Wednesday, 24 October 2012

How Much Is It?


I notice a lot more rumblings and grumblings on t'interweb about the perceived high costs of craft keg beer.  Pete Brown did a nice piece on what he feels is the most worrying aspect of craft beer, which is quality at the point of dispense.  I agree with most of what he says, but not that it is a problem which has recurred.  To me quality may be better than it was - and that's arguable -  but problems have never gone away as such.  I too am always keen to bang on about the quality thing, particularly when it comes to cask beer, though Pete makes many more far reaching points too, particularly about unfined beer.  More power to his elbow on that one.  And he does mention prices, although in the context of getting bad beer.

So, price. The moaning on the internet has been about how much craft keg costs at the bar.  It is justified by brewers by saying it costs them more through equipment, keykeg costs, ingredient cost and more, though many would argue that ingredients cannot justify the cost differences, especially for the same beer in keg and cask.  That in turn means higher prices at the pumps say pub and bar owners.  Another point about craft keg (and it is mainly but not exclusively keg) is that high prices and alcohol levels mean you are also likely to drink a lot less of it, which creates its own vicious circle of needing to charge higher prices, not just to cover the higher costs of buying it, but to account for lower turnover and to maintain profit.  If nothing else, this will limit the spread of bars than can charge such a lot.  There's only so many that the market will stand.  So while brewers (and pubs and bars) may have these lovely margins now, they may be heading for a brick wall if the market expands.  The customer and the market will decide in the end and my bet is that price will play a bigger part, as or if the spread of craft keg increases.  There may be rockier times ahead for this craft beer boom.

One thing is for sure and for now. Beer in certain places is becoming eye wateringly expensive and drinkers are starting to notice and question it.  You are bound to get a lot more shirty when you pay top dollar for a duff pint and a lot more likely to kick up about it.

I really recommend Pete Brown's article. The link is above in the first paragraph.

100 comments:

Cooking Lager said...

Price is one is the issues which divide the beer enthusiast from the regular drinker. The blogosphere is full of nutcases that ape variations of the phrase "I am happy to pay more to support good beer" Usually because beer is their life, rather than something they drink when they take an evening off life.

Among regular drinkers price is a determining factor of where you go and what you drink. It is the main reason Wetherspoons have enjoyed growth whilst most other chains (PubCo or brewer) have declined.

In terms of craft keg, price is the main reason it remains exclusive and elitist.

In terms of craft keg, is the point of it, it's main appeal if you like, that it is exclusive and elitist? If so a high price is all part of its marketing chic.

Some products sell because they are exclusive and elitist. If they were dirt cheap the only appeal would be the intrinsic qualities and on such merits would possibly fail. Caviar is an example. It's not that nice and if it was dirt cheap no one would eat it.

Would a dirt cheap glass of bitter gag inducing over hopped craft keg be seen as undrinkable slop if it lost the mystique of exclusivity?

cgarvie said...

Much as i would rather see many of these beers in Cask, i think many of these beers would not turn over in the rigth time frame in cask, at least in enough pubs for the brewer to be sucesfull. So i think we are stuck with keykegs as the best option. Ive no real objection to Keykeg other than the extra cost they add, but given the choice between extra cost and beer being sold past its best. I'll take the Extra cost.

Tandleman said...

From Summer Wine Brewery via Twitter:

@tandleman You are deluded Peter if you think we have 'lovely' margins on keg, the amount of tank time, transfers, carbonation, difficult...

. to clean kegs & the labour & sundries costs involved are built in, our margin on cask & keg is almost identical!

dave u said...

if brewers used kegs rather than keykegs for local stuff the cost would be a lot lower! keykegs really should be for export etc where getting empties back is gonna be major hassle

MagicRockRich said...

We may look to use proper kegs in future but we'd have to invest in keg filling and washing equipment first (no we're not willing to remove the spears).

Then we have to source the kegs, which at cheapest are £1.50ish each to rent a month.

dave u said...

we bought 20l plastic kegs for about £35 each... washing them is no harder than washing a cask, though admittedly we only do 5 at a time! we take the spear out, no problem, though again may be tedious if you're doing 100 (not that cask washing is much fun either...)

py0 said...

If the current keg brewers can't finds ways to cut costs enough to keep price at a reasonable level (max 50p more than cask equivalent for example), then that just means there's a huge gaping gap in the market for someone to come along in the next few years and make and distribute similarly tasty beer for cheaper and undercut them. Don't tell me it isn't possible. The craft beer "boom" has shown there is a market for a new style of cold, carbonated, but strongly flavoured beer out there, its now wide open for someone to come along and bulk supply it.

MagicRockRich said...

Like I said we're not taking spears out, the manufacturers don't like it, its a hassle, and its potentially dangerous and a source of contamination. We'd need probably 200 which is £7k, so why not wait and do it properly?

Mark Dredge said...

I think that an important issue is how cheap cask beer is - it's become a market that's hugely under-priced (though I don't complain at the bar, obviously). Small brewers relief has pushed the price of beer down to be more competitive, meaning cask beer sells for way less than it really should sell for (I'm guessing crap breweries fuel this problem because they are desperate to sell stuff, whereas good breweries don't have a problem selling it but the market price is low - some breweries know that and price their beer in a better way).

As for kegs... using a keykeg will add extra cost but using standard kegs shouldn't because I feel that's an investment the brewery makes to be able to produce keg beer (though it's damn expensive to do it). But time in tank is important (you can't chuck these beers out in a week and hope they condition in cask), plus these beers generally are stronger (meaning more tax and duty) and use more ingredients which all add cost to the product.

And I don't think there are 'lovely margins' in beer. Where does that come from?

It's also important to consider the pub and their margins, which vary (some of those might be 'lovely'...). I've seen a price range of £1 (£3.60-£4.60) on a pint when the pub bought it for the same price in the first place - the brewery doesn't control that.

Rocky times ahead? I think that most breweries kegging their beer (if it tastes good) could brew double the volume and still sell it very, very quickly. People are willing to pay for decent beer - not everyone, for sure, but a lot are. It's the same with any product - cars, shoes, TVs.

