About Yvan Seth

Yvan is a Western Aussie from the Margaret River wine region. He grew up in the restaurant world with chefs for parents and thus has an innate love for good food and a little skill in preparing it for himself. Since also developing a love for great beer he often tries to bring food and beer together in both recipes and pairings - sometimes it even works. Yvan is an active CAMRA member, a BrewDog EFP round-1 shareholder, and a CAMRGB member - so often feels self-conflicted, but tries to be a general good-beer evangelist.

Beer “sommelier”… pffffttttttt…

In which I spit all the dummies and throw all the toys out of all the prams…

A comment I made on this article here, just now, no idea if it will be published.

Makes the whole “beer sommelier” thing look a bit daft really.

I was aiming to go for the “sommelier” qualification, but TBH it smells a bit like poo after this bit of mis-counted “journalism”. I’ll rejig back to the US Cicerone path now I think. It seems to have better standards. Some actual values regarding the quality of beer.

Clear glass bottles.. in two cases… FFS… we discussed the evil of these when I did the Beer Academy ‘Advanced’ course. The whole Beer Academy “Sommelier” clearly worth little of any value in addition to this if this list is picked as a “best of Britain” with their brand attached to it. Automatic assumption is “so, they paid for these product placements”.

The publication of this article with the Beer Academy’s “Beer Sommelier” very thoroughly attached to it totally devalues the concept I would hope that they’re hoping to build. What does “beer sommelier” actually mean with this in front of us…???

Very little, very little at all. “Travesty” comes to mind.

It is grim. Very grim.

[UPDATE] See also: Ed Wray (in the comments below) has a response of sorts regarding Shep’s beer here: The Hops in Shepherd Neame Beers

The impact of duty/excise on the price of a pint

Captain’s log, additional… 

OK – yesterday I posted about gross profit, what it it means and how it compares between beers and pubs.

@YeastieBoys remarked that it is worth noting the impact of excise (duty) on the cost of beer. A definite factor, and one to be aware of – even if it is unlikely to change and thus a bit futile to worry about too much. But definitely worth having a good grump about from time to time…

In the UK at the moment the full rate of duty is £18.37 per-hectolitre-%… (a hectolitre is 100 litres, or 176 pints) i.e. on a hectolitre of 5% beer you’d pay £91.85 in duty. But only if you’re a “big brewer” – one that brews 60,000 hectolitres or more. A “small brewer” who brews no more than 5000 hectolitres pays half the duty rate. And there is a “progressive” rate between these two sizes. This is due to the progressive-beer-duty scheme which is intended to give start-up breweries a boost to counter the economies-of-scale unlocked by being bigger. (There is debate over whether or not this discount is right, too much, or too little…) I’ve illustrated the progressive beer duty scale previously.

At the end of the day duty is a part of the production cost of beer. Breweries pay it and factor it into their price. Then pubs calculate their GP on this price, typically as a %, then VAT is added also as a %. So duty gets amplified such that it can have a significant impact on final price.

Regardless of the price of a firkin of beer (ignoring economies of scale) the difference between half duty rate and full after amplification by a typical 65% GP* and 20% VAT is always 74p on the cost of you pint. (The reality is that large breweries economies of scale allow them to sell firkins at the same price as small breweries so this difference hits the brewery books but not the consumer.) And between a zero duty rate and the current full duty rate the difference in price is amplified such that the difference to the consumer can be seen as a whopping £1.48… £1.96 at no-duty versus £3.43 at full-duty. I.e. £1.48 of your 4% ABV pint from a big brewery is added purely as a result of duty.

So if duty was scrapped entirely we could probably enjoy more than a quid off the price of a pint. Wouldn’t that be nice!

 

It isn’t so simple of course – if the taxman had to lose the huge pile of £ made out of the duty and amplified VAT he’d have to tax us in other ways. Perhaps more equitible ways though? Do we really think the cost of alcohol to society is equal to the amount of £ raised by the level to which it is taxed? (I really don’t know – the beer industry would likely say ‘no’, but the schmucks at ‘alcohol concern’ probably think it needs even higher taxation!)

I expect I’d personally be in favour of scrapping or massively scaling-back beer duty and increasing VAT to 25%… but I’ve done no sums to support the total economic impact of such a change. This is just wild, and probably pointless, speculation at this point.

