Cask beer – Beer Tinted Spectacles

The tyranny of choice

There’s been something of a furore over Carlos Brito, AB Inbev’s top dog, over his comments about beer drinkers being tired of choice – and for balance, it’s important to mention that he was specifically talking about distributors and retailers, and how much choice they could actually carry on shelves. Yet customer and consumer are umbilically linked, so by default he is saying the consumers too, are tired of choice. And according to ABI’s earnings release briefing, craft beer sales in the U.S. are slowing, hence it must be so.

As you can imagine, a furore. Because surprise, surprise, here are AB Inbev, now commanding one third of global beer sales, concerned about any affront to their brands, their competitive edge, their ability to dominate the market. An agenda of consumers ‘tired of choice’ means ‘you don’t need to stock unusual craft brands, but you do need to stock nationally / globally recognised brands‘ – ooooh, and look – we have lots of them.

The thing is though, the provocation from Brito does have more than an edge of truth about it, depending on how you view the world. Take the U.K. beer scene at the moment. ‘Explosion’ is not too dramatic a term for the number of breweries that have opened and continue to open. Each month sees a closure, but each month see many more openings. The leaky bucket overfloweth. Go one level below this and there are serious implications. Each brewery will have, say, a minimum of three brands, probably three of four core brands and then a selection of in / out products too. So let’s say that there are now (round numbers), 2000 breweries, each selling five beers. That’s 10,000 brands of beer minimum (someone I’m sure will have the actual numbers on this, providing they’re watching the press releases daily.). There are about 150,000 licensed premises in the UK. In theory that means most bars can carry an entirely different range from one another (OK, there may be 14 other ones carrying the same range nationwide).

Now clearly, this is theoretical. Because the truth is more stark. In fact, most bars have a limited number of taps and lines. Choice, in draught in particular, is not finite. Many of these lines will be keg, a small number hand pull. And of the 10,000 brands of beer on sale, probably 9,800 are craft and cask brands. The number of mainstream, keg dispensed, national brands is slight in comparison, dominant in sales though they are. 9,800 beers competing for, say, one of three hand pull spaces on a bar or God forbid, one of the keg lines owned by a multinational.

You can’t build recognised brands in this environment, unless you own an estate and demand they carry your range.

And there’s the rub. The truth is that there’s so much choice now that the market isn’t saturated, it’s super-saturated. Just like the supermarkets have bred a generation of deal junkies, rather than being tired of choice, we have a spoilt generation of beer drinkers who are trial junkies. You can see it where every you go. Looking along the bar. Spotting the new beers. Examining ABVs. Asking for recommendations, a sip, a third. Buying a flight of different beers. Every beer a different beer during the session. Switching between styles. Ever more choice at home.

Oh sure, there are implications for drinkers. It can be bamboozling. So many choices, where to start? Which style between the many I like? Which strength? Colour? Hoppiness or maltiness? Sweet, sour, bitter, dry? How to make sense of that, goodness knows.

There are implications for customers too. If you are in some way tied in to a brewer or supplier, how to offer the choice? How to run a business based on strong sellers with the roller coaster of guest beers being so important? How to manage the tensions (under the bar) between keg and cask, cider and lager, craft and real ale, spirit vs wine, whilst all the time having to deliver a stonking food offer. I love pubs, but it’s a hell of a job to get right, particularly with those damned drinkers constantly demanding something new every week.

But what’s the alternative? Take London just 10 years ago. I was in beer sales down there at the time. Most bars had some combination of Heineken, Kronenbourg, John Smiths and Strongbow, or Stella, Boddingtons, Becks Vier. Becks, Budweiser in the fridge. Everything else scrapping for space round the edges. Ok – so perhaps this picture is a little dramatised, but even if it’s only half true, compare it with today. Bars bursting with choice. Beers on rotation. New breweries introducing new styles. Rarely a Stella or Bud to be seen, at least in a place where you’d want to be seen too. Do we want to go back to a world of Stella, Becks, Corona wherever we go? Do we want to see Mr Brito’s thin, assassin smile widen further?

Give me the tyranny of choice any day.

Am I missing something?

This Saturday morning just gone, my copy of ‘Beer’ dropped on to the door mat, and due to rigourously enforced exclusion zones, didn’t get shredded by the dog. I like ‘Beer’, and clearly others do too – Pete Brown finally joined CAMRA last year because it’s the only decent magazine available on the topic on these shores.

