Wednesday, 26 September 2012

How Many Then?


There is sometimes talk about how CAMRA excludes keg producing breweries from its festivals. You may have noticed this and it is of course untrue. CAMRA excludes keg beers from its festivals. Those that produce both are welcome to put their cask offerings forward.

The Good Beer Guide 2013 (GBG) indicates that there are 1008 (have I got that right?) breweries operating in the UK. Almost all produce cask beer. It must therefore be a tiny percentage that are thus excluded.

 Does anyone know how many keg only breweries we have in the UK?

Why am I asking? Because I just don't know and wondered. 

78 comments:

Steve Lamond said...

4: Camden Town, Lovibonds, WEST and Brewdog as far as I know (two of which used to produce cask beer)

Zak Avery said...

Freedom? Moravka?

py0 said...

Don't see why they can't let breweries serve their beer however they see fit. If keg beer is so much less palatable, then surely all the keg will be left undrunk at the end of the festival and these silly miscreant brewers will see the error of their ways.

The point is, its not for us to tell brewers how to present their beer. Let the beer drinking public decide... or else change the name from "Great British Beer Festival" to something less deliberately misleading, like the "great british cask beer festival."

Fishter said...

This could be seen as exclusion, but it only applies to "brands" not breweries.

"Beer festivals are not to stock or admit for any award, any beer brand which is produced in both cask and keg versions that mislead the drinker into believing that there is little or no difference between the versions."
(Internal policy 4.33)

Tandleman said...

py0 - Different discussion I think.

Fishter: That policy is unenforceable. How would that distinction be made in practice? The brewery would have to be adjudged to be deliberately misleading.

Martyn Cornell said...

Ha! Fascinating blind spot people in the beer chatterati have. As far as British keg-only breweries go, you're all forgetting Magor, Alton, Mortlake, the Royal brewery in Manchester and the one in Tadcaster that isn't either of the Smiths. And does Tennent's brew any cask?

I'm nowhere near a GBG, unfortunately, which is why I ask about Tennent's, but I believe there's also another keg-only lager "microbrewer" too - Cotswold. So that's at least seven tiny and five or six absolutely enormous keg-only breweries in Britain.

Pete Drinks said...

I think it's a bit of a straw man to be honest - I've not come across anyone claiming that breweries are excluded from festivals just for daring to keg some of their product - but their keg only product is excluded.

Perhaps a more interesting metric would be the proportion of beers in production that are not produced in CAMRA-friendly casks.

That, I suspect, is a lot more than the "tiny percentage" you suggest.

Tandleman said...

Pete: As Martyn points out, it is the vast majority.

Not a straw man. It is part of something wider I'm doing and in any event I clearly state that the keg products are excluded.

My point is about breweries. You may wish to change it to something else, but be fair. It's my blog.

Anonymous said...

Have you got a time machine? Will there still be a GBG in 2103?

Tandleman said...

If I had a time machine, I could come and kick you in the balls yesterday!

Duly corrected.

Anonymous said...

Out of interest what method of dispense is used for the foreign beer bar?

Barm said...

Anonymous, gravity or air pressure.

Anonymous said...

Thanks. Are they cask conditioned as well? Just trying to work out why British brewers aping US styles can't serve their beer in the same manner as they do on the foreign beer stand. (Or maybe it's "won't" rather then "can't").

py0 said...

I asked a similar question at the Cambridge Beer Festival, and the answer I received* was "because all UK beer that isn't cask conditioned is shit", which wasn't particularly insightful.


*This wasn't implied to be an official stance from the organisers by any means, just the opinion of the one volunteer I talked to.

Tandleman said...

"Just trying to work out why British brewers aping US styles can't serve their beer in the same manner as they do on the foreign beer stand."

Simply put it is because the brewers don't exhibit their beer, CAMRA does. They are asked to supply in cask conditioned form and they do.

Anonymous said...

That's what I don't get. It's all well and good being ambassadors for real ale, but it's inconsistent to allow 'non real' ale just because it's from a different country. Either allow 'non real' beer full stop and make a value judgement over whether it is good or not (which is surely what must happen on the foreign beer bar anyway) or only do real ale.

And yes, I know it's CAMRA's party and they can do what they like etc etc but the inconsistency just makes them look silly.

Pete Drinks said...

"My point is about breweries. You may wish to change it to something else, but be fair. It's my blog."

Ha! True, and it's an interesting question in and of itself - I was just taking issue with the presumption that anyone actually claims that CAMRA exclude all beer from keg producing breweries.

RedNev said...

In reply to pyO's comment "Don't see why they can't let breweries serve their beer however they see fit. If keg beer is so much less palatable, then surely all the keg will be left undrunk at the end of the festival and these silly miscreant brewers will see the error of their ways."

