Beer

[Paddingtonwolf]

Wonderful argument here. All very interesting.

And absolutely NONE of it gets round the huge elephant in the room that to a huge proportion of the customer base 1 pint of Bathams at £3 is a better buying choice then 2/3 of something elaborately named at £5. Sure there will be a smaller customer base who want the more expensive product but until that number is self-sustaining to expect the standard pub estate to devote space to the expensive product at the expense of selling space for the product that makes them money is complete pie in the bloody sky.

 

[Tyrannosaurus Dan]

People on here will never agree about beer pricing but I think the important thing is that the choice is out there. The majority of people in pubs will always go for the cheaper, mass produced product as that is what people do unfortunately and while pubs/breweries can continue to shift huge quantities of cheaper beer then that is what most of them will offer.

I do think that the selection of beer on offer in pubs is getting better, they even serve pints of Punk IPA in the generic Sizzler pub by my work these days, but sadly there are still those where your options are too limited for even a beer drinking amateur like me. I think the kinds of beers that Machin, Boozad etc want to see on offer will stay in the select few pubs that cater to that market rather than make it into the local pub.

To compare the craft beer pricing argument on here to burgers (I know burgers better than I know beer ) you've got the likes of McDonalds that will sell the cheap, mass produced burgers then you have places like Original Patty Men that will sell their burgers for £6 or £7. The expensive burgers are clearly a much better product but I can see the need for both options and I can enjoy them both. I would never turn my nose up at those choosing the McDonalds burgers but would question them if they tried to argue that it was a better or similar product.

 

[Johnny75]

Good read that Machin.

I think there seems to be a trick missed by both the craft brewers in that they could if they wanted to license their product recipes and/ or go into a joint venture with another brewer to make a cask only product therefore reducing cost by producing volume and that is an economy of scale.

I'd like to think they've explored that but I'm not sure they have. I also don't see the problem with having a lower quality product in cask with a higher volume, it would be just an entry level beer into their offering and complete the market.

The only issue i had with the blog is his analogy on M&S, he is wholly wrong on this and misses the point. M&S clothing as a whole may make a loss but it's about footfall and getting people in the stores themselves so they can drive traffic to their food isles whilst picking up extra things to buy (homewear etc), also the whole of the clothing lines M&S sell will not make a loss so the analogy falls down there. If Cloudwater et al were to make cask but only break even then they would be using cask as a marketing tool for pubs and consumers who will buy bottled beers and consequently know more about the brewery and its offering from then on. At the moment Cloudwater seem to have made a short sighted decision and will only ever be able to sustain the market they are in now as they have cut off an avenue for growth.

Just my 2 cents as the yanks would say.

 

[machin05]

I think the trouble with making cheap cask beer for those reasons Johnny is that it still takes up the same man hours and fermentation space in the brewery, which is usually in precious demand, so if that product barely wipes its own nose then that is surely unsustainable.

 

[Langers]

1 pint of Bathams at £3

£2.65 in Bathams pubs.

All down to taste I know but personally, I've never had a beer that can beat it either. Granted there are a lot of bloody tasty craft ales out there but I simply can't agree that there aren't similar quality beers available for around half the price.

 

[FrankMunro-371]

£2.65 in Bathams pubs.

All down to taste I know but personally, I've never had a beer that can beat it either. Granted there are a lot of bloody tasty craft ales out there but I simply can't agree that there aren't similar quality beers available for around half the price.

I totally agree. Thanks to Machin and Boozad I have started trying some craft beers, and they are very nice, but I can get a pint of forty niner for £2.25 in the Baron of Hinckley, and I think forty niner is a pretty decent beer.

 

[Paddingtonwolf]

Simple thing to look at for the pub is the economic concept of opportunity cost.

Say I have four beer lines to get product to the bar to be poured by whatever method you wish to refer to. If I fill three of those with real ale and one with lager, then the only way that craft beer is taking one of those places is if the profit to be made by selling the craft beer in that spot is going to outweigh the cost of not selling the real ale or lager it replaces. Even with small margins per barrel on guest beers that are most likely to make way, that is a serious hurdle. And then you add the smaller measures meaning that a barrel of the same size needs to sell through more units to be off the line and replaced with the next guest, which again is an opportunity cost.