The price of beer? It is what it is and if it's good then we'll pay for it. But yes, as you say, if it isn't good then we get unhappy. Thankfully I have way fewer poor beers on keg than in cask.

Rob said...

Can someone tell me where to find this underpriced cask beer. Outside of spoons it all seems to be about 3 quid these days. And I'm up north. If you think that's underpriced then you may as well demolish another 20k pubs as consumers will carry on voting with their feet.

Cooking Lager said...
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Cooking Lager said...

Ha ha, loving it. The expensive stuff isn't expensive, it's the cheaper stuff which is too cheap!

Brilliant.

MagicRockRich said...

Most pubs in Huddersfield, The Kings Head, Sportsman, Grove etc... 4% cask is around £2.40 a pint, bet its same in Sheffield.

dave u said...

Sheffield prices indeed similar to Hudds

but I personally wouldn't describe them as underpriced!

as a brewer, I'd prefer to charge more. but as a drinker I'd prefer to pay less...

Rob said...

Well I can't speak for The Kings Head and Sportsman but from the Grove's facebook page the cheapest is £2.60 with most £2.80 - £2.90. So I stand by my "about 3 quid". That's cheaper than my local which starts at around £2.90 with most over £3. At the moment I'm reasonably happy paying those prices, but I certainly do not think it is underpriced.

py0 said...

The fact that we have new breweries opening each year strongly suggests that they think there is viable profit to be made from brewing, which suggests that if anything, beer is overpriced. If beer was underpriced compared to cost of production, then brewers would be leaving the market, not joining it at record rates.

Cooking Lager said...

Well if the price of a 4% pint from 1980 increase with RPI inflation, it would cost today about £1.80.

But I love the argument that cask beer is too cheap. The same argument goes for supermarket prices. I love when an argument, even a piss poor one as things being too cheap, is extended.

Lets make beer £5 or £10 a pint!, then only the discerning would drink!

Phil said...

According to a post I'll dig out if I get the time, a £3 pint is underpriced - the guy's argument was that cask beer should be around £4/pint and keg should be around £4.50, and as the market won't bear a £4 pint of cask beer the brewers make it back on the keg. Bear in mind that this isn't about breaking even so much as making a decent return - if anyone actually loses money by selling a pint at £3 they're probably doing something wrong.

Rob said...

I read that as well. Here it is:
http://www.craftcentric.com/why-keg-beer-is-more-expensive-than-cask-beer/
I'm not sure about some things, e.g. that pubs are in effect using cask as a loss leader so they have to charge more for keg to make up for it. But in some ways I don't care about the explanations. If prices are hiked more pubs will close. I don't want more pubs to close. I also personally don't want to pay any more for a pint. Whether it's down to ingredients, tax, whatever, it doesn't really matter as all the punter sees it what they hand over at the bar.

py0 said...

This article:
http://www.craftcentric.com/why-keg-beer-is-more-expensive-than-cask-beer/

?

Its only valid for the assumption that a 250% markup on beer in pubs is the lowest the industry can bear, and doesn't even comment on the markup for the brewer.

The gist of the article is the circular logic that a cask is underpriced compared to a keg, so you have to overprice the keg even more to make up for the underpricing, which makes the cask even more underpriced by comparison, which means you increase the markup the keg.. etc etc.

It doesn't say anything about whether either cask or keg beer is underpriced compared to all other consumables.

Cooking Lager said...

Pubs using cask as a loss leader? The rotters. I thought that shoddy practice was just Tesco.

is everything cheap a loss leader?

Stuart Ross said...

Cookie, duty has gone up at a higher rate than inflation.

Cooking Lager said...

Indeed, Stuart, but the Sam Smiths that increases its prices only with duty, tax rises and costs charges £1.80 for OBB, which by all accounts is too cheap. The Keg bitter is £1.82, though so I am interested in the keg beer rip off debate. Whether the 2p is justified or the OBB is loss lead.

MagicRockRich said...

Maybe the point is more that many new breweries like ourselves want to make more characterful interesting beers and the costs associated with making them are higher than regular cask beers.

For example many of our beers take 3-4 weeks to produce compared with 7-10 days for standard cask beers. This makes it very difficult to produce beers to fit an existing low price point.

We get contacted regularly by pubs who want the beer but decide they can't stock it because their customers 'won't pay more than £2.50 a pint'. The publicans have a margin they can't dilute and so do we.

I'm not complaining, there is definitely a market for what we're making as we can't make enough but increasing costs of ingredients/production plus the way the duty system is set up based on ABV and this insistence by some people that they couldn't possibly pay more than £3 a pint, (it could be argued) is stifling innovation in the market place.

The market is using craft keg beer as a visible differentiator to explain why they have to charge more for these types of beer and to differentiate from cask, but we certainly aren't charging more for it margin wise, we are just passing on the higher costs associated with its production.

Modern cask beer is essentially un-finished 'running beer' while keg is processed for stability (pre-carbonated and packaged not neccessarily pasteurised) all this costs more.

Stuart Ross said...

Cookie, Sam Smiths is unique, they own the pubs, charge the rent, set the prices on the bar. not a good comparison unless you exactly what there costs are and which part of the company is actually making what GP%

Cooking Lager said...

Not that unique, Stuart. Spoons is dirt cheap too. I'm not saying everything should be cheap, and if people want to pay £6 for a pint of something labelled "craft" I'm happy to leave them to it.

But when people complain the price is too cheap, whether the cheap can of lager or the cheap pint of bitter, there not exactly leaving me to it?

Stuart Ross said...
This comment has been removed by the author.
py0 said...

Presumably if you invested in a kegging facility Rich, that would lower your marginal costs, shift the minimum of your average cost curve outwards, and allow you to achieve better market penetration by producing more beer and selling it at slightly more competitive prices without having to compromise on quality.

The number of outlets for high quality keg beer is only going to increase over the next few years, and the demand is definitely there for quality keg beers. I think demand quickly becomes price elastic much above the psychological £4 barrier - Brewdog seem to recognise this, if you go in their bars there is nothing on draft advertised for more than £3.90, they reduce the size of the serving rather than breaking through £4.


