Tuesday, 18 December 2012

If it's Good Enough for the Consumer?

Most - the huge 90% plus majority of beer is sold by big brewers.  That's a fact.  When people slag off big brewers, they are, by and large dissing almost everyone that drinks beer.  It isn't usually looked at that way, but that's really how it is. I'd say if that isn't snobbery, what is?  But of course, I'm a beer snob too. Not as much as some, but a snob nonetheless.

There was an interesting piece in E-Malt the other day about craft beer, written (or rather his words were reported) by Graham Mackay, who it turns out, is none other than the Chairman of SAB Miller Brewing, who are pretty big in the mass produced big brands game.  Noting that In the US, craft beer saw a 13% increase in volume in 2011, while overall beer sales were down by about 1.3% by volume during that same period, he said "the elimination of harsh and intense flavors has been the central sweet spot of the beer industry for decades, if not generations. If we go back 30 or 40 years and look at the formulations for the big brands that still exist, their bitterness levels in the U.S. are 7 to 9 [measured in International Bitterness Units]. Those brands, 30 or 40 year ago, were up at the 17, 18, 19 kind of level. European lagers are somewhere between 20 and 25."  Today, the consumer has gone back to saying, "Let's get a bit of interest, let's have a bit of difference." So, there's been the growth of craft beer."

Now the fact that flavour and character has been eliminated from big brands is hardly a revalation, nor is the fact that a lot of consumers are turning to craft brewing as a way of getting that flavour, not only back, but enhanced.  He went on to tell us that SAB Miller is entering the craft market, but admitted that it is "difficult for big companies to incubate small brands. That, at its heart, is the dilemma. To start a small brand in a credible, consistent, sticking-to-it kind of way is hard for big companies. That's what small entrepreneurs do best.”  When they do enter the market, craft brewers feel "we're stealing their authenticity. What we say is, 'Let the consumer decide.' If we're authentic enough for the consumer, that's authentic enough for anyone.

Mackay sees difficult times ahead for craft beer.  "I don't think the craft movement in its current guise will continue to grow indefinitely. I don't think it can. It's not economic. Too many people won't make any money. Too many of them will go out of business. And I think it will become less fashionable. These things are fashion to some extent,"

So how much of that do you agree with? Will the craft bubble burst? Will the big players whittle it away, or will they just whittle away at at it? Is it just fashion?  Do these observations which are largely aimed at a US audience have much traction here? I'm not sure.  I think there are two markets running on parallel lines.  I doubt if craft beer will have a crash here, though they ought to watch the warning signs on overpricing, which is endemic and complacency about the big guys, which is institutional, as well as the inevitable dog eats dog situation that will develop if the market continues to grow and recession continues to provide an unhealthy backdrop to spending on beer.

At the end of the day, Mr Mackay is right about one thing. If it is authentic enough for the consumer, that's authentic enough for anyone.  That's not just a warning, but a prophecy.

Read the full article here in E-Malt. Or above really!


Unknown said...

I think when we all stop quibbling about the word craft and its precise meaning (in around 3 months, I predict), it will outlive 'fashion' status and become an established (smaller) part of our beer enjoying lives. Partly because the American public has already adopted it big time, and partly because the results are so frequently delicious.

Tandleman said...

Two observations. America isn't here and what's going to happen in three months?

Pastey said...

Back in the 90's we saw a resurgence of cask ale, there were more and more breweries opening up, and more and more pubs started to sell the stuff. Chains such as Tap & Spile, Tut 'n' Shive and Hogshead spread around the country selling the beers that were available from the smaller breweries alongside those from the larger family ones.

After a while though, the fashion for ale seemed to drop a bit, and those chains stopped existing. A lot of the smaller breweries went out of business and we went back into a bit of a decline. However those small breweries that managed to get themselves settled with a good regular trade base managed to survive, some such as Oakham even went on to become larger and more successful.

I don't think that what we're seeing today is much different from then, except that it's not just happening in the UK, but in the States as well. And rather than chains of pubs cropping up selling to the pre-nightclub crowds, we've got independent pubs selling to the more educated drinker.

It's been about 10 years since real ale started taking off before settling to a better level than it was in the 80s, and I think that we may very well see the same with craft beer. It is taking off, and it will probably see a couple of years or so of growth yet. But what it has to do in those two years is get itself settled into the market place, get itself to become a "normal" drink that will be found in the tied houses of the larger breweries.