No pub is going to take its one lager off for craft ale. You would be removing a product that appeals to too large a proportion of the customer base to be economically viable. Equally you are going to want stout and cider available so the only space for craft beer to get on the bar is in replacement of an ale or you commit economic suicide. With tied houses that is only going to be in a guest ale slot. And with free houses the opportunity cost of getting the main ale out and replaced is going to be even higher because you can guarantee that the individual pub will have a deal with the brewery for those barrels going into that slot on the bar which craft ale will simply not be able to compete with.

 

[leedswolf]

Bathams is undoubtably a great beer (one of NMBCo head brewer's favourites), but Bathams are geared to producing a small core range of product and by doing so their costs are pretty much fixed. By definition, Craft brewers costs are going to be higher if they are to produce to their market place.

Given how much you like Bathams would you pay £5 for a pint if that was the price.

Johnny there would be problems for brewers going into the high volume cask production. Firstly the cost of the brew kits and premises followed by a prospective hike in taxation should they go over the threshold (60 000 litres IIRC).

 

[Johnny75]

I think the trouble with making cheap cask beer for those reasons Johnny is that it still takes up the same man hours and fermentation space in the brewery, which is usually in precious demand, so if that product barely wipes its own nose then that is surely unsustainable.

I see your point and this is where economy of scale comes in, if the product wipes its nose then yes it is worth keeping simply as a marketing and brand awareness tool. It is expensive but market awareness is key to promoting the lines that a brewer actually makes money on. The brewery isn't losing money on cask and it gets a greater market to aim at and sell its premium product to. That's the only way to grow and if it wipes its face (I phrase I truly despise) then it is sustainable, just not profit making.

I liken it to New Balance, I know New Balance run their cricket pads and clothing at break even becuase it wanted market awareness, brand kudos (for sponsoring England) and a greater market appeal so it can sell more fashion and running shoes. Cloudwater and others will have to think like that if they want to grow.

 

[Langers]

Yeah probably but I wouldn't be able to afford to drink it as often as I do, and I know for a fact that it would mean I wouldn't go to their pubs anywhere near as often as my friends wouldn't pay that much.

Moot point anyway as they won't almost double their prices. I was making the point that there are some absolutely awesome beers available for far cheaper than £5. Especially round these parts.

 

[Johnny75]

Bathams is undoubtably a great beer (one of NMBCo head brewer's favourites), but Bathams are geared to producing a small core range of product and by doing so their costs are pretty much fixed. By definition, Craft brewers costs are going to be higher if they are to produce to their market place.

Given how much you like Bathams would you pay £5 for a pint if that was the price.

Johnny there would be problems for brewers going into the high volume cask production. Firstly the cost of the brew kits and premises followed by a prospective hike in taxation should they go over the threshold (60 000 litres IIRC).

I did read that and that's why I suggested a joint venture between several brewers, but that is a lot of beer to sell and if you are making small margins anyway then volume is surely the way to go?

 

[leedswolf]

Even with JVs there is the question of premises, brew kits, etc. and tbf craft brewers (by definition) are not necessarily going to want to compete for that market place. Small batch production is costly and each business has to cut it's commercial cloth accordingly based upon it's business ethic.

 

[Paddingtonwolf]

Yeah probably but I wouldn't be able to afford to drink it as often as I do, and I know for a fact that it would mean I wouldn't go to their pubs anywhere near as often as my friends wouldn't pay that much.

Moot point anyway as they won't almost double their prices. I was making the point that there are some absolutely awesome beers available for far cheaper than £5. Especially round these parts.

There certainly are. And to carry on my analogy, take a quick look at a "non-Bathams" pub selling Bathams. Guess which one. To get past Bathams on tap there the craft beer has to beat off the following facts

Customers in this pub (let's call it the "GW") are guaranteed to shift, say 4 18 gallon barrels of Bathams every week. So that is 576 pints of Bathams sold every week, regular as clockwork, with a guaranteed margin and certain profit. Replace that Bathams font with something else and it needs to guarantee a) making the same profit per barrel and b) shifting barrels pretty much as regularly to be a profitable decision.

