Three Bullet Tuesday – 28 March

Something slightly different this week. I’m taking some time to respond to some other blogs. Enjoy.

1. Why do we drink beer where we drink beer? by Peter McKerry

A thought provoking post as always from Pete, which also led to some responses from Boak and Bailey and Mark Johnson amongst others. There was a lot I could relate to from Boak and Bailey, and while I couldn’t relate to “A pint of cask beer in my favourite pub ranges from £2.60 – £3.60, dependant on strength and purchase price.” from Mark’s post, he does have a point. I recently bought 7 beers from Borough Wines in Kensal Rise for £29, just over £4 a bottle. When I was at Mother Kelly’s a few week back, I was drinking halfs and two third for around £4 a serve.

I love the pub. I was a pub quiz champ and would often go to my local 2-3 times a week. Its where I met my wife. Then we had kids. Despite assertions between my wife and I that “things wouldn’t change”, they invariably do. Of course they do and its wonderful. One of the consequences is that I don’t get to the pub as often as I would like. An occasional lunchtime pint aside (Friday’s mostly), my pub visits are less spontaneous and less frequent. If my wife and I wanted to head out, we would need a babysitter at added cost.  I will get out for a session every now and then where I might drink 5-6 beers, but at home I would never drink that much. Maybe a beer here and there, a few on the weekend. And yes, I do post the occasional beer (not all of them – I don’t think people want to see every time I drink a Gamma Ray) online too. Not sure how many others that drink at home more than before are recent parents too?

2. Confession Time – Which Beers are you Embarrased to Like? by Boak and Bailey

A light, fun and mischievous post. In my conversion to full beer snob, there is a number of beers that I once cherished that I have left behind. It wasn’t that long ago I was quaffing pints of Becks Vier from the local and drinking bottles of Becks in a multipack from Sainsburys. Guinness also served me well and still does. Its usually my default when there is macro’s or mediocre cask on offer. In recent times, a multipack of Dead Pony Club or Camden Hells cans has become a staple in the fridge.

3. Supermarket Craft. Various.

One of the things I do ponder is whether or not there is a craft beer bubble. Many point to the fact that craft beer only has less that 10% of the market therefore there is huge upside. While factually that might be the case, there are significant limitations to the addressable market for craft brewers and the potential upside is that craft beers maximum addressable market share might only be 25%. I’ll try and explain why below.

On-Trade

Recent BBPA figures show ontrade sales of 12.4m barrels of beer in 2016 (Barrel = 163L). This includes pubs, clubs, hotels and restaurants. I was unable to find a detailed breakdown beyond this, but let’s assume most of the beer is sold in pubs. I have used some old stats here to show the breakdown (from 2009) but directionally I am sure the are still relatively close. PubCos dominate the industry with over 50% of all pubs. It is difficult for craft breweries to get distribution into these PubCos. SIBA tries to assist with their BeerFlex scheme, but the addressable market for PubCos is small. Small and regional breweries make up 16%. Again, they will likely prioritise their own beer, therefore the addressable market is again relatively small. Freehouses are a third of all pubs, and the biggest opportunity for craft breweries. Other opportunities of course are taprooms and own premises here as you can sell 100% of your own beer at such premises.

Off-trade

Recent BBPA figures show ontrade sales of 13.7 m barrels of beer in 2016 (Barrel = 163L). Off-trade now exceeds on trade as outlined in the graph below which used BBPA figures.

What’s striking is how much on-trade has declined, rather than a huge increase from off-trade. There are around 10,000 less pubs over this timeframe which is driving the big reduction in numbers.  I couldn’t find any breakdown for off-trade so have made a few assumptions: supermarkets account for 70%, corner stores 20% and speciality beer and wine shops 10%. What this crude analysis shows me is that the biggest opportunity for the craft brewer is in the supermarket. M&S you could reasonable argue have led the way with bringing craft beer to their shelves. Tesco, under Project Reset, have completely redesigned their range of craft beers, favouring US craft beer imports (Oskar Blues, Stone – albeit their german brewery, and Brooklyn), some UK brands (BrewDog, Vocation) with some regional variety) at the expense of brands such as Heineken and Carlsberg. And they are doing it in the way the know how –  offering beer and cheap, cheap prices. Morrisons and Waitrose have also amended their beer range and it can’t be long before we see others such as Sainsburys and smaller players delve into craft beer. This will create opportunities for some breweries, should they wish to take it. And it is a big decision with big implications on the business model and brand of a craft brewery as well as the other routes to market.

How much impact will cheap, accessible and decent beer at supermarkets impact both other off-trade and on-trade beer sales?

Is really good beer, made and marketed well going to be enough to increase the addressable market for craft beer?

Or should craft breweries be looking at other ways to get to market?

Other opportunities of course are taprooms and own premises here as you can sell 100% of your own beer at such premises. As mentioned in a previous post, Wild Beer Cos crowdfunding campaign showed the revenue potential from their own premises. Magic Rock taproom has become such a destination, there is often lines out the door, much to Mark Johnson’s bemusement.

