Tuesday, 3 January 2017

Nothing Much to See Here. Move Along



I was woken yesterday by a tweet from a branch member to advise me that Manchester's Cloudwater Brewery was to cease brewing cask beer. Now my first thoughts were "Oh. Not sure I like that", but reading Paul Jones piece about why they came to this conclusion, I started to see the simple truth, varnished though it was by the usual red herrings about low prices, bloody CAMRA and poor cellarmanship. "We took the decision to make more money from the same production and had to really, as we don't make a profit currently".  My paraphrase, but who can blame them then? Certainly not me. A brewery has to make money and when you have limited capacity and bills to pay, using tank space for a low margin products when you can small package and keg beers for the same effort and make lots more money on them - then you can see the point - while not necessarily agreeing with some of the supporting "evidence."

Matt Curtis and Ed Ray (and maybe others) have given their thoughts on this and you can take your pick which one you go along with. Matt takes the view that it is mostly down to low prices commanded by cask beer in the trade and a more questionable claim that cloudy cask beer produced by Cloudwater is also a factor. (For my part most cask I have had from Cloudwater has been perfectly clear, but opacity is a divisive factor that inhibits some modern producers of cask beer. There is a resistance to non clear cask beer - rightly in my view -  so only one point deducted there.)  Matt's other point about pricing and discounting is true and he blames drinkers for this. I am not so sure that this stands up to scrutiny though, as discounting is driven by the sheer number of cask brewers - nearly 2000 - competing in a diminishing pool and having the advantage of progressive beer duty.  Publicans often buy on price alone and if the beer is no good, then there are plenty more to choose from. I'd contend that the punter is the victim of this discounting, not the source of it. Prices are dictated by what the pubs charge in a competitive market. The customer has little say at all and often has to endure some bloody awful beers.

Ed points out a couple of things in Paul's statement that he disagrees with. Firstly on price of cask beer and secondly on the notion that somehow it is CAMRA's fault. This idea that CAMRA demands cheap beer is a pernicious one, but it simply isn't true.  Many CAMRA members, like many other people are price concious and why shouldn't they be if living on a fixed income in retirement as many do? But it isn't some kind of edict from CAMRA Central and anyway, CAMRA members have much less influence on the trade that many imply.  Ed concludes "let's face it, this side of libertarian communism you can't get away from the need to make money."  Can't argue with that any more than "if you haven't got the money, you can't buy expensive beer." (My quote not Ed's).

I have a couple of points of my own to make. Firstly the business model set up by the brewery has not proved robust enough to sustain the brewery going forward. After a couple of years it  has had to be reviewed and changed. 23% of Cloudwater's capacity is cask beer, falling from 45% in their first year. Already it is clear that the switch away from cask though isn't to keg, but small package - cans in this case.  Keg production will remain roughly the same, so cask is being replaced by the most profitable part of brewing. Shrewd move if you can sell it.

Another point I'd mention is that while the Americanisation of some of the modern British Brewing sector has brought many benefits, it has also introduced to some extent, overheads and risks. It is expensive to tie up strong beer in wood. It is expensive to have a team of brewers playing around with recipes, it is expensive to spend time on collaborations, tap takeovers, Meet the Brewer and messing about with other brewing pals. Constant "innovation" is costly too.  Maybe these aren't luxuries or nice to haves in that niche, but it certainly carries risk and relies on gaining a place in the market amongst other breweries doing the same thing. It also relies on the willingness of the public to pay for these things in higher prices. There is still in the UK  a narrow appetite for fancy and limited beer releases as Paul bemoans in his piece.  Maybe we'll never queue for hours in the UK for such delights?  The UK isn't the US - and sometimes that has to be remembered.

So to sum up, Cloudwater want to leave a low return, thankless cask market for a fun, innovative and much more profitable sector of brewing. A less "All things to all men approach". We shouldn't moan or blame them. For them it is clearly the right decision. Even if some of the supporting arguments, aren't 100% persuasive, the money one is.  Fortunately there are plenty of smashing cask breweries to replace them. Of the 2000 breweries in the UK, I'd guess 95% brew cask beer.  It is business that's all and the gap will be filled imperceptibly.  It isn't the end of cask conditioned beer, or even the beginning of the end. The way you make money from cask is to distribute fairly locally, keep a tight grip of costs, gain a good reputation and stick to your knitting. Plenty know that and will succeed.