It is worth noting that across the EU beer duty varies… the UK is one of the highest.

There is very detailed comparative information in a PDF right here, this is from 2014 and is the pre-reduction rate of UK duty. Here’s a quick summary of how my £45-quid firkin would fare in a few different countries – all other things being equal. This is making all manner of assumptions… also I’m totally unsure of my translation of the German/etc hectolitre-degree-Plato duty to a roughly equivalent UK hectolitre-% rate. Think of it more as: were taxes from <country> applied within the UK context:

I’ve included both the pre-2015-budget “penny off a pint” rate and the current UK rate. At 4% it really is about a penny off a pint, which is then amplified to 3 pennies by VAT & GP. Woohooo…

So… there you go. Google tells me the average price of a pint in Germany is £2.12 so the above seems not too far off. Time to move to Germany!


* typical 65% GP – I say this as my observation here in Cambridgeshire. Across the country this varies. Rents and wages are higher in Cambridge than, say, Hull – so where I pay £3.50 for a pint of a given type of beer I know some folk up north are paying £3.00 or even less. All the numbers above scale with the change in GP. If you want to play here’s the spreadsheet.

Gross Profit – why £6 is a good price for a pint of Gamma Ray

Ich habe Pläne große Pläne” – Rammstein, Stein um Stein

No no, wrong take on “gross” – this is definitely not about making an obscene amount of profit… I’m writing about “gross profit” as in “GP” – a term often heard when industry folk are talking about beer prices. I have written about GP before, with a focus on the role of the distributor in pricing – in this post I focus more on the pub and the beer. The motivation comes from recently having had £4.50 pints of Beavertown Gamma Ray being compared to £3.00 pints of £60-per-firkin bitter as if the Beavertown ought to be closer to the £3.00. As it stands £4.50 for a pint of Gamma Ray is near unheard of as that is pretty heavily discounted for promotional purposes.

GP is the “gross profit” made on goods sold. That is the margin made by the business in ex-VAT terms. If I sell pints of beer for a bargain £3.20 per pint I have a revenue of£2.67 per pint once the 20% VAT is scraped off. If that pint comes from a cask that costs me £60 (about normal for a local “boring brown bitter”) then each pint is costing me 86p (assuming a 70 pint yield per cask). So my gross profit on a pint is about £1.81… typically GP is expressed as percentage – this is the percentage the gross profit is of the revenue and in this case is 67.9%. This would be considered “pretty healthy” by most pubs.

When pubs talk GP they’re generally speaking of the average for the beer they sell. They’ll be targeting some specific figure that suits their overall business plan. This can be anything from as low as 40% in a countryside tied pub that probably survives only on profits from non-drinks sales to 70% in a city-slicker freehouse which might get away with being pretty much “wet-led” (most income is based on drinks). Two extremes of the pub spectrum.

All business situations are different – tie, location, rent, staff costs, etc. There’s a good breakdown of the costs of running various sorts of pubs available from the BBPA. There isn’t a one-size-fits all when it comes to GP. Yet customer expectations set a pretty narrow band for acceptable pricing of a pint, a trend now being a little broken out of by the “craft beer” scene. Still – a tied pub next door to a freehouse can hardly sell equivalent beer for a quid more per pint than the freehouse… so it typically makes a significantly lower GP on beer.

Let us look at a well known brown bitter as an example, a “20th century IPA” style of thing at about 3.6%. I’m talking about Greene King IPA of course. This is available on the open market at pretty low prices, I’ve heard of pricing as low as £55 from one reliable source. Meanwhile I know one Greene King landlord who pays £99. These prices are all ex-VAT, as is the way of these things. The problem is both pubs have to sell this beer for about the same price… in Cambridge let us say this is £3.20 in the freehouse and £3.40 in the Greene King place. The Greene King place isn’t going over the top on the price and there are plenty of drinkers in Cambridge who won’t be at all fussed by 20p if the pub is otherwise pretty good.

Pricing: Tied vs Untied

The freehouse GP here is a very healthy 70.5%… but the poor old Greene King pub is only at 50%. Keep in mind that these are pretty much extremes and there is a range between them, and then things differ again per beer and per pub.