Time will tell.

Three Bullet Tuesday – 31 January 2017

Cloudwater kings of Ratebeer, Brewery Growth Models, and the Ealing Park Tavern, Home of Long Arm Brewing 

• Cloudwater: the Manchester-based craft brewer are the kings of Ratebeer, the popular beer rating site/app after picking up a swag of awards in a ceremony in Santa Rosa California on Sunday 29^th January. Full details of the results will be released throughout this week, but according to their twitter feed they picked up at least 8 awards including best brewery in the UK. To be fair, I am unsure of who makes up the Ratebeer community here in the UK, but the award does carry certain weight, especially in the US where Ratebeer is more popular. Critics however compare this to a popularity contest. Either way, it’s a global awards ceremony that comes with a certain gravitas and I’m sure for them to pick up these awards in from a room full of their global peers gives them great satisfaction. As a result, I believe it should be celebrated.

Paul from Cloudwater doing his best Michael Phelps impersonation

• Brewing growth models: the ‘year in review’ blogs of a number of craft breweries opened the kimono on the growth curve some find themselves on. I’ve been reflecting on the challenges these breweries are likely to be considering, plus those on different growth profiles using a bastardised version of the BCG growth matrix. The BCG growth matrix is a strategic tool designed for large corporations with a portfolio of businesses to use to determine strategic direction. In my growth matrix, the x axis is relative size of the brewery and on the y axis is the growth the brewery is experiencing.

If we start in the bottom left, I’ve dubbed this group the Ateliers. This is breweries that are relatively small in scale and with a low growth profile. The archetype Atelier for me is The Kernel Brewery. I’ve interviewed Evin from The Kernel in a previous podcast and he makes it clear he believes the brewery could be capable of growing to be 15-20 times the size but is happy with the current size of the brewery, the quality of the beers they are making and the conversations he can have with his customers. The key challenge for Ateliers is finding a sustainable differentiator and for The Kernel, this is the stunning quality of their beers. The Stars are those breweries that are relatively small but are going through significant growth. Think Cloudwater, Five Points and Beavertown. Interestingly, they are all going about that growth in slightly different ways. Cloudwater are streamlining beer dispense to just can and keg and focusing on maximising the efficiency of their brewing. Five Points are facing growing pains in their current site and have started contract brewing to increase capacity. Beavertown are maximing their brewing schedule and expanding their current presence with one eye on moving to a big new premises in the near future. For these breweries the key challenge is likely to be managing the financials. When making capital investments a sharp eye on cash flow and expense management is critical. Ensuring the quality and consistency of their beers don’t suffer is another key challenge. The Cannonballs are those that have relative size and are also going through significant growth. BrewDog are the ultimate Cannonballs. They continue to expand their brewing capacity in Ellon, have set out plans to create Overworks, their Sour facility, expanding their bar network both domestically and abroad as well as launching BrewDog USA.  That is a huge agenda and good management, governance and control is critical to ensure they are delivering against all their plans. And finally the Cows. These are relatively large breweries experiencing low growth. Their challenge is how to push the business back into growth mode (or restructure). Whilst I wouldn’t put Fullers into this category (they seem to be focused on expanding their range of pubs), many appear to be responding to this challenge by doing things like rebranding or creating craft ranges to try to tap faster growing segments of the market. Some feel like half-hearted attempts at change given that authentic and sustainable cultural and strategic change takes more than some new packaging.

• Ealing Park Tavern: after many aborted attempts, I finally made it to the Ealing Park Tavern for an early dinner on Saturday with the family. Its been on my to do list for some time, given its relatively close to where I live. Its also the home of Long Arm Brewing, the winner of RateBeers best new brewery in Greater London. For those unfamiliar, Long Arm Brewing is a new brewery that is part of the ETM Group, a restaurant and bar group with 12 venues across London and one venue in Suffolk. To date, I believe they only sell their beer in their venues. They also previous owned The Gun in the Docklands, which they sold in June 2016 to Fullers. The Ealing Park Tavern is a lovely pub, adorned with taxidermy and open fires, separate formal and informal dining areas, a beer garden, and a long bar with around 12 keg lines (including Beavertown Gamma Ray and Four Pure Flatiron Red), 6 cask lines and an extensive can and bottle selection (I recall seeing Moor cans and bottles of Wild Beer Co). We sat in the formal dining area where the ambiance was lovely, the menu engaging and the service attentive. I had a pint of Thornbridge Lord Maples, a 4% cask bitter to start and a bottle of Wild Beer Millionaire with my braised Herdwick lamb serviced with sautéed sweetbreads, smoked aubergine, chick peas, chilli and apricots. My one criticism is that while they have an extension wine list to accompany the food menu, they don’t extend the same courtesy to their beer. All in all The Ealing Park tavern is pub with a pedigree beer and wine selection, excitable food menu and enjoyable ambiance.