That shows how little you know. CAMRA buys the beer for its festivals and sells it. If it doesn't sell, CAMRA bears the loss, not the brewer, who'd lose nothing.

I don't see why people who aren't members of CAMRA think they can tell the Campaign what to do; the Campaign takes the stance on real ale that its members want, as decided at the AGM. Plus, there is a big clue in the name, Campaign for REAL ALE.

So stop whingeing about CAMRA (people who complain but actually do nothing are quite irritating), go and join CamRGB and make that into the campaign you want. Or start another campaign; after all, CAMRA began with four men in a pub. But whatever, just go away, will you?

py0 said...

I am a member of CAMRA, hence I'm as entitled as you are to an opinion as to what we should and shouldn't campaign for and allow in our festivals.

If we're the Campaign for REAL ALE AND NOTHING ELSE, why do we support foreign non-real ale?
Why do we support cider?

The hypocrisy just comes across as churlish and deliberately antagonistic to accept foreign keg beer but not UK keg beer.

Calling it the Great British Beer festival but then specifically discriminating AGAINST certain types of British beer is a disgrace, frankly.

Jeff Pickthall said...

Camra should cease using "beer festival" and use "real ale festival."

py0 said...

Disgrace was perhaps a bit far, but I do think its both perplexing and slightly embarrassing. Perhaps if Tandleman + co's recommendations had be accepted by the NE we would have been in a healthier situation now.

RedNev said...

If you are a CAMRA member, PYO, I shouldn't have had to explain in my previous comment why your suggestion was so wrong. If you find the situation such a disgrace, either get actively involved and try to change things, or resign your membership.

Jeff: why? I don't think anyone is at all confused by the name of the GBBF, and as it has become so well known, it would be quite silly to change it. After all, it's not factually inaccurate.

One reason why CAMRA has a range of drinks beyond real ale at beer festivals is because not everyone who comes is a real ale drinker. People often come in groups which may include non-real ale drinkers who've joined their mates for a day out, or they may come as a couple, with one partner not a real ale drinker. As a regular worker at festivals, I've come across both those scenarios quite often.

Real ale festivals aren't manifestos - that's what the AGM is for.

Maxwell Power said...

So what you're saying is that if the missus wants a glass of wine or one of the lads fancies a Czech lager it's fine, but if they're after a well made, kegged, (craft), beer, they're out of luck?

Maxwell Power said...

More pertinent to the blog post, are The Kernel putting anything in cask nowadays?

Tandleman said...

So what you're saying is that if the missus wants a glass of wine or one of the lads fancies a Czech lager it's fine, but if they're after a well made, kegged, (craft), beer, they're out of luck?

Of course that's what it means. We campaign for real ale. What's the matter with you? Which bit of that is giving you comprehension problems?

I've explained the foreign beer bit loads of times and I ain't doing it again.

Maxwell Power said...

Of course that's what it means. We campaign for real ale. What's the matter with you? Which bit of that is giving you comprehension problems?

Maybe this from the GBBF 2012 site:

Every October, CAMRA organises its National Cider and Perry Month campaign, so GBBF is a great chance to experience some of the best producers around at the moment.

RedNev said...

Maxwell: I have worked at loads of beer festivals; how many have you worked at? I have never been asked for craft keg, nor am I aware of any complaints made to any of those festivals about the absence of such beers. Not only that, although I visit lots of pubs, I don't see craft keg anywhere. Serving it at a festival is against CAMRA policy (democratically decided by the members), but would also be a big financial risk as it's a minuscule niche market.

Not keen on democracy? Fine - don't join CAMRA, but non-members (or even inactive members) should not expect their views expressed on beer blogs to have any influence whatsoever.

Here's an idea! Organise your own craft keg festival. After all, CAMRA festivals are organised and staffed by unpaid, amateur volunteers.

Coxy said...

CAMRA organise the gig so they can sell what they like! IF I have a house party are you going to tell me what sausage rolls to buy? It's just beer , not drugs for cancer patients that the NHS won't pay for. Chill out , I think without a few Craft beers there still might be just enough choice around. does anyone know if you can Craft Pork Pies for my party by the way?

Anonymous said...

I can only speak for myself, but I'm not moaning about CAMRA. They are within their rights to do whatever they like. It still makes them look silly and inconsistent when they refuse to serve British kegged beer but are happy to serve foreign ones. I was genuinely trying to understand CAMRA's stance and I still don't. But that's their prerogative.

py0 said...

The stance is actually very easy to understand. I know plenty of CAMRA members who feel the same way as you.

Unfortunately, other less informed members of CAMRA are scared that if they allow UK keg beer the punters will prefer it and so they ban it out of fear.

Alternately, they personally don't want to try it because they know what they like and they like what they know and they don't want anyone else to try it either.