Paul Jones says "Cask beer should take pride of place in every bar and pub". He is right and equally he has every right to say - though he doesn't, "but sadly, it won't be our cask beer."  He isn't announcing the death knell of cask beer. He is just doing the right thing for his business, that's all.  Nothing wrong with that.

If my maths is right then Cloudwater sold on average 56 nines of cask beer a week.  Not a huge figure and slack that will easily be taken up.

There are however lessons to be learned, the main one being that in some cases, the most highly thought of modern breweries won't produce cask.  Maybe they just can't in the kind of world they inhabit.  Maybe they just don't get it due to American influence?

I'll also add that both Ed and Matt make valid cases. You pays your money and you takes your choice.

31 comments:

Alan said...

I don't disagree with any of that but all this was known at the outset and, if Ed is correct, the brewery is well financed.. The argument seems to be that small scale niche craft cask (which never worked for others before) would somehow work for this brewery. Why did they think that it would. And, more importantly, why did their financiers now facing the joy of surplus in the equipment so recently bought.

RedNev said...

One brewery out of thousands deciding to stop brewing a small quantity of real ale isn't front page headline news - a column inch on page 20, perhaps.

Mark said...

Specifically with regard to the topic of cask price vs keg price:

I haven't seen any commentary about lifespan. A cask, once tapped, can only last 2 or 3 days (as you know). So it's therefore necessary to sell volume of cask beer. The same isn't true of keg. In general, the higher price per measure, the less volume you'll sell. For me it makes sense that cask beer is 'pile it high sell it cheap' whilst keg is the opposite.

I would buy 2 pints of £3.50 cask beer but not 2 pints of £5.00 keg.

retiredmartin.com said...

"It is expensive to have a team of brewers playing around with recipes, it is expensive to spend time on collaborations, tap takeovers, Meet the Brewer and messing about with other brewing pals"

Exactly. Not a problem for say,Peerless or Allgates, let alone Sam Smiths

Beermunster said...

Steve from Beer Nouveau posted a cost breakdown of the various forms of dispense. He suggests that there is no more profit to be made from keg than there is from cask. Indeed neither makes particularly much money, but keg and cask are the medium which allows them to sell bottles, which make the actual profit which keeps the brewery running.

paul said...

the most highly thought of modern breweries won't produce cask. Maybe they just can't in the kind of world they inhabit.

Perhaps they will, though, in the future, once they've got themselves on a sounder footing.

Mind you, I'd have thought one or two constant and unchanging ales supplied to their favoured outlets would get them a nice steady base revenue stream and entice the curious, less fervent punter into the KeyKeg beers. Perhaps that's just not sufficiently sexy or challenging?

Curmudgeon said...

Something many seem to overlook is that cask beer is critically dependent on volume for quality. It isn't really suited to obscure, experimental, low-demand niche products.

Dave Bailey said...

I've given my own thoughts on my own blog regarding our future.

However, I think it is key to remember that there continues to be an oversupply of beer in the market, creating downward pressures on wholesale pricing. We have not increased our trade prices in 6 years and yet our costs have gone up significantly in that time.

For a number of reasons we find that cask beer costs us more to make, sell, deliver, recover empties and chase payments than we appear to be able to get for it.

Of course, this often doesn't ripple through in the price seen on the bar. It seems outlets are needing a greater margin these days, one must assume. Largely I think due to upward pressures on their costs, i.e. wages, energy and taxation.

Cooking Lager said...

I think people are looking at this from a cask/keg perspective when the issue is one of craft/craftmanship or degrees of automation.