All this may or may not be feasible. But my point above was simply that if existing breweries like yourselves do not look for ways to gain competitive advantage by cutting costs through process innovation then someone else soon will.

Starting to ramble now...

Rob said...

MagicRockRich, I regularly have your beers in Alfred in Leeds, and they cost more than £3 (and very good they are too). But Alfred is not a typical pub, and despite the "craft revival" the majority of pubs won't be able to charge what Alfred do.

You are now talking about the difference between your cask beers and others', which is a bit of a different argument. In essence you are a specialist producer for a niche market. People who know and appreciate that niche will buy your beers (unless they are vastly overpriced). That doesn't mean that a typical pub can charge more than £3 for a typical pint of cask. That is a different market to the one you are operating in.

MagicRockRich said...

We would look to buy some kegging equipment eventually but I don't think the cost benefits would be as big as you think they would, we would have to pay rental on them, pay to get them back from customers and clean them all of which we don't have to do with key-keg. The other extra production costs remain the same.

At the moment the priority is to increase capacity and that means selling enough beer to afford new tanks, this will take some time as despite what many on this thread seem to think brewing isn't a particularly profitable business.

Tandleman said...

py0

That's the point I'm trying to get over.

Stuart Ross said...

not that unique? 1 brewery out of 1000, 1 pub co out of 50? or more.

£6 pound a pint is fine by me but not because it might be "craft"! because it tastes good

Tandleman said...

Mark:

"Rocky times ahead? I think that most breweries kegging their beer (if it tastes good) could brew double the volume and still sell it very, very quickly. People are willing to pay for decent beer - not everyone, for sure, but a lot are. It's the same with any product - cars, shoes, TVs."

They are but it is a niche. If you widen that niche and meet demand, high prices become unsustainable. London might get away with it but most other areas wont. The big boys will be looking for a wedge to drive into this. Price seems ripe for it as the market expends.

And I frequently pay what I'd call normal prices for very decent beer indeed.

Tandleman said...

PS. I said rockier times, not rocky times. As competition increases in the market, the prices will change. I like the new market. It increases interest in beer, but it will change over time.

As Pete Brown said " We’re brilliant in Britain at spotting something new, special and exciting and then saying ‘right, how can I cut corners and offer people a lower quality version of that for the same price?’

Think about that and the other variables.

py0 said...

Where would you like to be in five/ten years time Rich? A Magic Rock beer in every pub? A Magic Rock pub in every town? Both? Neither?

Just curious, not often to get to hear straight from the horse's mouth.

MagicRockRich said...

py0: the plan at the moment is to stay small, maybe only 30% bigger than we are now and concentrate on quality. Would really like a brewery tap of some sort, ideally at a new brewery site.

An Anonymous Boozer said...

What percentage of the cost of a standard craft keg beer is related to the cost of the key-keg then?

I understand there are reasons why craft keg beer is often more expensive, because craft keg beers are usually stronger/more costly to make, but also because most places where you can get them (at the moment anyway) are areas where the rents aren’t exactly cheap either. The sort of areas where it’s probably not uncommon to see stupid prices for pints of piss lager, let alone a quality product. The cost of drinking at Meantime in Greenwich, for example, isn’t as bad as it first seems when you take into account that Greenwich is generally a rip-off to begin with.

But I think there are some UK brewers who could make more of an effort in saving certain costs for the consumer. At the moment there seems to be an attitude that people will pay for it, so who cares. But I doubt that is sustainable. The discussion of the cost of key-kegs is a case in point. Why are brewers not trying to keep this cost down? Kudos to Steel City for hatcheting a way to try and pass on some keg-related savings to the consumer.

py0 said...

Talking about prices, I think about $4 for a regular strength pint is about my limit on something to drink more than one of per sitting.
I'd happily sit and drink 5 pints of Rapture priced at <£4.
Any more than that and the demand starts to drop off steeply, and the beer moves into "have a half to try it and then find a cheaper option" territory.

MagicRockRich said...

Our key-keg adds 20p per pint to the cost. We try to keep the cost down as much as possible. I would argue that publicans are trying to recoup some of the cost of selling cask too cheap through charging extra for keg but hey what do I know?

Phil said...

We get contacted regularly by pubs who want the beer but decide they can't stock it because their customers 'won't pay more than £2.50 a pint'.

I've obviously been going to the wrong pubs! The only time I pay less than about £2.80 is when I'm in a Spoons.

As far as the pub's margin is concerned, what happened to making it up on volume? One of my locals is an odd sort of split-personality gastropub/brewpub - the beers are excellent but most of the people serving you barely know one beer from another. The management get round this by setting a high-ish price for cask beer and applying it across the board - £3.40 for their own bitter, £3.40 for a guest mild, £3.40 for a 7% DIPA (and very nice it was too). They probably didn't make much on that one, but it all helped to fill the pub and keep it full.

Jonny (Port Street) said...

As an independent retailer some of the comparisons here seem completely wrong headed to me. Comparing our prices or bars like us with those of Samuel Smiths or W'Spoons just strikes me as bizzarre, the purchasing power of places like that is phenomenal. If you want cheap beer then go to 'Spoons, they screw small brewers and sell the product cheap and put small local pubs out of business. If you want to support local businesses, local pubs, local breweries, innovation, if you want a drink of high quality with provenance then do. If price is your main driver then just go to 'Spoons as noone else will be able to be as cheap.

You've got some brewers on here being incredibly transparent about the costs involved, which you wanted. I don't see anyone asking the same questions of the big companies, about how 'spoons can sell it so cheap, for the reason that it's cheap so it doesn't matter.

It's worth stating that if you go in to some of the big national high street chains / groups you could easily be paying £4.50 or more for a pint of Stella, these aren't discerning drinkers, just normal people easily parted from their hard earned. There is profiteering for you, piss poor product, ludicrously high price.

Phil said...