I disagree. I think real ale is a superior drink and the best examples will always stand head and shoulders above even the really good keg beer. However, how are people meant to be able to judge that for themselves when the one place you would think they would find the best of British beer point blank refuses to serve it?

Its just fear, hatred and hypocrisy. Its like the bbc banning the sex pistols hoping it will just go away.

All this whimpering about craft beer being just a "niche market" is rubbish. Its extremely popular among the 20-30 age bracket and the biggest growing drinks market in the UK. CAMRA have nothing to fear from it, its taking drinkers away from commercial macro lager, not real ale.

Coxy said...

might be a point to help CAMRA get younger drinkers, in the last week I have been to The Cock Tavern , Pembury Arms and Southampton arms and the crowd was quite young with no obvious ale stereo types. Would they go if they didn't have Craft beer on even if they are drinking the cask? I don't know, maybe we need to interview these Hoxton Henrys . There is a worry for me in the future about cask ale because some people like the barman in the Southampton really considered Magic Rock High Wire in Keg better and I could tell he saw that as the future, so that does worry me a little and it must worry some in the CAMRA hierarchy?

py0 said...

Some beer works ok in keg, more often than not its too fizzy and carbonic. As such I really don't see it as a threat to ale, more of a stepping stone for non beer drinkers. If the CAMRA exec had any common sense they'd embrace it as a gateway beer into the world of real ale, not something to get so defensive about, banning it from festivals etc.

I've managed to convert several friends to real ale - by introducing them to good hefeweizen, to dark lagers, and to american style IPAs first. Once they get their head round that lot they're excited about trying some real ale, whereas before they hadn't been.

Erlangernick said...

Seems to me CAMRA's been successfully introducing people to cask ale for a good while now.

Erlangernick said...

"Unfortunately, other less informed members of CAMRA are scared that if they allow UK keg beer the punters will prefer it and so they ban it out of fear."


Really? Where do you get that? Is this why Red Barrel was banned from early CAMRA fests? (Assuming it was!)

Matt said...

py0, any evidence for your claim that "craft beer" isn't a "niche market" and is "extremely popular among the 20-30 age bracket."?

People who go to specialist beer bars often generalise from their own limited experience and think that "craft keg" is becoming a mainstream drink because they see all the young trendies buying it, overlooking the huge majority of young people who are in a non-trendy bar drinking mass-produced lager, cider, wines and spirits.

py0 said...

Sales of craft beer are low because the supply is low, not because the demand is low. If the demand were low, the prices would reflect this.
Ask yourself: why is craft beer so expensive compared to real ale? Simple: high demand + low supply = high prices. The demand is there for anyone to see, any time anyone opens a bar serving craft beer it's immediately packed to the rafters.

Have you ever considered that out of all the people stuck in the crappy tied village/suburb pub serving only Fosters and Greene King IPA because thats all Punch/Enterprise/GK will sell to them, most of them might actually prefer to be drinking craft beer?

You can probably take it as read that the majority of the sales of premium foreign lager would just as happily be drinking premium British craft lager, if only we could get it into the pubs!

Does anyone actually like Fosters? Do you really think people drink it out of choice? They have to drink it because we've got ourselves in the strange situation in this country where hardly anyone likes any of the beers sold in the majority of our pubs.

py0 said...

Britain: brewers of the best beer in the world, bar none.
Britain: drinkers of the worst beer in the world, bar none.

What's wrong with this picture? Are 80% of the UK population just idiots?

Tandleman said...

Interesting points being made here. One thing I'd say is that fear has nothing to do with it. Think of it as showcasing the things you believe in. Keg cannot give us something that can't be done in cask.

Foreign beers do not usually come in a cask variant and CAMRA promotes choice in beer styles, not in dispense methods. For dispense CAMRA choose cask conditioning, not brewery conditioned.

py0 said...

My question is: we want to promote choice in beer styles, this is great. Lets say we want to offer a hefeweizen: why not offer a Thornbridge Versa Weiss alongside the usual Paulaner's and Augustiner's etc? Its every bit as good (IMO).

I'm not suggesting we start offering filth like John Smith's smooth. I'm just suggesting that seeing as we already offer various foreign beer styles, why not include a UK brewed equivalent for comparison purposes?

I think we should be proud of the fact that not only do we make our traditional beer (cask ale) better than anywhere else in the world, we also make foreign style beers just as well as the foreigners do.

Tandleman said...

I doubt that this idea would have many backers. Don't disagree about ability to do things though.

Matt said...

The cost of beer isn't determined by supply and demand as py0 claims.

"Craft keg" is more expensive than both mainstream keg and cask beer partly because it's a tiny percentage of beer brewed, and therefore doesn't benefit from economies of scale as Fosters and Greene King IPA, and partly because the brewers of "craft keg" want to pitch as a premium product at relatively affluent drinkers in specialist beer bars which also sell cask beer at top prices.