The difference in many products is determined by one factor. Labour cost or man hours. The difference in the price of an off the peg suit and a bespoke one isn't the wool or the thread. It's the man hours in bespoke. What you pay for isn't "supporting great tailoring" or for some beardy man child to "play with wool". You pay for "the fit". You pay more, you get a suit that fits you. You get to feel like Steve McQueen rather than an under appreciated office clerk.

Anyone can afford a suit. Primark knock 'em out for £50. Ideal for the 16 year old lads first court appearance/job interview. You wanna look the part in a board room, you buy a bespoke one. Them's the rules.

If you want good quality serviceable beer, Sams have the process down to a level of efficiency where they can put a pint of bitter in a pub for under £2. Big lager can put a can of lager in a shop for 50p

If that's a bit low rent for you, push the boat out and go to £3. You get to drink much the same sort of stuff but in a safer middle class space where the other people likely have jobs and stuff and won't offer you knock off gear. Less fun in my view, I like rascals but it's your choice.

If you want experimental stuff, some of which will be surprisingly nice, much will be undrinkable swill that odd balls will insist on sipping whilst they wince because they believe it makes them discerning, that's gonna cost you, surely?

A labour intensive process with high wastage levels and people "playing with hops" for their own amusement. Well, if that's what you want the cost is £6 a third. Punt up and stop being so tight.

unclepuble said...

I like your analogy! Cheers to that

Martyn Cornell said...

If it was Jimmy Flybynight's brewery in Scrotum-by-Sea, no. It's Cloudwater. So yes. And the number of blog posts on the subject is QED.

Tandleman said...

I understand that point but really? Cloudwater = 56 nines a week. It isn't a tragedy or a portent of doom. Certain breweries just capture the imagination, but when you stand back and look at the picture, a different perspective emerges.

DaveS said...

I think Cookie's pretty much on point here, although you can get something more for your money when you move up a step in price from Sam Smiths to "standard CAMRA pub" - a few different styles, more choice[1] etc. And, depending on your tastes, you can get something more again if you pay another notch more for "seriously craft" stuff - more styles again, fewer shonky bitters / golden ales[2] bought cheap to make up the numbers.

Hence I think the argument that hardcore crafties should be making isn't that "cask beer in general should be more expensive", it's that "more people should be more picky and should be willing, if necessary, to pay a premium for the cask beer that they want."

If I wanted to blame CAMRA for something (and I'm not entirely sure that I do), it'd be for helping to create a culture where a pub that sells local microbrewed cask has basically got all the boxes ticked, regardless of whether the stuff's any good or not. For shouting "cask good, keg bad" so much that talking about whether some cask might be better than other cask gets rather sidelined.

[1] I know that more choice isn't always good, but "any beer you want so long as it's OBB" isn't always what you want either.
[2] I mean, I like bitter and golden ale, but there's a lot of "local micro" stuff that shows up in pubs around here which I can only assume is being bought for price rather than quality.

Cooking Lager said...

@DaveS

Your basic problem with paying the 50p extra and going in CAMRA pubs is that it's full of CAMRA types. They use less soap than the work shy Sams punter. You may get 15 different types of bitter, in all shades of cack brown, but the gaff is full of hobbits in anoraks talking about hops.

If you want an upgrade, go the full quid. Buy a pint of Robbies Bitter or some other similar mediocre local pongy bitter like Lees and sit with nice safe middle class types talking about house prices.

Neil Harvey said...

Interesting piece, Tandleman, but I think people should also read Hardknott's Dave Bailey's blog, with his musings about also leaving the cask market. You say "it isn't the end of cask conditioned beer, or even the beginning of the end" - me, I'm not too sure about that.

py said...

Punters who argue that cask beer is too cheap are fucking idiots. Turkeys voting for Christmas (or northerners voting for Brexit, choose your analogy).

The problem is not that cask beer is too cheap, its that "craft" keg beer is too expensive, hence the reason no fucker buys it. But the market will put pay to that soon enough.

Real Ale Up North said...

That made me titter.

Real Ale Up North said...

Neil, I understand your concern. However, I am with Tandleman on this one.

Tandleman said...

Neil

The market is saturated. Some must leave. I hope it isn't Dave though.

py said...