Rich - I've never understood why MR has gone for kegging. I had a half of Cannonball in the Euston Tap a bit back. I liked it, but I wasn't nearly as blown away as I was when I had Curious on cask. The chilling and the carbonation got in the way of the flavour for me, and letting it warm up to cellar temp. and knocking a bit of the gas out didn't improve matters as much as I'd hoped.

All in all, I couldn't help feeling it would have been loads better on cask, and I can't imagine that it wouldn't have sold.

Or did you just come to the conclusion that it tastes better kegged?

Tandleman said...

I kind of agree with Jonny, but possibly not for the same reasons. One reason why I like PSBH is the quality of product and service. OK - I pay a bit more, but hey - I like the offer. In fact if I was in the area more often, I'd go more often.

That isn't so with some other places. There you pay high prices because that's just what they charge.

JDW do drive down brewers prices, but I've seen plenty of revered names on sale there, so Phil's "pile it high - sell it cheap" works too. If a pub's offer suits you, you'll go there within your own price sensibilities.

It's a broad church. But what of the future. Nobody seems that keen to look at that.

Phil said...

If you want to support local businesses, local pubs, local breweries, innovation, if you want a drink of high quality with provenance then do. If price is your main driver then just go to 'Spoons as noone else will be able to be as cheap.

The Spoons around here sell a lot of beer from Moorhouse's, Phoenix, Conwy, Titanic, Hawkshead and a few other local(ish) independent brewers. It's not all cutting-edge stuff - no Red Willow or Magic Rock, doubtless for the reasons given - but it's not a megacorp bland-out by any means.

I think all that's happening is that a price point is being set relative to what the market will bear, and perceptions of craft beer being new, different and special are making the market a lot more tolerant of high prices. The question we're debating is whether it will last, and if not what will change it. I think it probably will last - generations have grown up drinking "lager", and it's still priced significantly higher than "beer". What probably won't last is the growth of the "craft keg" sector - it's fashionable now (adding to the tolerance of high prices, or even making them part of the appeal) but fashions change. In five years' time I'd expect to see one or two "craft keg" fonts in every decent real ale pub (probably including JDWs) - but only one or two.

MagicRockRich said...

Phil: We've been asked this a lot and basically we think hoppy beers over 6% taste better cooler and fizzy.

As well as intensity of flavour/aroma we're looking for drinakability, and temperature and carbonation help to make big hoppy beers lighter in mouth feel, they also accentuate hop aroma and clean the pallet of big flavours.

Personally I've held the belief for a while that great sub 5/6% beers should taste fuller and drink bigger than they are and great strong beers (over 5/6%) should drink lower (ie, easier) than they actually are.

Also cask beers shouldn't be on a bar longer than 2-3 days and there just isn't a big enough market for strong cask beer to support the amount of strong beer we make. We do sometimes put the odd stronger beer in cask but without exception I always prefer the keg version.

Cooking Lager said...

Ooops, twas me that mentioned the Spoons, but heh any discussion of beer pricing is incomplete without it.

As far as I can see, Jonny, you think there is more than trade occurring. That customers should pay a higher price to support values you have and hope they share with you, rather than just ask "is it worth £6 a pint?" It's a point of view, good luck with it.

As far as I can see Tand goes in your boozer 'cos he likes it and thinks some of what you have is worth what you charge.

I personally don't go in your gaff a lot. I find the prices eye watering being one of the reasons but not the whole picture. I do sometimes drink in expensive gaffs but that’s when I think it’s worth what they charge.

Now as far as I can see some producers have attempted an explanation/justification for a pricing differential, which you can either accept or think bollocks. Me? I think some people are having a laugh charging what they can get away with to mugs willing to stump up. It’s a contrary view. It’s one you might not like.

Market economics would suggest that if super normal profits are occurring, it attracts new entrants in the supply side of the market which brings prices down to a level called normal profit. I think we are seeing a lot of new brewers and maybe that’s to do with an idea that a good quid can be made from it. Nothing wrong with making a quid, we all need to do that, except the Tand being a wealthy man of leisure and more power to him.

Now new entrants may be arriving on the demand side to keep prices high, but if that tales off and stagnates you would expect fall out, some suppliers leaving the market and lower prices.

Who’s got a crystal ball?


py0 said...

I don't necessarily think its alcohol % that dictates the merits of casking vs kegging, but rather the fact that strongly flavoured beers, whether hoppy IPAs or roasted stouts/schwartzbiers, work well on keg. Milds, bitters, and golden ales tend not to because the coldness and carbonic bite overwhelms the more subtle characteristics.

I do think that there is definitely room for significant growth in these two particular keg beer types as a kind of intermediate step between mainstream beer and more esoteric craft beer. Maybe 5% alcohol, £3.50 - £4 a pint (in today's money), marketed at the people who currently drink premium foreign lagers like San Miguel or Staropramen.

Strong 6,7% stuff will only ever be a niche market product, because a) costs are higher meaning prices put of the casual drinker, b) most people don't necessarily actually want to drink such strong beers for a variety of reasons.

If you asked me what the beer industry would look like in 5 years, I would predict that most upmarket pubs would have a couple of British craft keg beers on, probably one dark and one hoppy, possibly alongside a decent British lager. There will also be a handful of successful pubs in each large town and city that specialise in the more unusual beers.

RedNev said...
This comment has been removed by the author.
RedNev said...

Mark Dredge says he thinks “that an important issue is how cheap cask beer is - it's become a market that's hugely under-priced”. In the last 40 years, if pub beer prices had increased by no more than inflation, we’d be paying around £1.40 to £1.50 in the North West. In most pubs round here, it’s roughly double that. I wish I was as wealthy as you, Mark.

Anonymous said...

Having read the craft centric article and the comments here it would seem that craft keg is obviously more expensive for the brewers to produce and they probably making the same sort of margin as their cask. When it gets to the beer bars though the price is being inflated. If we follow the logic that cask is sold too cheaply then I presume bars and pubs are making a much larger margin on keg in order to mitigate their cask loss.

Paul Bailey said...

I know I had a spell away from the world of blogging and may have missed a few things, but could someone please explain what a "key-keg" is? I'm wondering if it's a "one-trip" disposable container, but if so it doesn't sound a good, let alone eco-friendly, idea to me!

