Monday, 17 October 2016

Reality bites

For a long time, there has been a widespread view that craft beer happily floated along on a higher moral plane, where animosity and cut-throat competition were unknown. You know, “beer people are good people” and all that. However, there have recently been one or two uncomfortable incursions of harsh commercial reality.

Boak & Bailey have reported that some smaller brewers are complaining about the competition provided by “well-funded, trendy” brewers such as Cloudwater. And Matt Curtis has bemoaned that the craft beer market has succumbed to prince competition in a race to the bottom.

I’ve said before that I have little sympathy for brewers who find themselves exposed to the harsh winds of competition. The world doesn’t owe anyone a living and, to succeed, you need to be good at business, not just good at brewing.

And I fail to see how Cloudwater can be considered to be doing anything remotely immoral or underhand. As I said in the comments on Boak & Bailey:

I’m certainly no cheerleader for Cloudwater, but they have built up their reputation through producing well-made, innovative beers that people actually want to drink – surely the recipe for success in the craft beer market. The fact that it was brewed by Cloudwater would make it more likely that I would sample something unusual, simply because I’d be confident they’d done a good job of it.

There seems to be a large element of “tall poppy syndrome” about all of this. I’m not aware that Cloudwater beers are particularly cheap (indeed often the opposite), nor that they are engaging in loss-leading. Competition can be a harsh mistress.

Surely the fact that price competition and discounting have reared their ugly heads is a sign of maturity in the craft beer market – that it is reaching out to sections of the population who would previously only have considered mainstream beers. Every consumer market manages to sustain discount, middle-of-the-road and premium segments, and beer is no exception. Any fears that an outbreak of competition will end up devaluing the quality of high-end craft beers are misplaced. But it may expose more people to different and better beers than otherwise might have been the case.

28 comments:

  1. Well argued Mudge. The same tall poppy syndrome was applied to Brew Dog as Cloudwater in my view. While the latter certainly got decent pre-launch publicity from CAMRA mags, the same is true of every new microbrewery opening weekly. Cloudwater have a reputation built on selling their beer thru reliable pubs as much as inherent quality.

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    1. You may remember me drinking a pint of Cloudwater "Bretted Bitter" in the Magnet in Stockport last January - a less Mudgie-style beer is hard to imagine ;-)

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  2. I can understand folks who find access to capital a major hindrance to growing their businesses getting a bit miffed when someone drops in to "their" market on a million quid parachute. It's always going to happen though innit?

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    1. Oh noes, I've installed some solar panels in the hope of getting a bit of a feed-in tariff and the Chinese come in and invest gazillions in Hinkley Point. It's just so unfair!

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  3. Don't be having a pop at THE CURTIS. He's the future.

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  4. I'm going to reiterate what I said in response to Matt's post - I don't think that either Spoons and Tesco or heavily funded startups constitute a threat to quality in the "premium craft" sector. On the other hand, I can see some cause for concern that (wholesale) price might start to trump quality even in specialist craft places if enough people aren't willing to be a bit picky about what they're drinking and whether they think it's worth the prices being charged for it...

    FWIW, and on a related thing, if I've got any beef with CAMRA then it's less about making people overly price-sensitive and more about creating a culture where people seem to be uncritical about what they're drinking so long as it's cask, microbrewed and local.

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  5. It will be a good thing to have a clear out of so called craft brewers. Many brew appalling overpriced beers.

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  6. the points I would make, and they are ones Ive made before, 1) there are a large grouping of breweries based in and aroun the North West,who fundamentally are all chasing the same amount of access to pubs/business, so to break into that youve got to be doing something incredibly special or you run your own pub/bar and 2) the likes of Brewdog and Cloudwater recognise their market isnt solely restricted to within Locale boundaries.

    Ive drunk more Cloudwater beer in places not remotely local to their brewery or natural market,because theyve recognised theres a bigger market out there and do something about pushing their product, tap takeovers etc to places across the country, that even the more recognisable craft brewery names rarely bother with and then complain they cant sell their beer.

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  7. I'm generally in favour of cheaper drink, so I'm not too bothered. Brewers do have a bit of form for grabbing a market then gradually lowering the quality of the beer though.

    Also, I'm not mad about craft, but it's nice to always have new choices. I thought the big brewers buying up the popular craft brands wasn't a problem, because a new one would pop up to fill that niche. It would be a pity if that was becoming less likely.

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  8. Not so sure it's tall poppy syndrome as people hacked off at the class nature of society: if you've got money you get to make more, and if you don't you don't.

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    1. "Them as has, gets" "Brass breeds brass" and such like. Also see "The second million is easy".

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    2. So if everyone can't have prizes, no-one shall. Socialism in a nutshell - the equal spreading of misery.

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    3. Ha. Yes that's much better than the Capitalist model of keeping misery confined to the poor and disenfranchised!

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    4. You're a funny man Mudgie. You'll be telling us that "life's not fair" next.

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    5. I have always been a Socialist and did admire the East Germany way where everybody had a job and housing provided for them.
      When thatcher became prime minister it was a greedy society with have and have nots,and those greedy people did not give a toss if you were slung on the dole due to the decimation of the steel works,mining and manufacturing,
      I was lucky in having a job during her time in Goverment,but i always felt sorry for those who were made redundent.
      I have always thought of myself as a fair person who would help somebody who is worse off than me,so i do give to charity out of my wage each week and feel better for it,does a greedy person feel better or is there is slight bit of guilt at being so selfish.

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    6. Ah yes, East Germany, where they said "we pretend to work, and they pretend to pay us". Where they had Trabants while they had Golfs in the West. Where you informed on your neighbour to the Stasi. A poverty-stricken, totalitarian state. Precious little to admire there.