The GP as a % versus “margin” in £ is important because punters generally only go out with so much £ in their pocket. Most people are living within a finite budget when it comes to luxuries like having a pint. The freehouse is making more per average customer. If the tied pub want to achieve similar profits it has to sell more volume (be larger, be in a better location) and/or shift other products – i.e. turn into a gastropub. Or maybe it can get by just fine as a wet-led pub simply making less profit… like I said before, every business situation is unique.

So that’s GP – and GP compared for tied and untied pubs. Now I get to the next core point of this blog-post: what does this mean for “craft beer” and why does my pint of Beavertown Gamma Ray cost me six bloody quid?!

Great tasty beer costs more. I won’t try to explain why – there are plenty of debates about how reasonably, or not, it is priced. All I’ll say is the brewers I know brewing what I think of as awesome craft beer are mostly working at capacity and expanding. Textbook supply-vs-demand means they can command a higher price for their product – within reason. Flavour is a factor, ingredients, and quality – but big factors are also fashion and brand… the best have all of these right. These folk haven’t founded a brewery with the aim of competing in the lowest-common-denominator end of the market. If this craft beer also happens to be in keg it’ll cost even more per pint, another debate to be had (and has been had) elsewhere.

In my opinion Beavertown stuff is reasonably priced, in the grand scheme of mid-5%s kegged craft beers. A pub will be typically paying anything between £85 and £100 for 30 litres of this lush 5.4% beer – depending on location, volume, and supply chain. For some calculations below we’ll pick £95 for a 1-off keg purchase in a very craft-keg-rotation-happy bar. This is to compare to the same bar buying any one of a dozen mid-3%s local bitters at £60 for a firkin.

We’ll say you get 52 pints out of a Gamma Ray keg, so a pint is costing £1.83 – more even than the pint of *tied* Greene King IPA (£1.42). But at £6 per pint the GP the pub is making on this beer is 63.5%. Most freehouse crafty places I know are aiming for the 65-70% GP range. They’ll cut a bit from target GP selling Gamma Ray at around £6 but balance this out by selling a “craft lager” at £4.50-£5.00 and higher GP (in the 70-75% range).

But, the punter says, a 70% GP pub selling a 3.6% 20th-century-IPA (brown bitter) is only making £1.88 from my pint – but this craft beer bar is making £3.18 from my 5.4% new-wave IPA… the profiteering SCUM! Fuck’em!

It doesn’t work like that. Going back to my point of punters with only so much £ in their pocket. Their limited beer cash might get them 4 pints of bitter or 3 two-third glasses of modern-IPA. Either way your business needs its target cut of their precious limited £… and in the above numbers a freehouse will make £7.24 out of the £12.80 worth of bitter and £6.36 out of the £12 worth of modern-IPA. (In the graphic below we’ve assumed the lowest brewery duty rate, but it isn’t really going to make a lot of difference which rate is involved.)

Pricing: Keg vs Cask

So, at £6 per-pint the pub has just given you a discount on some pretty lush IPA.

That’s GP for you. And why you really cannot think a £60 firkin of 3.6% brown bitter ought to sell for a very similar per-pint price as a £95 keg of 5.4% hoppy modern IPA.

Check my working… hopefully I’ve got all the above correct. Here’s the spreadsheet to go with this post.

Whether the keg of modern hoppy IPA ought to be £95 is a trickier debate… but that’s the price and your choice is to have that beer at that price, or some other beer at a lower price. My experience of “cheap” keg IPAs so far has not been excellent, but there is some good stuff on the market at prices down to around £85 I think. Below that it mostly starts to get a bit suspect.

To fine the unfined?

This is a sort of a “repost” of a BollocksBook post by a friend of mine.

He’s a very experienced cellarman, running a very good pub, serving good beer in typically very good condition. He really knows his stuff.

He likes the sound of some beers but they happen to only come in unfined form. The question is:

Is it OK to buy a deliberately unfined beer and then fine it so you can serve it clearer?

My own view on this is: NO – unless you have agreed this with the brewer of the beer. At least that’s the only case in which I’d do it myself. But I’d also probably not buy an unfined beer if I didn’t want an unfined beer.

