thought.

A year into supplying Morrisons and they are keeping things very live, as are we. It's fun to produce something new and it really excites me to get that new thing out there to the great craft beer fans. Last year we launched Intergalactic Space Hopper at Craft Beer Rising in Glasgow. It was well received and we supported it in our own way with a very daft video, where I make quite certain that no one is going to accuse me of not putting my own reputation on the line for the purposes of getting us noticed.


Intergalactic Space Hopper from Hardknott Brewery on Vimeo.

Looking at the total craft beer range the beer buyer decided that Infra Red perhaps hasn't done quite as well as they would like and we should try some thing else in it's place. He noticed Intergalactic Space Hopper had been making a few waves and asked if we'd like to consider supplying that instead of Infra Red. To be fair, I guess Morrisons probably listed it despite my crazy video antics, or for that matter any other imagery that might have originated from the Hardknott PR clunky machinery. Whichever, we're just pleased we can once again get much more of our great craft beer out to very many more people.

Apparently it is going live today, although twitter tells me it's been on the shelves for a few days already in some stores. Out goes Infra Red, in with Intergalactic Space Hopper, and early indications are that it is doing well.

Looking at Twitter I'm seeing some people finding Hardknott in Morrisons and declaring them the best supermarket for craft beer. I don't know if this is fair, or entirely due to Hardknott, but I'm going to claim it anyway, as outrageous and potentially inaccurate declarations are by and far the most successful ways of getting one's name better respected.

So, get sown to Morriosns and buy some stunning craft beer from Hardknott.

Enjoy.

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.

Supermarkets and beer

It's the first of November. Yay! Christmas is nearly here!!

Today starts the first day of a very exciting promotion we are running with Booths supermarket in the run up to Christmas. Continuum, Code Black and Azimuth are all £1.25 per bottle. That's a lower price than we sell it direct to consumers at our brewery door. It helps get our beer out to more people, in more places and at a lower price. We are able to do this with Booths as we have worked hard at the partnership to bring down the costs of getting beer onto the shelves.

Stunning Craft beer at stunningly low prices at some of the best food and drink retailing stores in the North West. This, I hope, is only the start of what might become a better retail distribution; we've been talking to other supermarkets recently, with some positive news next year I hope. This will of course be limited to one or two lines, leaving the best independent bottle shops to do what they do best; provide diversity. Getting our beers into supermarkets will help bring much more efficient national distribution of Hardknott beer, getting it to more people in a more economic way.

I can hear the cries now "You're just helping the supermarkets close pubs" and no doubt some of you will want to say "The supermarket is selling at below cost just to get the punters in" There is the point that some people can't go to the pub. They have young kids, perhaps, or it's a drive to get to the closest pub, or even there isn't a pub anywhere near that has Hardknott beer. Besides, selling our core brands to supermarkets helps pay for us to do some of the more fun stuff that probably makes us very little money.

Azimuth, on a stunning snowy West Cumbrian fell

However, I'd like to address some of the fairly false myths associated with beer in supermarkets. 

Owning a bottling machine brings new opportunities and challenges to a brewery like ours. On the one hand we can put any of our beers into bottle just about anytime time we want. We can do as short or as long a run as we want, provided we have the beer, and we have no transport costs associated with moving tanks of beer or finished bottles back to us. Sending beer to contract bottlers has all the issues associated with transport costs, minimum run lengths, scheduling time on the line to coincide with brewing schedules and many other issues. Moreover, it is less likely to go wrong as the beer is handled less, and if it does go wrong, at least we have full control over the problem¹

However, we have a big fat loan associated with the purchase of our machine. It doesn't run quite as often as I'd like it to do, or pay enough to service the loan interest. I've been doing a lot of sums lately, comparing costs associated with making cask beer, keg beer and bottled beer. I've also been comparing various advantages of selling beer in these formats.

My top option, from a commercial point of view, based on the fact we have a bottling machine, is bottle. Of course, this works only if the price is right, and every deal has to stand on its merit. However, having looked at various routes to market, and the costs associated with them, supermarkets are far more commercially attractive than you might think.

Having looked carefully at the costs associated with getting beer, in cask, to pubs, we find that bottles, even at supermarket prices are more attractive due to the much lower cost of logistics. Margin per litre of beer is actually a little better when supplying to supermarkets compared to cask.

As for supermarkets selling beer at below cost, this is certainly not true from my perspective. The promotion we are running is entirely funded by us and the supermarket is still maintaining the same percentage margin. Furthermore, we are also looking at some much bigger contracts with supermarkets that have many more stores. Contracts that might see 200 fold or more increase on the Booths contract. Bulk logistics makes the eye watering discounts we might have to consider much more attractive than they seem at first sight. Having looked at the supply price we might be considering, and the eventual retail price, I can promise that they are not selling below cost, and neither are we.

It's not a one way street however, as the minimum order quantity (MOQ)  has been increased, for instance, to ensure our costs are reduced. For this reason, the MOQ thing, we cannot even sell it at the brewery to the public at this price. You see, we're not set up for efficient retail at the brewery, and stopping what we're doing to be nice to a member of the public can be a little distracting to brewing, or bottling, or packing thousands of pounds worth of beer onto a pallet to send to a supermarket.. We'll sell you beer, but we'd prefer you went to Booths, an independent bottle shop or to our bar.