Rob said...

And I think that logic is patently false. Decent pubs/bars I know might have 6 cask beers on but only a couple of keg. There is no way that they can afford to lose money on the cask and hope to make up for it on the keg. "Destination" bars might have more keg on but the price differential is still similar to those with only a couple of keg. What I find more likely is that bars are trying to take advantage of the craft keg scene by hiking the prices which they can't get away with for cask.

With all due respect to the brewers commenting here it is very natural to think what you do is undervalued. I think I get paid too little as well but that's the reality of the career I've chosen.

Rob said...

That was a reply to anonymous not Paul by the way.

Anonymous said...

The UK has amongst the highest tax burden on beer in Europe, but some of the lowest on trade beer pricing per unit of ethanol. This should tell you all you need to know about margins involved in making and selling beer.
Most small brewers and publicans work a long way in excess of the 48 hr week, they are very lucky if they acheive national average wage.

Cooking Lager said...

I hope there is a follow up blog post on this Tand. You've picked an engaging topic and I found many of the most revealing comments on twitter. It may be unfair to follow up with twitter comments as it is difficult to make a full point with the character limit, but the twitter storm (okay, maybe not storm, heavy rain) revealed to me what I thought to be one of the dividing points between elitism and snobbery.

As the undeniable truth is that craft keg is relatively a more expensive product it follows that it is a less democratic product and therefore to some degree elitist. Not a problem, many things are to some degree elitist. Not everyone can afford everything.

However in seeking to deny this obvious elitism the more interesting views were not the ridiculous notion that somehow cask beer is too cheap, but that the behaviour of drinkers was the issue. That it is affordable if you drink less.

Whilst superficially true it does reveal the views of those that think a person of limited means ought to forgo a cheap 4 pack or couple of cheap pints in favour of a more occasional consumption of a product they believe to be of a higher quality. Leaving of course the opportunity to get a little pissed the sole preserve of people of higher means.

Like Fernly-Wittingstall believing the high price of organic chickens is not a problem if you teach the prols how to make a soup and get more out of a chicken.

The issue is one of the behaviour of poorer people, not the high price or even their limited means.

Some consider criticising the free choices of poorer people to be a form of snobbery, heh why would I do it?

Anyway it is a pity many of the more interesting twitter comments are not available on the blog.

Rob said...

I've got no idea what a brewer earns, but it's their decision to do it, and lots of people seem to want to given how many new breweries there are. Publicans I have sympathy with but the problems there are largely due to the fucked up pubco system.

I agree that tax is far too high here but it's certainly not my experience that we are cheaper than the rest of Europe. France is randomly expensive but then wine there is much cheaper.

Anyway, it's a bit besides the point. Pubs are struggling and closing because people aren't going as much and when they do they don't drink as much. The rights and wrongs of how much a beer should cost are irrelevant when people are already making their choice and not going out. Telling the punters how lucky they are that it's not more expensive won't get them back into the pubs.

Bailey said...

Never used it myself but you could 'Storify' the Twitter comments in question and then paste a link.

Tandleman said...

I really don't have the time to do that. Beer festival duties for the next three days preclude that.

Seems to me that Twitter prevents blog commenting and you end up with half the story elsewhere. Progress?

MagicRockRich said...

Cooking Lager: That some publicans are forgoing normal margins in order to make some cask beer fit into market dictated price points is a fact not a 'ridiculous notion'. By most peoples definition this is selling some cask beer 'too cheap'.

I know because I hear it from publicans and see it first hand. Not all cask beers are made the same and the market needs to realise this.

Bailey said...

Honestly: some comment threads I *know* are going to get heated and Twitter's sometimes less stress/lower commitment.

Bailey said...

Oh -- and I was aiming that Storify comment at Cooking Lager but forgot the comments don't thread as replies on Blogspot.

Rob said...

Rich, now it seems to be "some publicans" and "some cask beer". This is quite a different notion to "cask beer is too cheap".

Of course there will be different GP on different things. But GP is not everything. What would a pub rather do, sell 100 pints at 50% GP or 50 at 60% GP? The percentage is not everything either, the actual amount of profit matters. Say Magic Rock charge £1.50 a pint to the pub (I have no idea what your charges are by the way), and Greene King charge £1. If you stick your 60% GP on then a Magic Rock pint will cost £3.75 whereas the Greene King will be £2.50. The pub decides their customers won’t accept that difference so they bring the Magic Rock down to £3.20. The GP is down but they are still making more on every pint of Magic Rock sold than Greene King.

It’s not a simple issue and different places will approach it differently. There are a multitude of other factors such as food offerings as well. I wouldn't be surprised if pubs accept lower margins on beer if they are getting people in having meals for which they get a better return.

What I took exception to was the statement that craft keg was subsidising cask. I don’t see that happening at all. If anything, the bars that have a large keg offering seem to charge more for cask than those who don’t have any craft keg.

Phil said...

CL: so "elitism" = "this stuff is great even though you can't afford it, sorry about that", and "snobbery" = "stop moaning about how you can't afford it, you could if you really wanted to".

Which ironically means that snobbery can look anti-elitist - "This isn't a beer for the few, it's a beer for everyone! Of course you can afford it - go on, get out of the Value aisle and try the finer things in life for once!"

py0 said...

Currently craft beer manufacturers are able to charge high prices because the beer is new and exciting and curious punters are willing to pay extra just to say they've tried it. As long as they keep coming up with something new, then they can keep charging silly money.

However, this is unsustainable over the course of more than a couple more years. There are only so many innovative new beers out there. Once you've had one whiskey barrel aged cranberry infused dry hopped imperial stout you've had them all. Eventually the number of takers for each beer will drop off. the bubble will burst and prices will have to be cut to compete.

Lower prices means some craft brewers will struggle, then they will have two choices: find a way of cutting costs without compromising on quality (making use of increasing returns to scale by expanding output is the most obvious method), or go back to the day job.

Some of the comments about "overpriced this" and "underpriced that" - you can tell brewers aren't economists.