Now I am pro-unfined and regularly sell products from three breweries that are 100% unfined (Moncada, Moor, and Weird Beard). I certainly don’t pressure folk into thinking they ought to be buying unfined beers though. But I’ll explain fairly passionately why some of the beers I sell are unfined if I am asked. Ultimately I sell these beers because there is a demand for the products in question of course – this doesn’t mean you have to buy or drink them though.

On the other hand I’m not anti-finings. I’m not a vegetarian and I don’t mind fish parts being used to clarify beer. I don’t think it is entirely necessary for the goodness of the beer, but it is necessary for selling beer to most of the beer-drinking market. And there is something beautiful about a crystal-clear pint. Yeast also doesn’t necessarily taste good… but a good unfined beer ought not be “yeasty”, nor even “cloudy”, with a few days on stillage it should be hazy at worst.

Anyway… my friend’s post is inside the walled garden of unofficial-CAMRA Facebook so I reproduce it in entirety here:

I have some cask real ales coming in that are unfined and will therefore have a haze to a greater or lesser degree. I am considering adding finings in the cellar before I condition the beer – I have done this many times before in my 30 years of cellarmanship, but only when the beer has been hazy due to a problem of some sort.

The reason for this is that the vast majority of my customers will not drink cloudy ale, and at the end of the day they pay the bills! Finings (made from the swim bladder of the Sturgeon) have been used for centuries to clear beer by taking out the unwanted stuff that sits in suspension in the beer. Finings cause these particles to congeal and sink to the bottom of the cask, hence making the beer clear. There is many an argument as to whether the floaty bits are good or bad for you, but that is not for here.

I appreciate that this means the beer will not be as the brewer intended it. Some of there brews are purposefully unfined to make them suitable for vegetarians or vegans, or because a brewer might wish their beers to be as pure as possible. I have the greatest respect for these folk and again this is not about whether a beer should be fined or not.

I am passionate about real ale, and want to be able to offer as many unusual, experimental and rare brews from small, independent brewers. But we are not in a trendy city – not even a busy town centre! I have a traditional local on the edge of a small town and therefore need to balance what we offer carefully. We generally struggle to sell cloudy beer and as small brewers ales are usually much more expensive than mainstream ones, we can’t afford to risk having to chuck it away!

So it’s a simple yes or no question – should I add finings to the beer.

Yes – It’s crystal clearly the right thing to do. Cut Diamonds are always better than Rough. Its fine with me!
Or
No – How dare you? Leave the mist in the mystery, the amazing haze, the fuggled fog! Let the clouds reign!

And I’ve created my own everybody’s-welcome Survey Monkey poll for this too. Remember this is not a debate about whether finings are good/bad or clear beer is good/bad or haze is good/bad… just about whether it is “OK” for a publican to fine a beer that a brewer deliberately sells as an unfined product.

If you do the ArseBook you can go over there and join/read the existing discussion. (And please continue the discussion there if you do do the arsebook, but if you don’t there’s comments below and Twitter…) There’s supposed to be a poll there too, but it doesn’t work for me. Thus I have this:

Create your free online surveys with SurveyMonkey , the world’s leading questionnaire tool.

Keg: All Tied Up

Tied Keg Tap

Tied tap

An impromptu #BeeryLongRead inspired by a little Twitter exchange earlier today. It’s a bit of quickly typed up “brain dump” really… little time for finesse with such things these days. I’m very keen to hear any other views on these things. Always learning, ever adapting…

I’ve spent the last year selling good beer to pubs & other drinks sellers – good beer in any format: cask, keg, bottle, can… cask is by far the larger volume market for me. There is a strong “freehouse” scene in the UK, with pubs that like their variety of beer on the cask pumps. And a strong drinker following for enjoying the variety they supply. (Yes, this is a minority of the overall drinking market, but a significant one.)

So – why, when you walk into these amazing freehouses, do you find on the keg taps alongside the cask a very predictable list of ubiquitous multinational-brewed products: Stella, Fosters, Guinness, Carling… here I offer my observations on this. Take note that a) I’m a newbie in the industry and b) I’m in the industry – and fight my own corner.

