Category Archives: Craft Beer

We can do without “craft” elitism…

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Dabbled in Facebook briefly. I use it as a “business tool” mainly (and it is a useful one), but if you’re there you get dragged into being “friends” and into “groups”. There’s a “Craft Beer” group where you’re only allowed to talk about “craft beer”. Some poor chap got told off for mentioning Robinsons beer…

Pffftt…

I’m not a big fan of Robbies. Old Tom on cask can be a delight mind you. Like most trad brewers their sterile shelflife-first flavour-second bottled stuff is mostly not great compared to their cask, and their cask is mostly a bit unexciting. But entirely pleasant when found in good condition.

But just because they’re a bit trad, presumably pay full duty rate, are more than 10 years old as a brewery, and that you find their beers in Tesco… seems little reason to blithely dismiss them as “not craft” in my mind. Let alone get on a high horse about it.

They’re independent and family run… do not represent a huge chunk of the UK beer market… well below the 3% that makes up the US definition for craft brewers, let alone the overall volume of beer produced under the US market definition. I’d be curious to know if they brew less or more than BrewDog at the moment. BrewDog… that common, or garden variety, Tesco brewer who most certainly are on the full duty rate.

Craft defined by style? Maybe craft defined by hops?

The mindless faddishness of it gets my goat and I want no part in it. It reflects badly on the industry as a whole, and it makes folk who claim that they like beer look like a bag of fashion-victim style tossers.

Objective Definition of Craft Beer

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Don’t try to define craft beer, that way madness lies… [Added 3/8/15 21:41: Please don’t read this as me insisting there ought to be some sort of an enforced definition… nor that I think I am laying down a One True Definition of Craft… it’s just a thought exercise. I do still think the concept is worth pondering.]

But hey, everyone seems to be defining craft beer again. I decided to give it a ponder, to flog the dead horse per se. Nowt better than a well flogged equine corpse. (I clearly don’t have enough to do… like accounting, inventory, and sales for example.)

The problem is nearly every definition goes into some wishy washy non-measurable territory about “quality” and ethos. This isn’t going to work… after significant thought (5 minutes, but on the back of several-years worth of feedback loop), here’s what I boil it down to from my own personal perspective. This is _my_ best attempt at a definition of “craft beer”, it gels with a lot of others, even BrewDog’s, but brings in stricter ownership rules and discards what I see as unnecessary minutiae & subjectivity.

  1. Brewery is “privately” owned and controlled.
    This is about being in control of creative direction, not being answerable to shareholders and investors. Freedom. Being an exchange listed company _definitely_ rules you out of the “craft beer club” (which, to my pleasure, takes Greene King out of the definition, huzzah!). Collective employee ownership is OK however – that’s about as craft as you can get I reckon. You can buy a brewery and have it still be craft too, so I’m not tying this down to founder-owned. Look at breweries like Moor, for example. [Disclosure: I sell Moor beer. It is awesome.] I’ll allow breweries owned by rich benefactors as well, so long as they have entire ownership of the brewery, so I’m not tying it down to brewer-owned either. If the owner(s) build it up, and sell it to Molson Coors… craft status stripped. Harsh perhaps, the beer probably won’t change in the short run (it will almost certainly change in the long run). But I believe craft is about more than the liquid in the glass.
  2. Investment companies / investors own, collectively, no more than 10%
    I think equity-investment in brewing is fine, see “rich benefactor” above, but a large corporate or institutional investor pretty much says one thing to me: where’s the exit strategy? It isn’t quite universal, perhaps, but it is nearly always the case that investment means travelling a path towards a destination of either sell-out-high or get-listed. Cash-in, cha-ching… that’s not craft. On the other hand, making lots of money by building a mega-successful brewery is perfectly OK. It’s “selling out” that I don’t believe is craft, unless the “sell out” is privately to a private owner in which case there’s room for the operation to remain “craft”.
  3. IMG_20150802_163304Beer clearly states origin and name of origin brewery.
    Origin fudging is not craft. I won’t budge on this one. Being shy about your production is not craft. If you’re embarrassed about how & where your beer is produced: it is not craft. I’ve no problems with cuckoo or contract brewing so long as it is done honestly – Yeastie Boys are an example of honest (and worthwhile) contract brewing. [Disclosure: Yes, I sell their beer. Because I love the beers.]
  4. Beer lists all ingredients.
    At a minimum top level ingredients, including brewing essentials such as yeast – so a list such as: Barley Malt, Flaked Wheat, Hops, Yeast, Blood Oranges, Otters’ Tears. I don’t really understand why this isn’t more normal, in my opinion it ought to be a legal requirement. But failing that – brewers should just naturally choose to do this! If you’re not proud of your ingredients, not ashamed to admit what goes into the beer, than you’re not craft as far as I’m concerned. I’m not saying brewers should give out the recipes to their beers – I am saying every beer should say what is in the bottle. And I want more than most here, as much as is practical. Malt types, hop varieties, yeast strain (and “our house yeast” is fine here). Whether isinglass is used at any stage too. Ideally this should be on the bottle, it can’t practically be presented for keg/cask – and sometimes hops have to change, often recipes evolve, but that’s what websites are for: 8 Wired, Hopwired [Disclosure: Hey, I happen to sell this stuff too.]
  5. Brewery meets a (to be determined) set of basic standards.
    This one needs some work. But, basically, I would lay down a set of minimum standards in addition to the core points above… I don’t think it is good to be too specific, like ruling out use of certain adjuncts, or brewing processes, etc. But there are some basics that are simple to audit. Some rough initial ideas: pays at least living wage (quality of people, I don’t think living wage is perfect but it is a start), invests in cold-storage (quality of beer), deals with wholesalers who invest in cold-storage (self-interest afoot here! But I believe *strongly* in improving supply chain in this direction – and the same applies for exporters and foreign distributors), educates employed brewing staff (owner-brewers excepted perhaps?), does not package beer in clear glass (personal enraged bugbear!) … what else? (All subject to debate…) [I’m, astonishingly, changing my mind on pasteurisation just a little, there are circumstances where I can accept it is not a compromise. Late additions of maple syrup, for example… how’s that for a subject for a “craft debate”?]