As for the closing pubs thing, and even the whole cask versus keg issue. We've looked at the costs associated with cask, transport to local rural pubs, or eCasks and palleting out to wholesalers at necessary discount and decided a long time ago that we needed bottle to secure the commercial future of our brewery. This is why we bought the bottling machine in the first place. Less people are drinking in pubs than they used to. This is a shame, and we can discuss this all day until the cows come home, but it wont change the market statistics. Putting beer into bottles and making it suitable for supermarkets makes perfect commercial sense. When putting beer into bottle it is also easy to put the same beer into kegs at the very same time. You can't rack the same beer into cask at the same time and indeed it is better to brew specifically for cask.

Although I'll admit to feeling slightly guilty about not being in a position to sell more beer to pubs, and avoid the whole bottle thing, it's not us that is causing the damage. It might be the supermarkets, although in turn it could be argued that they are only responding to customer buying habits. It's not one of them, and no single business can succeed by taking an altruistic stance as someone else will surely take their place.

Equally, if we don't sell our craft beer to supermarkets, someone else will. We think drinkers should rejoice in the fact that many of these places are now actually waking up to the fact that they have to have some sort of craft beer. There appears to be three main categories of beer in supermarkets. Big brand, like lagers, Guinness and "Smooth" bitters, then premium bottled ales, which largely consists of traditional beer and now there is a growing section of craft beer. It's true, it's there and it is "signposted" with Sierra Nevada, Goose Island, Chimay and some Scottish brewery or other, I forget the name. I'd love Hardknott to be there too.

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¹And, I can feel better as I'll know exactly which Scott to shout at. Unless it is my fault, which obviously is very unlikely, but not impossible. In that case I'll probably just take myself to one side and give myself a good talking to.

Hardknott in Sainsbury’s

Last week was the launch of the in-store round of the Sainsbury’s Great British Beer Hunt. We have been successful in getting Infra Red to this stage. This involves us shipping 19,992¹ bottles to the central depot for onward distribution to over 400 stores by Sainsbury’s own logistics.

Infra Red is not a beer that we sell a lot of in draught formats. Much of our output of this beer is in bottle. Indeed, in stark contrast to draught sales, it is the case that it appears there is a sweet spot for bottle beers in the 5%-7% range based on the demand we see. 4% beers, at least for us, sell in lower volumes in bottle.

I believe there are several factors that might improve our chances of getting though to the final, but for certain strong sales will help. If you would like to see more Hardknott in future then buying our beer from this scheme will help.

It seems appropriate for me to comment on the issue of supermarkets and their approach to selling beer. I’m sure some of you will be thinking that we’re selling out. I’ve seen comments on twitter and elsewhere regarding the fact that the breweries are being screwed and that it’s just a loss leader exercise.

What I can say with complete confidence is that the price charged by the supermarket, at least in this instance, is at an appropriate mark-up. We knew the price we’d be paid for our product well in advance and could make the appropriate commercial decision. The volume of beer delivered for this contract represents more than the total sales for the whole of January this year. Furthermore, all we had to do was take the bottles off the line, pack in boxes, onto pallets and out the door. Less than 24 hours from tank to lorry. 12 pallets of beer in 2 shipments three weeks apart. Save for the stress of meeting the deadlines, and a couple of long bottling shifts, it was a breeze.

We love the rest of our customer base too. We like having a variety of beers, we’d get bored otherwise. However, it can be a real logistics problem making sure we have the right beers in stock, in the right packaging and ready to ship. Every week Graeme, my production brewer, hassles me for a brew plan. I have to refer him to Ann who can try and guess what people are going to order in two or three weeks time. We never guess right. Almost always we have too little of this, and too much of that. Last time we did a stock take we had over £20k of beer stock, just to be able to keep enough on stock for potential orders.

If I only had Sainsbury’s as a customer I would not need to keep £20k of beer in stock and could operate a leaner just-in-time business. I would then have £20k more in the bank, or at least, owe the bank £20k less.

The exercise has made me realize that supermarkets are not loss leading, they are doing deals with breweries to shift volume. The loser may well be the pub, and this is unfortunate. But you can’t buy Continuum, or Azimuth, or Queboid, or even Katalyst in Sainsbury’s. At least not yet. I expect that if they take on any of these beers we may well invent something else exclusive for the on-trade, it’s not really that tricky.

Supermarkets give a very powerful and cost effective way of getting our beers to the people who want to drink them. It helps us get our beers to people who can’t normally get them. It helps get beers to people who might not be able to get to pubs as often as they like, perhaps because they have young children, or live somewhere where it’s a car drive to the nearest decent pub.

Obviously I’d like to get through to the next round of the competition, where we supply for a 6 month period, at a price that is slightly better. The bad news for you guys is that the price on the shelf will likely go up.

However, if we don’t succeed in this round, and to be fair the odds are against us, we’ll look elsewhere for similar volumes. After all, we have staff wages to pay and a bottling line that needs using to be worth having.

Meanwhile, be pleased that Infra Red is available at a really knock-down price, take advantage and fill your shopping trolley.

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¹20,000 doesn't divide by the supply size of cases of 12.