Replace another guest ale in this mythical establishment and you are looking at still needing to shift a barrel quickly as the guest ale slot relies on regular turnover because it is the spot where customers want to try something new and different. And here you bump into the customer who goes in there and likes to try a Sarah Hughes Dark Ruby, or a Kelham Island product, and at that price point and pint quantity. It is very hard for craft to get onto that pump as well as it isn't likely to be profitable for the pub. The best way for this establishment to dip a toe in the craft waters is to take bottles and see how they sell through. Barrels and pumps just isn't economically viable.

 

[So Long Architect]

It's a different situation down here where a pint of pretty much anything is in excess of £4 (except in Weatherspoons). It doesn't seem outrageous to pay £5 plus for a pint of Punk in a pub here, but I can see it would in other parts of the country. But even down here where it's "leafy" and everyone wears clothes made of gold, most people will opt for the mass market lagers or a pint of London Pride if they feel like branching out.

 

[Johnny75]

Even with JVs there is the question of premises, brew kits, etc. and tbf craft brewers (by definition) are not necessarily going to want to compete for that market place. Small batch production is costly and each business has to cut it's commercial cloth accordingly based upon it's business ethic.

Oh I acknowledge it would need investment and maybe that's the stumbling block or maybe as you put it it's just an ethical thing. Either way there isn't much point the craft beer companies moaning that cask isn't viable if they are unwilling to move with their costs or ethics. It's all a bit of a hollow argument if there isn't the will to change and you could apply that to both sides of the bar.

 

[Johnny75]

Simple thing to look at for the pub is the economic concept of opportunity cost.

Say I have four beer lines to get product to the bar to be poured by whatever method you wish to refer to. If I fill three of those with real ale and one with lager, then the only way that craft beer is taking one of those places is if the profit to be made by selling the craft beer in that spot is going to outweigh the cost of not selling the real ale or lager it replaces. Even with small margins per barrel on guest beers that are most likely to make way, that is a serious hurdle. And then you add the smaller measures meaning that a barrel of the same size needs to sell through more units to be off the line and replaced with the next guest, which again is an opportunity cost.

No pub is going to take its one lager off for craft ale. You would be removing a product that appeals to too large a proportion of the customer base to be economically viable. Equally you are going to want stout and cider available so the only space for craft beer to get on the bar is in replacement of an ale or you commit economic suicide. With tied houses that is only going to be in a guest ale slot. And with free houses the opportunity cost of getting the main ale out and replaced is going to be even higher because you can guarantee that the individual pub will have a deal with the brewery for those barrels going into that slot on the bar which craft ale will simply not be able to compete with.

That is a very conservative approach. If a bar i situated in a town centre and is serving the same stuff as everybody else and that works for them they have no incentive to change, however to get on to current trends or for the sake of differentiation and more importantly new customers with new money then a craft beer offering would make perfect sense otherwise it's trying to do the same as everybody else and that's a race to the bottom only Wetherspoons wins.

 

[Paddingtonwolf]

Not really no. Because the Real Ales round here aren't race to the bottom Wetherspoons shite are they?

 

[Johnny75]

Not really no. Because the Real Ales round here aren't race to the bottom Wetherspoons $#@!e are they?

No they aren't but if everybody stocked the same then yes it would become a race to the bottom. Places like the GW and Slaters offer something different for the very reason they don't want to be the same as they would lose customers.

 

[Paddingtonwolf]

Possibly, but I think you have to consider not losing current customers in order to try and bring new ones in. At the end of the day, a craft beer takes up a pump unless it is in bottles.

Plus a craft beer customer will be happier to take a real ale as an alternative if there is no craft beer than lager boy and his mates will if you say "sorry no carling, but we have thirds of this Addles Fuckbunny to try"

 

[Kenny]

Addles Fuckbunny

The art work for that drink is something I want to see....