Three Bullet Tuesday – January 17

Cask confessions, Meantime and Finding comfort in the UK craft scene

• Cask confessions: Now that Pete Brown has made cask confessions de riguer, I have one of my own. I’m a caskophobe. Ok, maybe that’s a little strong – it’s not that I hate cask beer but as a preference it sits below keg, bottle, can…I guess it’s at the bottom of the list. Let me try and defend that stance. I didn’t grow up in the UK but rather the warmer climes of the anitpodes. Growing up in Australia, cold, carbonated keg beer is king and rightly so given the hot and humid conditions. Unlike in other parts of the world, it would be hard to argue that cask is revered by the Australian beer drinker – it’s perhaps seen as a British eccentricity and even derided as warm, flat beer. I’ve enjoyed reading the tsunami of content is response to Cloudwater’s announcement; in some corners reinforcing my own views and in others places educating me on what cask beer is all about. One irony I see in all this, at least in my own perception, is that as a (non-cask) craft beer drinker you tolerate the occasional bad beer from a small producer yet we frown at the poor quality of cask beer. But questions remain for me, so rather than remain ignorant, I am keen to learn more about cask beer to help me understand why it is held in such esteem by some – any ‘cask guides’ welcome!

Note: Pete McKerry has kept track of a lot of responses to Cloudwater’s blog post on his own blog, check it out. I particular enjoyed this post from Siren Craft Brewery and another from Conor Murphy.

• Meantime: the Greenwich-based brewery took time out of being handed around by corporate owners to announce it was teaming up with well-funded, well-connected Silicon Valley start-up 23andMe.com to produce Meantime Bespoke, a new service that offers beer matching your DNA to our taste preferences. In an online post on their website this is explained as ‘assess hereditary variations in your oral taste receptors to reveal genetic variants that could explain personal preferences to ward specific flavour profiles’. Or in other terms, use science to tell you what you probably already know – your taste preference. All for the princely sum of £25,000 for an easily transportable 2,000 pints. The proclaimed benefit of all this? ‘Unprecedented bragging rights with your mates’. Good luck to them. But this is taking the concept of using your body parts as ingredients one step further than before. Australian brewery 7 cent made headlines with a beer brewed with yeast captured from belly button fluff for the 2016 GABS festival. Oregon’s Rogue Ale’s who brewed a beer using yeast cultivated from the beard of Brewmaster John Maier. I did try one of these beers not that long along, and while it was a decent enough beer, it was a little funkier than you would want from a beer of this nature. I would hate to spend my spare £25k to find out my DNA is farmhouse funk.

• Finding comfort in the UK craft scene: anyone who follows my twitter feed (@bushcraftbeer) would have seen that I was in Australia recently on holiday. The weather was great as was spending time with friends and family. Some of the beer was great too. My highlight was the Moo Brewery Pilsner. While it was great to try some new drops, the prevalence of 4-5% ABV Summer Ales, Pacific Ales and Pale Ales, many of which are brewed by ‘craft brands’ of larger breweries, left me wanting more. What I didn’t expect is that it left me really appreciating what we have here in the UK all the more.

Introducing Three Bullet Tuesday

Tuesday 29 November 2016

Inspired by the GoodBeerHunting Read.Look.Drink and Tim Ferris’s 5-Bullet Friday, I wanted a forum to get across things I am pondering, enjoying or not enjoying that is shorter than a blog post and longer than a tweet. So here is my first Three Bullet Tuesday.

• Podcasting: you will have noticed a hiatus in my podcasting. This is partly based on a busy time in my life including a job, a wife and two young boys. But, to be fair, it’s a deliberate pause. When I started podcasting, I did it because I felt there was a gap – there was no long form interview style beer podcasts in the UK – and I wanted to speak to people in the industry to hear their stories. Now there are plenty of others doing it, which is fantastic – more voices, more stories. I am currently re-thinking whether or not to continue and if so what changes should I make to the podcast to keep it relevant in a crowded market. Stay tuned.

• Fullers – friend or foe?: West London is often the laughing stock of the craft beer scene in London. Why is that? As I continue my search for an answer, it often comes back to Fullers. Fullers are more than a brewery – they are a publicity listed PubCo with almost 400 pubs. Many of these are within a few miles of the Griffin Brewery in Chiswick West London. They all invariably stock vast amounts of Fullers beer and little else (with the odd exception). Are they to blame for the dearth of craft beer in West London? Are they even a craft brewery? Perhaps this needs more investigation…

Griffin Brewery, Chiswick West London

• Chris Hall: Chris spoke with Matthew Curtis on episode 83 of the Good Beer Hunting podcast and, ever the wordsmith, produced a great quote that I constantly reflect on. The thread starts at 1h25m into the podcast. He talks about the way craft breweries should leverage peoples other hobbies to grow into new areas. It’s summarised in this quote:

“There is so much overlap between our world and loads of other sub-cultures that we would be utterly, utterly stupid to waste these opportunities to involve others in what we do. We have got nothing to gain by only talking about beer to people interested in beer” 

I tried to imagine this graphically using the much-favoured Venn diagram and I am keen to explore this in a future post.