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    7. "Socialism Bad" therefore "Moneyed Elites Good"? That's your point?

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  9. I have to say there was something about some of this (and Matt Curtis's piece in particular) which made me uneasy. I can't help thinking there was an undercurrent of "we can't have craft becoming too cheap - it should be kept special for the likes of us" I thought.

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    1. Pretty much my thoughts on the same article. Also shame on Thornbridge for making their beers more affordable by offering free delivery! If Thornbridge have a business model that can support and sustain such an offer then fair play to them.

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    2. Yes I also thought that this smacked of "how dare the plebs drink my expensive craft" type of attitude.

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  10. Cloudwater seem to be a strange choice of target. I've purchased their beer direct and wholesale and it's not cheap. Also they have a well-deserved, IMO, reputation for excellent, quality beers. How dare they prove popular:)

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  11. Whenever you hear beer is too cheap type arguments a decent thought process is to run the same arguments through 2 different other economic things of value. Take beer being a special case away. A product you regularly buy and one you sell. Let's say bread and an hour of your labour. Should this be protected in a cosy cartel of pals maintaining concepts of exclusivity and luxury?

    Does Curtis's blog hold water?

    Clearly not. But it's interesting he puts himself not as a beer consumer but aligned with beer producers. The actual consumers of his own writing work. You are not willing to buy Curtis's output, you consume it for free. Producers pay him to promote them through his content. So he writes from their perspective. He is part of the industry wanting to maintain a luxury status.

    Credit to both CAMRA and Clarkey particularly for many of the Brewer presentations put on in Ckarkey's branch. Well worth a look if you see them coming up. You get to see the business models of craft brewers. From commercial outlets with paid employees selling beer in pubs you can actually find to chancers wasting their inheritance on a dream they will never bring to fruition that they want your support for, to the guy making beer in his shed for sale only to his local social club as the house bitter and made as a hobby and sold for cost. A fascinating glimpse into a world of craft.

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    1. Indeed, Cookie. Many ordinary people struggle to make ends meet and would blanch at the thought that anything in their regular expenditure was too cheap. The fact that can get some craft beers on offer at Tesco will be welcome news.

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    2. The Spoons "help the poor drinker" argument is a tad tired.

      What about us? The relatively prosperous?

      It is a sad state of affairs if the only bread is cheap white sliced for £1. Everyone can afford bread but bread enthusiasts are at home kneading dough.

      An artisan bakery opens selling proper bread for £3. The poor are no worse off, but me and you can now enjoy craft bread.

      Sainsburys notice this is popular and open an in store bakery. It smells of fresh bread. It's £2 a loaf. We know there is no in store baker. We know the loaves arrive frozen and the ovens have timers but the bread appears proper bread if now a semi industrial process. Labour is reduced, but quality isn't. No one is making it all by hand, but the ingredients and process look kosher. The £2 loafs puts decent bread in the hands of more people.

      Some baulk at this, advocating the only true craft bread is the baker and his £3 loaf. They may sneer at those unable to tell the difference or care whether there is a difference between the £2 & £3 loaf.

      Meanwhile we might accept the £3 loaf opened a new market but some of it taken from from the £1 loaf.

      The £2 loaf may take customers off both the £1 & £3 loaves. And that's a problem if the £3 baker is your pal.

      If you eat bread, you now have far more choice. A golden era for lovers of toast.

      If you make £3 loaves you need to give people a reason to pay more, and a bit of sneering, a bit of snobbery adds so much more to your product than flour.

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    3. As a further question. This time on the supply of 1 hour of my labour.

      When I set up a company and went from employee to service provider, I got my 1st gig by pricing myself below contract market rate for 6 months?

      I now get away with a slight premium on what appears market rate if I look at gigs in my field on CW Jobs, but I built up a portfolio of work I didn't have at the start to show prospective punters.

      Should I moan about new entrants pricing below me? (which they do) or is that just the game and I have to accept competition?

      If I choose to become a beer writer would it be a good idea to undercut Curtis/Brown/Cole/Tierney/Protz or is the Beer Writers Guild like a union which maintain rates?

      Considering a few well placed by-lines would get my name out there and be worth more longer term than an immediate pay check?

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    4. It is worth adding that whilst Curtis clearly runs Total Ales on paid for content, no one paid him to write that specific blog post. It is his opinion.

      Back to the hour of my labour point. The government outsource processes to various 3rd party suppliers. There are fair and reasonable questions you might want to ask about whether you the tax payer obtain value for money from this or those customers of the service, often vulnerable and uneducated people on welfare, are adequately catered for.

      I provide an expensive service I do quite well out of to some of those 3rd party suppliers.

      Lets say I am offered the opportunity to write in the trade press, unpaid, but with my name on.

      Would you expect me to write a critical analysis or a supportive article of the process of out sourcing considering I have a clear vested interest in the success of my client?

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  12. He lost the plot when he described real ale as a "luxury product". An everyday necessity, surely!

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    1. Yep.

      There's a butchers vaguely near my work in a bit of a dodgy area. Sells the best pork pies - light crispy pastry, soft pink meat - for 90p a pop. Just plain pies but stunning and no pretence. Then I can go to my local farmers market and pay £2.50 for ones with rhubarb/black pudding/chilli. Nothing wrong with that but
      don't go telling me the 90p ones are too cheap.

      I really do think it is something that is missed in the craft beer bubble that beer in this country is 'of the people'. If you make it exclusive you remove the very essence of pub culture in this country.

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