Why do people drink Fosters, Carling and John Smith's Smooth? Maybe it's because their brewers spend millions on advertising them, something that also adds to their price.

py0 said...

The mechanism you describe Matt is just paraphrasing supply and demand. There is a limited supply as you say, and the demand is such that consumers are willing to pay a high price. Obviously producers would therefore be mugs NOT to sell at that price. Brewdog make profits every year because of the lack of competition in the craft beer bar market. The market is out of equilibrium at the moment, as we have a clear deficit of craft beer in the marketplace. If you could buy decent beer at your local pub then people wouldn't be willing to pay high prices in Brewdog bars and they'd be forced to cut their prices to compete.

I'm an economics student, I could bore you with this stuff all day. It is supply and demand, you just have to learn to recognise how to interpret it.

90% of people who drink Fosters drink it because there is nothing better available in the pub they happen to be in. Hell, sometimes I drink it and its one of my least favourite beers of all time. Its certainly not because I like it, and its certainly nothing to do with those stupid aussie blokes.

An Anonymous Boozer said...

"For dispense CAMRA choose cask conditioning, not brewery conditioned."

What about brewery-conditioned bright beer?

Reading other blogs, I understand that a lot (well at least some) of what is passed off as 'cask-conditioned' beer is really brewery-condition bright beer. Shouldn't CAMRA have some sort of campaign against breweries passing off bright beer as 'real ale'? And is there any bright beer at the GBBF?

The reason I ask is because, as I understand it, quite a lot of 'craft' (key)keg beer really is not all that much different to bright beer served from a cask.

Barm said...

py0 is talking complete rubbish. I constantly see people drinking Fosters in pubs where there is much better beer available for less money. I suppose your study of economics hasn't got much beyond the basic supply and demand curve yet.

Phil said...

If you could buy decent beer at your local pub then people wouldn't be willing to pay high prices in Brewdog bars and they'd be forced to cut their prices to compete.

I can buy excellent beer in most of my local pubs, for a lot less I'd have to pay for BD keg - and that includes the two that actually serve BD keg.

Come to that, I paid £1.89 for a pint of Hawkshead Lakeland Gold in a town-centre pub earlier this year. The beer, the condition, the temperature were spot-on - I've had better pints, but I can't remember when. Just along the bar from me a guy was buying a pint and a half of Heineken and a Coke; they came to £7.20. (I remember, because he didn't believe it either - he looked as if he was going to clock somebody. The barman had to print a receipt and talk him through it.) Supply and demand that.

BD are pricing their gear Dutch auction-style, at the highest level the market will bear, and they're small enough - and fashionable enough - to be able to
keep it fairly high. Expansion is going to have to be taken carefully, though.

py0 said...

What better beer barm/phil? real ale? Ever considered the fact that people might not like the same beer that you and I do?

Phil said...

Now you're contradicting yourself. From your earlier comment:

If you could buy decent beer at your local pub then people wouldn't be willing to pay high prices in Brewdog bars
...
90% of people who drink Fosters drink it because there is nothing better available in the pub they happen to be in.

Well, in lots of places - the entire JDW's estate for starters - there's plenty of better beer available. If you're going to argue that they're buying Foster's because (from their perspective) it's the best thing there, then there's no reason to imagine they'd switch to craft keg.

Either you're arguing that it's possible to say that one beer is objectively better than another or you aren't - you can't switch mid-argument.

Again, I can get excellent beer at lower prices in the same places locally that serve BD. This is a real problem for your initial argument: if there is such a thing as objectively good beer, BD seems to be overpriced by comparison to other good beers. If there's no such thing as objectively good beer - there are only revealed consumer preferences - then clearly there are people out there prepared to buy BD beer at its current price. But this tells you nothing about why they'll do this. After all, there are plenty of people out there prepared to buy Heineken at its current price.

(Sorry about the length - facile "supply and demand, innit" arguments are a pet hate of mine.)

py0 said...

I'm sorry you're not able to follow my argument, but I assure you I'm not contradicting myself.

It doesn't matter what you or I think are decent beers. What matters is what the consumer in question perceives to be a better beer: the beer that has the highest utility maximisation potential.

Brewdog consumers clearly derive a lot of utility from drinking Brewdog beers. This is undeniable. But like everything else, cold hoppy beer has a diminishing margin of return, which implies that if it was more readily available, their exclusivity would be reduced.

Price paid always equals marginal utility, and if marginal utility drops due to increased availability then the prices will be forced down with them.

py0 said...

Anyway, this is straying waaaay off topic. I suggest we leave it there.

Phil said...