MagicRockRich said...

CL: I changed it to 'some' because I knew you'd pick me up on generalising the entire market, but it is happening in the real ale pubs which people on this thread will frequent.

Ok maybe its not subsidising as such but you stating that its "a ridiculous notion that somehow cask beer is too cheap" is what I had a problem with.

Some cask beer is being sold too cheap imo and that distorts peoples view of pricing at the bar.

Matt Curtis said...

Bloody nora, this is some debate! I hope that many of you never go on holiday to Norway or Denmark and order a beer, your head might explode!

py0 said...

If cask ale was being sold "far too cheap", that would imply that raising the price by a good percentage would have a minimal effect on the number of pints sold.

I think that's delusional. Raise the price and see what happens: punters will just go to the cheaper pub down the street. There will always be someone willing to undercut you, probably with the initial JDW.

Like them or not, Spoons is large enough and well distributed enough to effectively set the reference price for the pub industry. I might be willing to pay 50p extra per pint to drink in a nicer atmosphere, but £1.50 extra? No thanks.

This is all assuming of course that they don't just stop going to the pub altogether and buy their IPA from tescos at £1.70 a pint.

Bailey said...

Phil -- those both sound pretty awful put like that. What would be a 'correct' attitude? A self-denying boycott in solidarity? Can see why so many people just choose not to think about it at all. (Not snarking, genuinely interested.)

Coxy said...

I just had a couple of days in Copenhagen , it really ruins your drinking experience having to worry about your wallet all the time! The Mikkeller bar had some good beer but it does leave a bad taste in the mouth when you are paying seven eight quid a pint. Saying that it could have been cheaper if they hadn't paid a top designer to design the bar, I could have slapped a few odd chairs , white paint and shelves in an awkward place for a few free pints, I might have even made it comfortable.
Most of the pubs in London that do "Craft Beers" are so popular they could easy get rid of a nine of cask in a couple of days, if its excellent beer like Magic Rock is producing it would be easy peasy ,when I see Hire Wire is hardly lasts a day.

Phil said...

I guess the 'correct' attitude would be to say "nice beer, shame about the price", and generally moan about the £££ in the way that the brewers on this thread are finding so endearing (all credit to Rich for hanging on so long). That, and to look at the latest amazing caged-cork champagne-bottled limited edition and think "hang on, I could be drinking actual champagne for that money" - instead of thinking "ooh, expensive... but shiny!".

Good beer just shouldn't be unaffordable. If it is, it may still be good beer, but it's a damn shame. Marble currently have bottles on sale at £16 and £19 - I've loved some of their specials in the past, but £16 for a bottle of beer? Just no way.

Bailey said...

Phil -- feel like this conversation has taken place before but... isn't all beer unaffordable to someone? And aren't real ale drinkers failing to show appropriate solidarity with those who drink canned beer at home because they can't afford the pub?

Can you still drink posh beer as long as you moan about the price while you're doing it?

Dan said...

Phil -- Why is the price point of champagne acceptable? Are their overheads a lot bigger then a breweries? Or is it just so damn tasty that its ok to pay that much? Some beers are incredibly costly to produce and produce very little yield however that is how you create very complex and interesting flavours. If a bottle of beer is priced closer to £20 then £3 there is a reason for it. Beer doesn't have to be drunk in pints. Beer doesn't have to be refreshing. Beer doesn't have to be carbonated. Beer doesn't have to be flat. Beer doesn't have to have millions of yeast cells still swimming around in it. Beer however has to be engaging and social. Sharing a £20 bottle of wine between three or four people is one of my favourite things to do. Some things in life cost more and if you want quality you tend to have to pay for it.

Paul Bailey said...

Before I have to resort to Wikidpedia, could someone please tell me what a KEYKEG is??

Coxy said...

Look Im English , I like to drink eight to ten pints on a good night out, that's going to cost forty to fifty quid at Craft prices, the point is the cask version is always better if served correctly and most of the "craft beer places ive been to serve their cask well.
ps Champagne is fizzy shite, and the region lives on reputation, the Terroir is better in Sussex these days.

Phil said...

If a bottle of beer is priced closer to £20 then £3 there is a reason for it.

Somebody's screwed up their budgeting and is now trying to get out of the red by passing the cost on to me?

Some things in life cost more and if you want quality you tend to have to pay for it.

As I said above, "snobbery" = "stop moaning about how you can't afford it, you could if you really wanted to".

Can you still drink posh beer as long as you moan about the price while you're doing it?

You can drink what you like, frankly. All I'm talking about is the way we talk about these things - and you do see a lot of "ooh, shiny" and a lot of "you can afford it if you want to" on the beerblogosphere, and not so much "NB, SATP".

No, I don't think a £3 pint is unaffordable to all that many beer drinkers - there's a reason why the price has stuck at around that level. A £2 pint at Spoons is even less so, & (in my experience) is often a fine beer in good condition. Anyway, debating the affordability of a £2 pint seems like a bit of a red herring when we're talking about pints costing £6 and up.

Bailey said...

Ok, I take your point about the tone of the dialogue, though having to include class anxiety disclaimers might take some of the fun out of it.

Paul Bailey said...

I could afford these inflated prices if I wanted to pay them, (although not on a regular basis). However, I choose not to on principle! There's a lot of hype around "craft beer", and what I've read in the comments here hasn't convinced me otherwise.

A triumph of style over substance methinks!

Phil said...

Incidentally, I didn't say the price-point of champagne was acceptable (to me). I never buy champagne - Freixenet Cordon Nero is about as far upmarket as I go.

But if I was going to drop £16 on a bottle of anything, it wouldn't be beer.

cgarvie said...

Paul Bailey a keykeg is a ONE use plastic ball with a Plastic bag inside it. Generally brewery conditioned. Gas is pumped into ball between ball and bag to force the beer out of the bag. So no extra gas needs added. There great for Export, but they ADD SERIOUS cost to price at tap. I understand why many brewers use them. But personally id rather see the same beer in cask with out that extra cost being added.

py0 said...