I think we all hope Hardknott survive, but this is the nature of the free market, red on tooth and claw.

If you want to make a profit, you need to be better than your competitors. Either your product needs to be significantly and noticeably better, or you need to find a way to produce the same quality at a significantly lower cost.

Curmudgeon said...

Note that Hawkshead seem to be making a success of their business despite 65% of their production being cask :-)

py said...

Not really surprising, they're a well-established craft brewery with an enviable reputation, less direct local competitors than in other areas of the country, and plenty of middle-class tourist friendly real ale pubs to sell to.

Curmudgeon said...

Hawkshead do a lot of business in the free trade in Greater Manchester, and also with Wetherspoon's. They're by no means just a Lake District brewery, and remember a lot of the pubs in that area are controlled by Marston's and Robinson's. Hawkshead is one of the relatively few breweries whose beers jump off the bar at me.

Des de Moor said...

I think there's more to the price issue than simple oversupply. Setting aside the issue that's it's a strange kind of oversupply when most of the breweries I know are struggling to meet the deluge of orders, there's the longstanding historical factors that artificially depress the price of cask compared to other formats. Part of the reason big British brewers pushed keg ales and lagers in the 1960s and 1970s was the low margin on cask -- the new beers, on the other hand, were sold as premium products at a higher price, also recouping some of the expenditure needed to produce them (you'll find much stuff in early Protz and Hutt about the price of keg v cask). The early microbreweries, despite their higher costs, had no choice but to match the bigger brewers on cask prices. So that discrepancy in price has persisted, so we now have the unusual situation where, in the pub at least, customers expect to pay lower prices for the labour-intensive, small batch product than they do for the mass-produced low cost industrial one. In my experience, that expectation remains strong, especially among consumers above a certain age. I've witnessed many incidents of shock and bewilderment at the price charged for 'craft keg' and bottles in some pubs. The Rake and Tap East are among the outlets that now train their staff to warn customers about the price of some of the more expensive beers before they pour.

It's a little disingenuous to say CAMRA has had no part to play in this. It may no longer have a policy centrally on beer price, but it's certainly pushed for lower prices in the past. What's Brewing regularly used to publish price comparisons, and some local CAMRA mags still do. And then there's all those expectations around discounts for members, not to mention the Wetherspoon vouchers. If what you're saying is true (and I believe most of it is), CAMRA should explicitly be saying that if we want to keep quality cask then we have to get used to the idea of paying more for it, but I can just imaging the explosion that would follow.

Des de Moor said...

Also...I suspect that Cloudwater have stopped doing cask now because they can. Just after they opened, I was talking to another small Manchester contemporary brewer about cask and keg. He told me "we have to do cask. You might be able to get away with being an non-cask brewer in London but not round here, all the pubs want cask, and they want it cheap." Two years on, I guess that situation has eased a little, particularly for Cloudwater who have a national reputation and sales.

Curmudgeon said...

@Des de Moor - simply not going to happen.

(a) beer in pubs is generally perceived as pretty expensive already

(b) there are many people on modest incomes who already struggle to pay current prices, especially pensioners who will never see an above-inflation pay rise

(c) if you make cask dearer, more people will switch to kegs or lagers, or to drinking at home

(d) cask quality is critically dependent on throughout. Raise the price and you risk making it worse, not better

geordiemanc said...

Somewhere I missed this when it came out. While I'd like to think Tandy is a mate of mine, some of his musings can be bit insular.

But this one is spot on. Cloudwater have done what they have done because bank manager / accountant has said this is what need to do. Paul is a likeable chap, but his brand is built on good honest sounding blogs and tweets which excite the "bloggerati" but which often can be cut down to single liners as Tandy has done in this case.

@Des de Moor makes some points which are valid in the wider discussion but not particularly relevant to Cloudwater.

Tandleman said...

Insular? Me? I expect my many millions of readers to leap to my defence here!

Tandleman said...

Oh and Design makes some very good points.

Tandleman said...

Or Des even!

Tandleman said...

Or Des even!