I'm sorry you're not able to follow my argument

Please don't patronise me. The only reason I'm "not able to follow your argument" is that you're making two separate and distinct arguments and switching between them as it suits you.

In this last comment you're Rational Utility Maximiser Man, for whom all that needs to be said about any beer anywhere is that it's either (a) selling or (b) failing to sell. Either way the market clears and equilibrium is reached, and all's well with the world - what you or I might think is good or bad beer has nothing to do with it.

This is totally inconsistent with your previous assertion that

If you could buy decent beer at your local pub then people wouldn't be willing to pay high prices in Brewdog bars

Homo Economicus says: obviously you can buy what the people going to those pubs consider to be decent beer, or they wouldn't be buying it and the pub would either stop trying to sell it or go out of business. On this logic, BD's pricing strategy obviously can't be explained by the scarcity of "decent beer", because the only way for there to be a scarcity of "decent beer" in terms of revealed consumer preferences is for beer to be scarce, which it clearly isn't.

You began by asserting that there's enormous suppressed demand for precisely the kind of thing BD offer, and that this is why they can keep their prices high. You've now conceded that there's no evidence for the suppressed demand. For a more nuanced (and entirely economically rational) explanation of why they can keep their prices as high as they do, I suggest you refer back to Matt's comment and mine of 20:19 yesterday.

py0 said...

This is just nonsense now. My argument has been 100% self consistent.

Its self evident that if brewdog consumers could buy beer that they considered to be equivalent in utility to brewdog elsewhere for a lower price then they would buy that instead.

Are you SERIOUSLY attempting to deny that? Seriously?

You appear to think the beer market is perfect competition. Its not, its a state of monopolistic competition.

At no point have I conceded that there is no evidence for high demand for brewdog beer. The high prices are all the evidence you need!

py0 said...

I think the source of your confusion is that you're switching between different consumers with different utility functions without realising it. For example you compare:

"then people wouldn't be willing to pay high prices in Brewdog bars"

with

"obviously you can buy what the people going to those pubs consider to be decent beer, or they wouldn't be buying it"

but these two groups of people are different, and therefore so are their preferences.

I hope that clears things up :-)

Phil said...

You've conceded that there is no evidence for widespread suppressed demand for BrewDog beer, which is what you originally asserted:

Have you ever considered that out of all the people stuck in the crappy tied village/suburb pub serving only Fosters and Greene King IPA because thats all Punch/Enterprise/GK will sell to them, most of them might actually prefer to be drinking craft beer?

In revealed-preference land, of course, all we can say is that all those people are buying what they buy and can therefore be assumed to be deriving utility from it. Whether they would get more pleasure out of drinking something else is unknowable - you might as well say that most of them would prefer to be visiting the National Gallery.

The statement I challenged (which you've conveniently edited) was:

If you could buy decent beer at your local pub then people wouldn't be willing to pay high prices in Brewdog bars

Obviously, if you could buy beer from which Brewdog bar customers derive the same utility as they currently do from Brewdog at lower prices, those customers wouldn't pay BrewDog prices. This is a statement of the bleedin' obvious with a few long words thrown in (like much else in undergraduate economics). There's a huge gap between that and your own, unsupportable statement about "decent beer".

It's simple: either you can say (taking your economist's hat off) that beer A is objectively better than beer B, or you can't. If you can't say that, then every beer is as good as every other beer (except the ones that don't get sold). If you are saying that some beers are better than others, then you can't say that the only reason most people don't drink craft beer is that most people haven't got any 'decent beer' available to them.

Tandleman said...

Looks to me that you two guys are arguing each other to a standstill here.

Be my guest though.

py0 said...

So first you claimed what I said was wrong, and now you say what I said is "stating the bleeding obvious", which leads us to only one conclusion, that you're admitting you were wrong.

I accept your apology.

I've already explained the mistake you are making in characterising what is and isn't "decent beer", but you have simply repeated the same elementary mistake. In consumer theory it is the preferences of the consumer you need to consider, not YOUR opinions.

Phil said...

first you claimed what I said was wrong, and now you say what I said is "stating the bleeding obvious"

The inconsistency is all yours. Here's what I actually wrote:

This is a statement of the bleedin' obvious ... There's a huge gap between that and your own, unsupportable statement about "decent beer".

Statement 2 was obvious; statement 1 was wrong.

However, since I've now made this very simple point three times at great length, it's clear to me that either you're much stupider than you appear or you're not arguing in good faith. Either way I'm not going to waste any more time on you.

py0 said...

So let me get this straight: when I talked about Brewdog customers being willing to pay through the nose to drink at Brewdog bars because they couldn't get "decent beer" elsewhere, you actually, genuinely thought that when I said "decent beer" I meant what I personally consider to be a decent beer, not what they - the people we were talking about - considered to be decent beer.