I'm sure there is a market for £30 750ml bottles of beer, but
a) its a relatively small one currently
b) its far more likely to be used as an alternative to cava/prosecco on a special occasion than as a beer to drink down the pub.
c) it better be seriously nice to justify the price, otherwise sales will soon die off.

dave u said...

personally i struggle to see how a beer can be worth stupid prices... enjoyability generally follows a curve, thus a decent pint of cask beer in a pub for £2.50 is (at least) 10 times as enjoyable as a 25p can of tesco value bitter and therefore worth the price differential. But beyond that the curve flattens very rapidly, such that a £5 'craft' beer isn't twice as enjoyable as the £2.50 one...

I also find I'm very concious of the price, so that paying a lot actually diminishes the enjoyment somewhat, so a £5 pint has to be bloody amazing to justify the money. Once you get into double figures, that's it, I'm out. It might be brewed with virgin's tears, aged in 200 year old cognac casks at the south pole, blessed by the head of three major religions and hand poured by royalty... but it simply doesn't taste THAT MUCH better

as for Brewpuppy and their £500 squirrel-bound 'beer'... no. just, no.

Phil said...

having to include class anxiety disclaimers might take some of the fun out of it

On a personal level, when I pay more than, say, five or six quid for a beer I do feel anxious - it seems like a lot of money to risk - and it does take some of the fun out of it. This may change when my income improves!

More generally, "this beer shouldn't cost so much" doesn't strike me as an anxious thing to say, any more than "this beer should taste better". I go back to the pinko roots of CAMRA - for me it's about Good Beer For All, not Amazing Beer For Me (although that's also good).

Chris Mair said...

Hi - Chris from CraftCentric

Pubs do not off set all their cask against their keg. Having read these comments too many of you are picking the argument that appears to make the least sense and jumping on it.

Bars are also not 'making a loss on 6 cask mitigated by 2 keg' because that would be commercial suicide.

It's a balancing act. Some bars will be forced to mitigate the cost of some of the higher priced casks by ordering some much cheaper casks or offsetting the cost by buying in cheap industrial kegged beer and selling it at a premium. The craft keg beers are not mitigating the cost of expensive casks, if they were they'd be even more expensive. I used the keg mitigating cask as an example as to why there MIGHT be a difference.

At the end of the day if you want to drink/eat/drive/wear anything of quality you have to pay a premium for it. If you want to drink/eat/drive/wear something that costs list then by and large you get it's market value. What it's value is to you is something else entirely.

And with the greatest of respect, some of you really have absolutely no idea what you're talking about. May be, as you're coming from a point of ignorance, that contributes toward your mind set of the costs and the margins involved.

Should Rich and Stu compromise what they believe in and make beer they think is of a lower standard to keep costs down? They might sell more (I doubt it) but will they have the same pride in THEIR business as they do now? Will they enjoy what they do as much? That is the value that so many of you seem to forget. These guys have values, core beliefs and they make their beer the way they believe in. Like so many others they hope you'll share those values and be prepared to pay more for the best beer available. If you don't like it, or don't want to pay for it just don't.

Let me be absolutely clear here because this is not speculative it's a fact. Pubs DO price SOME of their casks below the GP they would prefer in order to maintain solid turnover and sustainable growth. GP isn't set in stone, it depends on location, business rates, property lease costs, staff costs.

Before you charge in moaning about the price of beer try to have a grasp of how these things are costed, because it's not some fairy tale ideal where everyone making is making a huge amount of money and driving big cars.

And if you really want to point the finger at profiteering, target the breweries who pay marketing companies to run their twitter feeds. They clearly have lots of disposable income.

Cooking Lager said...

@Rich A retailer selling multiple products will not sell them all at the same margin. The market will bear a higher margin for some than others. Saying your lower margin products are too cheap and therefore subsidising other products is a ridiculous notion. Do you think Tesco value beans subsidises the Heinz beans? I’m sure a pub would love to have as much of a mark-up on the beer as the food, or have high margins throughout .Tough.

@Phil I found snobbery inherent in well off people telling less well-off people what they should do. Telling people they can afford it if they drink less and commenting that people choosing not to do that only want to get drunk is a snobbish view of people less well off. I see no shortage of well off people getting pissed, the poor are free to get pissed how they like without the patronising paternalism of snobs.

MagicRockRich said...

Cookie, I conceded in my last post that subsidy is probably not happening. Are you just not bothering to read what I've written?

Cooking Lager said...

I am reading what you've written, Rich but ultimately I cannot accept that a retailer not making the GP they would prefer to be selling at is thus "too cheap". All would prefer everything to have a higher margin. Markets don't work like that.

As far as I can see, some are happy to pay more. Great, enjoy that. Me? If it's worth it, depending on what else the market offers and prices at, will make his own choices.

Phil said...

Having read these comments too many of you are picking the argument that appears to make the least sense and jumping on it.

With all due respect, Chris, keg/cask cross-subsidisation was what that post was all about. What other arguments do you think we're overlooking?

At the end of the day if you want to drink/eat/drive/wear anything of quality you have to pay a premium for it.

This is just not true; not only that, it shouldn't be true. Good quality beer (cheese, bread, whatever) should be affordable, and very often is. Affordable beer should be good quality, and very often is. Going back 50 years or so, cask beer in many parts of the country was an amazing thing - a really good foodstuff, sold as standard. CAMRA (and the broader movement they spearheaded) in turn achieved something amazing, bringing this affordable but high-quality thing back from the brink and making it widely available.

The premium-for-quality Taste The Difference route is exactly, 180 degrees the wrong route for beer. If affordable beer isn't good quality, that's a problem that we shouldn't accept; if good-quality beer isn't affordable, that's also a problem that we shouldn't accept.

Obviously I can't define 'affordable', except to point out (as per my recent blog post) that approximately two-thirds of the drinking-age population has an income of £21k or less, so if your income is significantly higher your perception of what's affordable is untypical. We do know that the £3 pint is an 'affordable' price-point - it's a price people without any specialist interest in beer are pretty much OK with paying.