Back in the 80s most of the tied pubs where I was didn't have a handpump, now they all do. At the moment, in Manchester at least, we're starting to see key-keg lines cropping up in places you wouldn't expect. If the larger breweries take this one, then I can only see this as a good thing. Perhaps in ten years time we'll see a key-keg line in most Holts or JW Lees pubs. What it dispenses may very well not be anything overly special, but at least it'll be there.

So personally I think that yes, the larger breweries should get into trying to produce craft beer, it's a good way to get it into their tied estates and into the glasses of those that don't go out looking for it. And who knows, if they try it they may start looking for other decent beer.

Bailey said...

'Craft beer' is all part of the interplay of influences in a healthy market. Big business with a monopoly will make the cheapest, weakest beer they can, and sell it at the highest markup once they're dominant -- they'd be daft to do otherwise. (We dodged that in the 1970s.) Small breweries, opening, closing, coming and going, keep things fresh and interesting, and keep the big lads on their toes; they also help to test and uncover new markets.

I reckon I could find about a hundred blog posts saying "everyone hates big breweries except me", and I think the number of big-brewery hating blogger snobs is sometimes is a bit over-estimated, at least in the UK and Europe.

Tandleman said...

I like what "Unknown" says.

Bailey: I think actiond speak louder than words on big breweries.

Pastey said...

Sorry for the "unknown", Google keeps forgetting who I am, but I do wonder if we're seeing another cycle of beer styles. The prospect of getting the family brewers to take notice of what people want, the growing market that's been labeled "craft beer" and responding to it, and producing something that is more drinkable that their standard stuff if a good one.

I admit that a pint of JW Lees (to pick one at random) doesn't hold a patch on a pint of something that say, Oakham would produce. But at least it's there. It's not there for us beer snobs who'll happily drool along the bar in places like Port Street and the Euston Tap, but it's there for the 90% or so of beer drinkers who just want a pint of something tasty and refreshing.

py0 said...

No-one outside the blogosphere gives a monkeys about "authenticity". They just like beer that tastes nice. Its a sad indictment of the current climate that finding a beer that tastes nice is simply impossible in probably 50% of pubs.

An entire generation has now grown up thinking that all beer tastes foul, because all they've been exposed to is sweetcorn flavoured lager and warm metallic brown bitter, and the breweries have no-one to blame but themselves.

Sid Boggle said...

Interesting. I wonder if Mackay was responding to that US Brewers Assoc 'Craft vs Crafty' press release that got a lot of hoo-hah last week?

I tend to think there's a tipping point that 'craft' will hit, but whether it's affected by fashion? The US market had a shake-out in the mid-90s and you'd expect the same again, but the more established bigger guys are slow and steady, still innovating and investing in capacity. The rest are under the radar, so you would assume not worth the attention. Whether they have sustainable business models doesn't seem to be deterring them from having a go.

Whether more of the big brewers decide to acquire the entrepreneurship by buying up 'craft' brewers thr way AB-I have with Goose Island.

I suppose one of the factors is what each of the businesses can give to the other. Things like credibility and reputation aren't transferable, while you could hardly expect AB-I to start adding costs by spending more on ingredients, when Inbev have spent most of their time since the merger stripping costs of out AB, to attract a tiny percentage of drinkers who think their current beers are rubbish.

As a beer drinker making a choice, am I a 'snob'? A grain of that, but surely there are wider factors than the beer I want to drink indicating that. And I think we'll eventually have a settled definition of 'craft' in the UK. All the turbulence now is part of that process.

Neville Grundy said...

“When people slag off big brewers, they are, by and large dissing almost everyone that drinks beer. It isn't usually looked at that way, but that's really how it is. I'd say if that isn't snobbery, what is? But of course, I'm a beer snob too. Not as much as some, but a snob nonetheless.”

Some drinkers are quite rude about other people’s drinks. In CAMRA circles, the terms “chemical fizz” or “zombeers” for non- real ale are two I’ve come across in print. I’m not a foodie, but I wouldn’t expect people who are to insult my choices of meals: the same courtesy should apply to beer. In the CAMRA magazine I edit, I permit no insults about the choices made by those who don’t drink real ale. Some standard lager drinkers I know have given real ale a go but have discovered they don’t like it. That’s fair enough: I can’t stand fish or (worse) seafood but I know plenty of people who love both. The idea that if smooth or lager drinkers just tried real ale, they’d be converted is nonsense because we all have different likes and dislikes, which means it’s silly to insult other people’s preferences.