Are you even being serious at this point? Get out of here, this is a wind up. I know you're not an economist so the technical terms might have thrown you a bit, but no-one is really this stupid, are they?



Erlangernick said...

Right, who won that little match then?

py0 said...

He just misunderstood something I said in my very first comment, and that led to some confusion.

Phil said...

You be the judge, Nick.

Tyson said...

Nick

Coming to this a little late, I'm going to have to call a no-contest. pyo has nade one fatal, basic, error. He has tried to explain the habits of drinkers in terms of simple supply and demand. It may come as a shock to an economic student, but life's a bit more compilcted than that:)

py0 said...

Wow, you've just completely demolished the entirety of microeconomics in one sentence. You must know something that none of the professionals in the entire world know. I imagine you're a multi-billionaire with such priceless insights.

Either that, or you don't actually understand what supply and demand equilibrium actually entails and are just taking potshots in the dark.

Tyson said...

pyo

Oh dear, resorting to sarcasm hardly does you or your case any credit, does it? And be careful in your patronising approach. An economics student, I believe? "Student" being the operative word here. Come back when you have a Masters degree and we can talk as equals. I was studying economics way back when. Or, as we say around here, I was in Baghdad when you were in your dad's bag.

py0 said...

Go on then, explain how supply and demand has nothing to do with it how monopolistic competitive markets reach a short term equilibrium.
I've read what professional economists studying the alcoholic drinks market have to say about it, but clearly you know something that they don't.

Tyson said...

Oh dear, again with the personal insults? Really? Frankly, you're just coming across as a bit of a twat now. I can see why you alienated people on this thread. It's somewhat reminiscent of the flame wars of the 90s-happy days-but I digress.

My aim wasn't to question your grasp of economics; as you seem determined to believe, but only to question your use of its basic mechanics to explain the Brewdog phenomenon.

Putting aside the old maxim that two economists will never agree anyway, economics is but only one discipline. Drinking habits are complex. To explain the likes of Brewdog and its customers requires study of a broader socio-economic picture. So Brewdog didn't consult any economists before rolling out their bars, but they did look at sociological data.

py0 said...

So you don't have an answer, ok, you should have just said that. Funny how you're happy to come on here and claim what I'm saying is wrong, but then when pressed to say how or why its wrong it turns out you don't actually know.

If you want to have another potshot, try and explain how my use of microeconomics to explain the fact that Brewdog are able to charge high prices without losing customers is incorrect.

Its one thing to tell everyone how mucher smarter you are than the rest of us, its another thing to actually come up with an argument to back it up, isn't it?

Tyson said...

Pyo

It's you who keeps telling everyone hoiw smart you are. You're an economics student after all. Everyone else on here is just too thick to follow your argument. Why else would they disagree with you? After all, you're an economics student.

If you are too thick/vain/arrogant to accept that economics does not exist in a vacumn, then I'm afraid you are doomed to a life of frustration. I would recommmend that you read something from leading behavioral economist Dan Ariely, but of course you are an economics student and have all the answers.

As others have tried to tell you, your analysis of Brewdog is simplistic and flawed. Their product is not exclusive for a start. But even in places where you can get exactly the same product cheaper, people continue to drink in Brewdog bars.

Why are customers willing to pay more for Brewdog than the market actually demands? Because they want to. They have entered into a social contract with Brewdog and in exchange for a higher market premium, they gain perceived higher status.

Brewdog and its customers are in a symbiotic relationship that does incorporate, but also transcends the simple supply and demand theory that you insist on applying. Unlike you, Brewdog are well aware of this and play to their audience.

py0 said...

Thank you for FINALLY attempting to engage in the debate rather than simply throwing around childish "py0 is so naive stupid" insults (although I see you've slipped a few more in for good measure). Let me address each statement one at a time.

"Their product is not exclusive for a start."

I never said it was exclusive, I believe I used the term monopolistic competition. That means that it has near substitutes that it differentiates itself one by generating real or perceived differences in its product. I think this model describes the real word situation quite accurately.

"But even in places where you can get exactly the same product cheaper, people continue to drink in Brewdog bars"

Please expand on this statement - what product, where? Obviously a limited range of bottled Brewdog beer in Tescos is not the same product as a wide range of draft Brewdog beer in a bar setting. On the very rare occasions I have seen Brewdog beer in pubs, it has been one beer, there for a limited time, and at a similar price to Brewdog bars.

"Why are customers willing to pay more for Brewdog than the market actually demands?"

What do you even mean by this? No consumer voluntarily pays extra for a beer than Brewdog charge. I think this is a nonsensical statement. Are you claiming that Brewdog beer is a Veblen good? I see no evidence that this is the case.

"They have entered into a social contract with Brewdog and in exchange for a higher market premium, they gain perceived higher status."