Anyway, why the lack of variety? Simple: nearly all keg lines in the UK are tied – including those in “free”houses. It’s an interesting situation really… the UK keg beer market is very much like that in New Zealand described here. [I don’t have a survey or stats to quantify any of this – it is merely observation from a year of working with pubs. I’d be very interested in any real data, or just other views on the topic.]

OK – but there’s plenty of complexity under the hood! The basic principle is this:

Beer company (Heineken say) says to pub: we’ll put all the equipment you need to serve these beers into your pub, we’ll look after it for you, you just have to buy the beer from us.

An attractive offer! Single simple delivery of all your keg products, and a whole load of stuff you just don’t have to worry about. The pricing for the “premium” keg brands is also fairly reasonable, and pubs can make a slightly higher GP on them (for the often higher-volume product). So it also subsidises those pesky cask drinkers who go apecrap if their pint costs 10p more than they think it should. (Spirits are actually better still, I’ve been told by many a pub they’d not be in business were it not for cheap vodka & whisky.)

Tied KeyKeg Coupler

Tied beer line…

Until recently there was very little cause to want to do anything else with keg. There simply weren’t diverse keg beer options on the market – you want ultra-premium, you’ve got -say- Hoegaarden and Leffe… so against the rise of cask ale the big brewers and distributors got themselves very solidly embedded into the freehouse market. And it was pretty much good for everyone. (Yes, there were always a few outliers – bars with knowledgeable enthusiast landlords who get hold of special imports and carved their own niche.)

But now things are changing. Small brewers are toying with keg, led perhaps by BrewDog’s bold positioning of switching over to being keg-only. Keg has various technical advantages – which can be discussed another time – and some folk simply prefer the beer the “keg way”. Usually folk inspired by European and American brewing. BrewDog were far from the first of course – Meantime, Camden, Freedom, and others were forging themselves little keg empires of their own already – with a big focus on supplanting mainstream premium lagers.

Speaking of these lager brewers – they had the strategy that was necessary to crack into this keg market. You’re a small brewer wanting to get your beer into keg, problem: how to you get that keg into a bar? All your locals have equipment owned by BigBrewCo and none of the publicans have the 1st clue about handling kegs beyond absolute basics. Put beer in keg… easy… but what next?

Those who successfully got their kegs into bars knew exactly what: put keg lines into pubs, follow the same model that the pub already understands. We start to see Meantime, Camden, Freedom, etc branded fonts showing up everywhere (in London and the South East at any rate). But this just means more tied lines! There’s a bit more diversity than before, but it’s still mostly “just lager”. The established-keg-breweries themselves provide a little diversity – pale ales, red ales, stouts… but all the same brands and little real “fun” to the beer. “Gateway beers”? Cask is still very much supreme for a tasty pint.

BrewDog’s little keg revolution changes this though – loads of little breweries now put their exciting beers into keg. But there’s a problem: the number of pubs with free of tie keg lines and clued up landlords is relatively minuscule. So now you’ve got dozens (hundreds?) of little breweries all vying for a tiny volume of keg throughput. Mostly relying on a small number of “craft” bars to get beer in front of consumers.

“Craft bars”? To me what it takes to make a pub or bar actually “craft” in ethos is total freedom and no compromise. We see places like the Euston Tap showing up – they know what they want, they don’t want to be tied up, they invest in their own equipment. Ostensibly they’re successful, others follow suite… we’ve now got a small raft of craft venues supporting these breweries. Cambridge 5 years ago probably had zero free-of-tie keg lines, now across 4 venues there are over 30 – and more to come no doubt. But that’s four venues in a city of dozens of cask freehouses. There’s a long way to go.

Coupler Fittings

Simple plastic fittings…

So what needs to happen to keep on growing this free-of-tie “craft” keg beer market? Pubs need to invest… in both equipment and know-how. Both are seriously lacking. I keep coming across pubs that have had free-of-tie keg equipment installed. But with only half the couplers they need, they don’t even know how to change a coupler on the lines, they don’t even have pressure gauges on their gas. They’re heading in the right direction but they need a lot of hand-holding in the short term. That’s what we have to offer – myself as a distributor, breweries to their direct clients. I fully support all keg beer I sell because this is necessary. I drove 80 miles to replace a simple plastic fitting last week – that’s how dire the state of knowledge in the industry is. The tied-keg-line status quo has done a good job of keeping landlords clueless and dependent.