Apart from anything else, what does somebody like Chris say about the duty escalator? They certainly couldn't say that it makes beer too dearThey couldn't say it's bad for the pub trade, either, because by definition it's not - after all, if you want it badly enough you can find the money, and everyone knows you have to pay for quality...

MagicRockRich said...

Well from my point of view the market needs educating that some beers cost more to produce than others and they are worth paying for.

If everyone's opinion is that all beer is the same, its never worth more than the market average price and when people charge more they're profiteering, we might as well give up.

py0 said...

The market couldn't give a monkeys how much it costs to produce a beer, and neither should they; thats the brewers problem. If the brewer can't make the beer cheap enough, he goes out of business. Tough.

All the market cares about is how much they enjoy drinking the beer: that then dictates how much they will be willing to pay for it. Its up to the brewer to find a way of providing this in a way that provides him with enough profit to live on.

Cooking Lager said...

The market needs educating?

Isn't it a typical response of a politician explaining why his policy is deeply unpopular usually not one of admitting it but saying "we need to educate and inform people and communicate better" ?

Customers are educated and informed. Many people of means do choose to eat and drink relatively more expensive products than the general population.

Educate people all you want, people will either welcome it or find it patronising as per their nature or the manner you go about it.

Or just make a product some think is better and people are willing to pay more for. If people can manage that without disparaging those who for whatever reason choose something else you will not find me bandying words like "snob" about.

MagicRockRich said...

I don't disagree with either of you just explaining why there may be price differentials at the bar. It seems many on this thread are not happy to pay more for than they're used to for beer which is fair enough.

I realised when I started our business that our market in the UK was pretty limited and this thread pretty much bares that out.

py0 said...

Its not a case of "more than we're used to", its a case of "more than its possible to profitably sell a beer of that quality for".

We're talking at cross purposes to some extent - lots of us are talking about our personal demand curves for beer, but it may just be the case that that means we're not the ongoing target audience for Magic Rock.

Which would be a shame for us, because MR beer is really damn good and I'd love to be able to afford to drink lots of it, and (possibly) a shame for them, because we're a big market and if they don't supply it, then someone else will.

Phil said...

If everyone's opinion is that all beer is the same

Where did that come from? I'm all in favour of good-quality beer - I'm quite militant about it. There are lots of breweries I avoid because they're too variable or just a bit mediocre. But I think all beer should be good - and I've had some very good beer which was also perfectly affordable, so I know it can be done.

As it happens I'm a big fan of Magic Rock - great brewery, great beers. I usually avoid their keg, though, and if they started charging >£4 a pint for cask I'd usually avoid that too.

dave u said...

until recently, cask beer did pretty much cost the same, in a given location and a given ABV... some beers were far better than others, yet the price at the bar hardly varied - the market at the time would not bear much deviation. People would prefer one beer to another, but this was always interpreted as personal taste and not something they would expect to pay extra for. Only recently has the market, or part of the market, been persuaded to part with more brass for a better beer. Being a beer snob and a tight git (well, i do live in Yorkshire...), I don't (deliberately) buy crap beer, whatever the price (my mate asserts crap beer is better than no beer, but i would rather go without), I'll pay a bit of a premium for something decent, but I won't pay what I percieve to be over the odds...

And like Craig, I'm really not keen on paying a premium for the privilege of my beer coming from a one-use container...


Erlangernick said...

I'm admittedly ignorant of Magic Rock. When I'm in England, I'm drinking cask beer, and as low gravity, pale, and hoppy as possible. I've seen MR nitro(?) taps at numerous places, and I think I've seen handpumps of stronger beers than I care to indulge in whilst on my aleidays.

I've had a bottle or two of less stronger MR stuff at home courtesy of alesbymail, and these have reminded me of ...well... my homebrew, but stronger, and yeasty. My point is, I'm genuinely ignorant of what makes MR beer relatively more expensive to produce. Okay, the keykeg thing is clear, but otherwise...

I would say that the likes of Mallinson's, Hawkshead, Abbeydale, Bradfield, and yes, the various beers I've had from the Little Ale Cart are all *quality* products. I haven't noticed paying a premium for them.

I can see charging more for a beer that's been treated specially or exotically, tying up precious brewery or cellar space in whisky barrel aging, lambic-style aging and blending, or what-not, as these are costs that the brewery needs to recoup. I can see *others* paying a premium for these, but they're just not my cuppa these days.

Cooking Lager said...

It's clear that the price differential is a combination of cost (key keg) and higher margin on the product (presented not as a higher margin but other beers being "too cheap" or lower margin), ain't it?

Anonymous said...

Can I suggest that everyone on this thread, gadabout and tight-wad alike, lobby your MP re the beer duty escalator.
The continuation of such a policy will certainly lead to beer being more pricey or more shit, or indeed a combination of the two.

Paul Bailey said...

Thanks for enlightening me about Keykegs, Cgarvie. Presumably breweries are using them because they can't afford to invest in kegging equipment? One has to ask if they can't put their money where mouth is, ought they not to stick with cask instead?

cgarvie said...

PaulB. THe Cost of non disposable Kegging from what ive heard is quite HIGH to get started. Where as the cost of KeyKeg is more or less just the cost of the kegs. Now yeah there not cost effective in the long run, but not every brewer (and remember many of the keykeg users are NEW start up brewers) has the extra capital to invest in the Real Keg facilities.

unlike some here (and i dont think there wrong, they just have a different take on it) im happy to pay a premium from the rigth brewers as i do think their beer is a cut above, most likly as they using more malt/hops, etc ie their beer costs more to make. Im fine with that. But a premium is not going from £3.60 in Edinburgh for normal cask ale, to too often £6 for keg.

so am with you on, as soon as they can get rid of Keykegs "as normal use" the better. That will see about £1 off the price of a pint of keg beer.

In the mean time i do understand why theyre using them but id like to see more of them offer Pins (of their currently keg only beer) to pubs. That way their beer can get out there at a much more reasonable price (from my point of view at least)

(id also like to state clearly here that Brewers NOT doing what i want doesnt make them bad people.)

Tandleman said...

I need to have a think about all this now. Thanks to everyone that responded.