This is known as "additional value" (ie the additional utility the consumer receives on top of the direct utility derived from consuming enjoyable beer), and it is factored into deriving the demand schedule in the MC model that I am describing.

So, hopefully if you read all that you'll see that you're not actually contradicting me, even though you appear to think you are. Some of your statements are reasonably accurate, its in the fact that you think this somehow contradicts what I have been saying that you are mistaken.


Please follow my lead and only reply to discuss the economics, leave the insults at home.

Phil said...

On the very rare occasions I have seen Brewdog beer in pubs, it has been one beer, there for a limited time, and at a similar price to Brewdog bars.

I can name you two bars on one street, in one suburb of Manchester, which have at least one permanent Brewdog font. I think they're more common than you think. Pricing is still silly, but that's what I'd expect - in bars, high prices are effectively part of the Brewdog brand. (As I said above, "BD are pricing their gear Dutch auction-style, at the highest level the market will bear, and they're small enough - and fashionable enough - to be able to keep it fairly high.")

py0 said...

Are there any beers that are not priced at the highest level the market will bear? One imagines that they set the price according to maximise profit so that MC=MR, or at least as close to that as they are able to predict.

As you say, due to their ability to maintain a higher level of demand through product and brand differentiation strategies, they are able to maintain profits above that of a perfectly competitive market. Once some closer substitutes come on the market and gross levels of supply increase, their profits will be eroded. At the moment that isn't the case though.

Not relevant to Brewdog of course, but non-premium lager sales in the UK are about as close as you'll get to a perfectly inelastic demand curve as you'll find in any market place.

Tyson said...

I’m glad that you’ve realised that I wasn’t trying to “contradict” you, so much as help you see beyond what I believe is a rather narrow perspective. You come across as a very traditional type of economist-no offence meant, particularly in an age where the leading American institutions, and increasingly over here, are teaching that the old laws of supply and demand are actually reversed. But no one questions your grasp of the fundamentals of economics; only your use of them to explain Brewdog.

You have, however, made some quite sweeping statements (no one chooses/likes to drink Fosters) that not only have you given no evidence for, but that you are unqualified (no offence-just as an economist, I mean) to make. I think your belief in the overriding power of the simple mechanism of supply and demand has led you to try and squeeze a round Brewdog into a square hole.

For example: you claim that low supply+high demand=high prices. But, as others have tried to argue, that isn’t quite the case. For one, it’s debatable whether there is “high demand”. At best, I think that all can be said is that there has been an increase in a very small market.

And as for low supply, when I think of that, I think of things like oil which is often limited by natural or artificial pressures, such as OPEC. That isn’t the case here. There isn’t a low supply. If you just mean that there isn’t much about, well that could be just be explained by low demand, couldn’t it? I am a shareholder of Brewdog and they tell me that there isn’t enough demand here in the UK for their product.

Now on to specific points; I’m happy to clarify these as I know that knowing what you want to say isn’t the same as being able to explain it well.

If I understood your point correctly, you seem to be saying that Brewdog customers pay more as they cannot get Brewdog-or a similar equivalent-readily. What I was trying to get across is that there’s more to it than that. In London and Manchester you can get exactly the same draught Brewdog beer for less.

In fact, since Brewdog came to Manchester, there has been a great increase in availability of their beers. Not far from their bar, you can purchase a number of the same draught beers for considerably less. Yet people continue to drink at their venues. What I was trying to say was that customers are actively choosing to pay more than simple market forces might suggest they should be paying.

This is not a new phenomenon and not unique to Brewdog. As you say, there is the concept of additional value. So far, I think (?) we’re broadly agreeing. Perhaps totally?! However, whilst Wetherspoons might be a perfect fit for your economic model, I believe that Brewdog isn’t.

Why? Well (and here’s where we will diverge) I believe your basic premise is flawed. Traditional economics assumes that prices of products in the market are determined by a balance between two forces: production at each price (supply) and the desires of those with purchasing power at each price (demand). The price at which these two forces meet determines the price in the marketplace.

However, this all depends on the assumption that the two forces are independent and that together they produce the market price. Increasingly economists are challenging this assumption. Empirical experiments conducted alongside psychologists and sociologists suggest that what consumers will pay can easily be manipulated.

Secondly, it’s arguable if the forces of supply and demand are actually independent, but rather, given anchoring manipulation, dependent. It seems in the real world that far from consumer’s willingness to pay influencing market prices, that the causality is somewhat reversed. So it is the market price itself that influences the consumer’s willingness to pay. This, if true, means that demand is not a completely separate force from supply and would render the traditional model obsolete.

So, in conclusion, I’m just offering an alternative economic model which I believe is a better fit for the likes of Brewdog.

py0 said...