Which raises that point too: the vast majority of publicans really don’t have a clue. After decades of fully supported keg lines the entire keg system is a black box to them. We need to help them skill-up, and really could do with a useful manual of keg system operation. I’ve done my BIIAB ABCQ – and it’s utterly basic, it teaches a reliance on Big Beer – which is of course relevant & correct for most of the current industry. We need something a bit more technical… I believe Cloudwater may be working on something in that direction. For the most part maintenance and operation of keg systems is actually pretty simple stuff, once you’ve got on top of some basic principles.

What’s next? Publicans need to be convinced that it is worth investing in the equipment. Because if I own the equipment in a pub I’ll pretty obviously want only beer I sell going through it – this is just sensible, there’s a cost to be recovered. What I want to do is support pubs in taking ownership of their own equipment, help with installs if needed, and then as part of the service of selling them beer offer full technical support – folk like me and all breweries selling kegged beer need to do the same to make it a viable option for pubs.

We need to get smart and start doing this now. Because the alternative future will be keg lines under the control of medium sized operators. Another recent conversation on Twitter I had was about Adnams. They’re aggressively going after the craft-curious market, sticking their kit in, and creating a craft-monoculture of Adnams/Camden beer across these eastern parts. Now I like Adnams and quite enjoy their Dry Hopped Lager. But this particular practice is pretty damn close to “craftwashing”. We’re getting a growing mid-tier of pseudo-craft-bars with an unchanging range, including craft beers like Bitburger… yes, I really have seen this billed as “craft” in several bars. (Camden and Adnams both deserve a place in a craft lineup… but unchanging lines of either and nowt else isn’t where it should be at.)

From both a personal and a business perspective it is very disheartening to have a good conversation with a pub about getting free of tie keg up and running for them, then to find a fortnight later that rather than that they’ve got the same two beers from Adnams as everyone else. The offer that the likes of Adnams has for these folk is simply too good… the price of stuff like Dry Hopped Lager is good too, as you’d hope. Adnams aren’t “the enemy” per se, they’re very nicely building their own market and if an Adnams tap is replacing a Fosters tap this is a step up. But… y’know… ho hum.

I’ve considered going the whole-hog myself, simply paying to put lines in, tied to myself. But it is so against my own world-view that I’m hesitant… but it is tempting.

There’s a long way to go on this. I’ve done my first full keg install for someone this year, and hope to do more – targeting the micropub sector a bit. I’ve spent a lot of the last 6 months helping folk understand keg, obtain couplers, and handle outlier support cases like “venting” various forms of keg. (Making up for brewery screw-ups, which comes and in hand with the micro/craft sector unfortunately.) It certainly isn’t trivial.

If we all support pubs in this way between us we can build the free-of-tie keg market. Giving publicans and drinkers more options – which is what it is all about in my opinion. It’s what I’m here for anyway.

Sadly necessary disclaimers, because everyone always seems to think that anything I say is all-or-nothing or black-and-white:

  • I am NOT saying that all bars and pubs need to be “craft beer” bars/pubs. This is very very far from what I believe.
  • I do NOT think that Fosters/Stella/etc need to be eradicated from the face of the Earth. Folk like drinking these beers, they’re the largest part of the beer industry, they’re not going anywhere and they have their place.
  • I LIKE ADNAMS – my favourite regional brewer by far, and by securing lines in pubs what they’re doing is simply good business and an attractive deal for publicans. If I were them I’d do the same, and they’re actually a bit “loose” with their tie – to my benefit!
  • I don’t claim that keg is superior to cask, I’d not claim the reverse either – they’re different and I believe both have their place.
  • I simply want more diversity in a small number of pubs and bars, and I see their lack of access to free of tie lines as an obstacle to my desired level of diversity. (And yes, I have a business interest in this obviously.)
  • Another topic: microbrewery keg pricing… a sticky issue and a definite barrier for publicans.
  • And the simple fact is that fancy keg beers are a harder sell for the publican. It takes a bit more work than shifting a pint of Stella. It’s definitely not for everyone… yet look to the “craft beer bars” and observe their apparent success. Why not give it a try?