What, nothing about about size? Production volume? Etc… I think the US has shown that measuring craft by brewery size doesn’t work very well.

It may not quite be perfect… but it is “craft” as I see it, as much as I can pin it down within my own mind. Plenty of breweries I think are a bit crap fit within the definition, but defining craft beer can’t be about what I do and don’t like and it needs to be objective if it is to work at all. I use the word and if I’m to continue to use the word I ought to be able to outline what I mean when I use it… that’s one of the points of this post.

I’ve an ulterior motive in all this of course. Because I think, if done right, this can be used as a mechanism to drive change and improve quality in the UK beer industry. A proper craft beer representative body can pick up where SIBA fails to deliver, and bridge the gap to where the Beer Academy doesn’t quite seem to have the grunt to execute.

If there is to be a wider crystallisation of a concept of craft then mere definition is not enough… it needs an organisation behind it to work. Sometimes there are grey areas and a committee, perhaps, needs to make a ruling. For a definition to work lines do need to be drawn. And the organisation doing this needs to really stand up for the ethos behind craft beer… creativity and independence, and striving for quality. (We can’t make quality part of the definition, but an organisation can support and encourage it.)

This should be a membership based organisation like SIBA, where all breweries that meet the definition can join for a fairly low fee. (£250?) [But you don’t have to be a member to _be_ a craft brewer!] Major decisions are made on an open democratic basis – we have the technology to achieve this quite simply. The purpose of the organisation is to manage the membership, manage the definition, promote the concept of craft beer, and – importantly – make an attempt at defining best practice. Work to improve and modernise the world of great beer in the UK, which will be of benefit to everyone in the chain from farmer to drinker.

In the UK we’ve a lot to do to improve the pint of beer that ends up in the glass. SIBA isn’t doing it (but it does help), the Beer Academy isn’t doing it (but it does help), CAMRA isn’t doing it (and may actually have become a barrier to good quality).

Finally – “craft beer” should try hard not to look down on “not craft beer”. We’ll all have our own personal prejudices which we won’t give up (*cough*GreenKing*cough*). But we have to accept that some multinationals do make a high quality product, and sometimes it even happens to be rather tasty.

This has been a craft community broadcast brought to you by the vested-interest department… and I may very well change my mind tomorrow. Or after I’ve had a beer.

P.S. In all of this I think it is well worth being aware that craft is not necessarily equal to “good”, and non-craft is definitely not equal to “bad”. Good and bad are subjective and undefinable, there is debate even around identifiable brewing/beer flaws. Craft is not equal to “better” – but it will _usually_ be more interesting than the alternative thanks to the creativity and flexibility of the style of operation I think my above points encompass. Cases in point are to look at Greene King’s efforts at “craft”, and Marston’s “Revisionist” beers… which for the most part I don’t think are _bad_ beers, but they’re clearly contained and restrained beers… yet are the most “adventurous” beers breweries of this scale and shareholder-value maximising sensibilities will produce. (You can still brew really dull beer within the points of my attempt at a definition above, of course.)

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

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“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.

Keg: All Tied Up

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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?