As for the term “beer snob”, I’d say that only applies if you are bad mannered as described above. Knowing what you like and being able to explain why you like it isn’t snobbery; considering that your preferences make you somehow superior to someone who happily orders pints of Stella, Fosters or Carlsberg is.

Cooking Lager said...

Craft will grow until and beyond there being a microbrewery for every man, woman and child. Cask beer and lager will die and everyone will be happy to pay top dollar because craft beer is worth it. Camra will disband and pork pies will no longer appear on ploughmans lunches. It may take longer than 3 months. 4 or 5 maybe.

Pivní Filosof said...

"When people slag off big brewers, they are, by and large dissing almost everyone that drinks beer."

Nitpicking, I know, but I don't agree with that. We all like something that other people cal legitimately call "crap".

I believe that certain beers are rubbish, and I may have many reasons to believe that. But I don't think people who buy them are idiots anymore than I am an idiot for enjoying, I dunno, Motörhead.

That said. I think that overall Mr Mackay is right. The growth of "craft beer" will stop sooner or later and sooner or later the big brewers will figure out a way to introduce brands that will compete with them.

What I'm wondering, though, is when will the bigger "Craft brewers" begin to buy smaller ones, because I believe that will eventually happen...

Leigh said...

I remain sanguine, and think of the craft beer market very much the same as any other - the quality, the brewers with more than just a brand, with beers that people want to drink - will thrive because they produce a quality product - the rest will fall by the wayside.
I hope.

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Rob said...

Price will determine it. I was at the pub last night and it was £3.30 for a very nice pint of Ilkley Lotus IPA. It was £4 a half for Thornbridge Halcyon. Yeh I know the Halcyon is pretty strong (7.4% and Lotus IPA is 5.6%) but that's just ludicrous. There were other fancy keg beers on as well, all at the same sort of price. I didn't notice anyone ordering any of them. For something like that I could be pushed to £2.50-£3 a half but not £4, and I'm someone who likes and knows about these sorts of beer. No wonder no one was drinking it.

Tandleman said...

Rob. Personally I think many of these fancy places are effectively pricing per drink. The thinking may be that it will take people a lot longer to drink it and as this is a going rate for a single drink, then charge that way. Nobody really minds as they would pay £4 for a drink and wouldn't be drinking strong beer by the pint.

Rob said...

Well judging by looking around the place, whatever the strategy was, it wasn't working. Most were drinking cask, or Erdinger.

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py0 said...

I think the problem with craft beer at the moment is that the costs of production and distribution and the level of demand are so variable from beer to beer that no-one really knows how to price it correctly. Give it 12 month and the market will have settled down a bit and we will all have more of an idea of what a "fair price" for half a pint of 8% beer is.

Leffe (at 6.5%) was £2.50 for a half back in 2004, and this was in Nottingham, not central London. So its not like these prices have come out of the blue.

Unknown said...

"America isn't here"


'Craft' is here. It came from America, and many Brits claim to have difficulty recognising it, or what it 'means.'

Maybe this is because America effectively IS here, there's no more obvious manifestation of that fact than the craft beer movement, and some of us are just plain old unhappy about that?

The Amercan public's broad acceptance of the term 'craft' means it will now stick globally. Right or wrong, the USA tends to get its way in terms of chosing business terminology due to its established power of influence, whether in cultural or business matters.

To say "America isn't here" is at best a noble attempt to disregard their influence, but it also smacks of resentment and denial.

America is here. It's tasting pretty good. It's really just a question of how much we can stomach it.

StringersBeer said...

"America is here"? I just looked outside and it wasn't. http://www.economist.com/style-guide/americanisms

Unknown said...

I don't think the "craft beer" bubble will burst, but it's clear it can't remain in growth forever.

As Pivní Filosof points out, there are bound to be some takeovers and mergers at some point in time. And then beer enthusiasts will start complaining about the loss of brands no doubt.

Markets are markets, they wax and wane. I don't see that as a problem, it's the ones that remain flexible that will survive. Or the ones that are big enough to ride out the storms.

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