By "low supply", I mean that, for example, there is no draft Brewdog sold anywhere within 50 miles of my house in any direction. If that isn't low supply, I don't know what is. There's not even any near substitutes as far as I am aware. This is the situation in the majority of the UK - places like Manchester and London are the exceptions, not the norm.

Would it sell, if the supply was there? Well it sells well in Tesco's, so I see no reason why it wouldn't. Their bars have done well in the small number of places they've opened so far. I know of plenty of people who would drink at a Brewdog bar if one did open in the vicinity.

What specifically are you saying about the relationship between gross demand and price? Are you saying its unrelated? Upward sloping? The amount consumers are willing to pay for a product obviously varies greatly between consumer as you say and depends on various psychological and sociological reasons, but we're talking about horizontally summed market aggregate demand, not individual demand. This should even out any fluctuations.

Are you saying Brewdog beer is a Veblen good? Its rather vague.


On another note: Fosters. This is not an economic point, just an observation derived from many years of pub going. Many times I have been in various pubs surrounded by people drinking Fosters (or other non-premium lager) simultaneously complaining about how horrible the beer is and how much they would prefer to be drinking something better. Why don't they drink something they prefer? Because there isn't anything better on offer. Why don't they go to a better pub? Because they chose that pub for reasons other than the beer choice. Obviously this doesn't apply to all Fosters drinkers, but I do think there is a level of discontent with the quality of beers offered in UK pubs.

Curiously, the top three beers in a recent poll of "what is the worst beer of all time" were Fosters, Carling and Stella - the three most popular draft beers in the UK.

You'd think that the most popular beers were also the highest regarded, not the most hated.

Phil said...

Why don't they go to a better pub? Because they chose that pub for reasons other than the beer choice.

Perhaps this is also true of the people who are currently packing out Brewdog bars. I was in the Euston Tap the other day - it was rammed, but a lot of the people around me quite plainly had no clue about craft beer. They were there for some reason, but it wasn't the beer choice.

Economic explanations to my mind come in two varieties, crude ones that say too much and subtle ones that say too little, without much in between. You can say that lots of people would buy Brewdog beer in bars if they could, and this is why the retail price is so high; that to me is a crude application of simplistic ideas about supply and demand, which is only valid if you make lots of assumptions about why people buy things & how prices are set. Or you can be more sophisticated about it and say that Brewdog set prices for particular beers consistently with their business model and their appreciation of the market into which they're selling, and that people who regularly buy Brewdog beers derive sufficient satisfaction from the experience, for whatever reason, for them to go back and do it again. This fits the facts, but when you look at it more closely it doesn't actually tell us anything we didn't already know - or anything that isn't equally valid of every other brewery.

It's a bit like Freud's biographies. Sigmund Freud, fresh from discovering the crucial importance (as he thought) of the Oedipus complex to the psychology of the human male, wrote a series of biographical studies of famous men, real and fictional (I think he did one of Hamlet). In every case, he demonstrated that the life and deeds of the person he was writing about could be explained by reference to... the Oedipus complex. Once you'd read one you'd read them all. Similarly, "sellers sell things to make a profit, buyers buy things to gain subjective utility" explains everything, and consequently explains nothing.

py0 said...

Your "sophisticated" application and your "crude" application are saying exactly the same thing but with a few words moved round. There is a demand out there for "craft beer", and Brewdog seek to maximise profits by providing it. If it had more competition, it might have to charge more competitive prices eventually it will. That's just supply and demand.

Everyone keeps coming and saying I'm talking rubbish, but no-one seems to actually be able to come up with anything to actually contradict anything I've said. You just paraphrase me, which is not the same thing at all.

If you think a microeconomic analysis of a particular market explains nothing, that's just a failure of your imagination.

Talking of the Euston Tap, I know several people who get the train all the way from Cambridge to drink the beers there. I have never seen anyone get a train 50 miles just so they can drink Fosters.

Phil said...

Your "sophisticated" application and your "crude" application are saying exactly the same thing but with a few words moved round.

???

The crude version says that there are lots of people who would buy Brewdog beer if they could (which we don't know), that the level of customer demand is what enables Brewdog to keep their prices high (which we don't know) and that people who pay the high prices are doing it because they like the beer (which we don't know).

The sophisticated version doesn't make any of those assertions, and doesn't have any explanatory value - as I said, it's true of every commercially viable brewer in the world, and consequently doesn't tell us anything about Brewdog.

py0 said...

Substitute "we don't know" for "I don't know", and I will agree with you. I would say those three statements are pretty self-evidently true.

Phil said...

Substitute "we don't know" for "I don't know", and I will agree with you.

You do know? Or you assume?

py0 said...

I haven't interviewed everyone in England, but I've run hypothesis tests on the surveys I have run that suggest quite strongly that they're not misleading.