But it was ‘What’s Brewing’ tthat accompanied it that struck me most. ‘Triumphalism’ is too strong – but it’s not far off. The front page: ‘Growing Cask Ale Sales Inspire Confidence’; page 5, an ad for SIBA Beer X, ‘British beer is thriving as never before’… it’s a vein that’s been showing through the skin more and more in recent months. There’s a warm glow emanating off brewers and cask drinkers up and down the line.

It’s like Railway Mania all over again. Look at the facts, if you will. One: the UK economy has been flat lining – going into the sixth consecutive year. Two: beer sales are down. Hellooo? Anyone here me? Down. The on trade was down 5% in the run up to Christmas and it’s accelerating as the annual figure is 3%. Three: it’s because we’re all drinking at home, right? Wrong. The off trade was down 7.5% in the last 3 months of 2012 and almost 5% in the full year. Four: in the last 10 years, the UK beer market has declined by, wait for it, 23%. Twenty Three Per Cent. Five: there are now over 1000 craft brewers in the UK. Six: yet cask beer remains in decline by 2.5% (better in the run up to Christmas 2012 – only down 1.5%)

I draw three conclusions from this:

a) Now is not the time to be opening a new brewery if you have any ambition of scale. The honeymoon but will be lovely but give it a year or two and you’ll be struggling for sales.

b) Behaviour has changed. Beer is no longer recession proof because it’s no longer the default thing we do when we socialise. Breweries need to face the new – repertoire – reality.

c) I intend to enjoy as many interesting beers up and down the land before the next round of consolidation.

So am I? Am I missing something?

*Thanks to Chris at Ashdale Business Consulting for the up to date figures – forgive me Chris if I have used them rather imprecisely, I know what you’re like for your decimal points (www.ashdale-consulting.com)

The Session #69: The Perfect Beer World

“The grass is always greener on the other side”, so sang Glaswegian post-Britpop crooners, Travis; “the neighbour’s got a car that you wanna drive”.

Dear old Fran Healy, where are they now? Mind you, it would be easy to agree with his sentiment when considering this month’s blog topic – the perfect beer world. For UK readers, it could be like the latest British Gas adverts – idyllic & psychedelic pints of frothy ale, always full, never drunk, in carefree orbit around our mini planets. But really. Where will it take us this navel gazing at a Beer utopia? Frankly I don’t see any positive value in that exercise – so in true politician’s style I shall answer the question my own way. And it’s still a good angle because the trials and tribulations of life are written into the weft and weave of beer itself.

The lesson of time immemorial. From fantasy worlds like Star Wars or Harry Potter; to the real world –the motivations are the same. Good versus evil; failing, getting up and trying again, or just staying down. The big guy vs the little guy. Of man and woman, race and religion, tribe or creed. And it’s all here in ‘Beer – The Board Game’¹. Let’s consider the United Kingdom as said board game to illustrate.

The playing surface plots international brewer against start up micro; of wholesaler against cash and carry; of national pub chain against a family run independent pub; of government policy against pressure group set against a three dimensional backdrop of street scenes inspired by market towns the country over. And we have our equivalent of ‘Chance’ cards? The rise of teetotalism (‘Go To Jail. Do Not Stop at The Red Lion’); the growth of non-alcoholic drinks, coffee in particular (‘Advance to Starbucks. Lose 5% market share’); the media stoking the flames of ‘binge Britain’ or neo Prohibitionists in the US (‘The local authority orders you to clean up the vomit. Lose 2% market share’). Oh, and good ones too, like (‘Cask Beer Reports sector in growth by 2%. Collect 3 free beer tokens’).

But this is a board game: players will win and players will lose. If you work for Waverley TBS, my genuine commiserations; if you work for Punch – your business model doesn’t seem to be working fellas, maybe take a look at it again. The government, with its incessant and anti-competitive above inflation duty rises… well they are doing the equivalent of perpetually building hotels on Park Lane – but one day the property bubble will burst and the rents won’t come in.

Beer is playing out the game. From some angles it seems precarious – per capita consumption in western markets is falling…but in eastern, emerging markets it is growing. The inexorable rise of pale lager is being challenged: indigenous and new beers are appearing again, and like life, the fun is in the hunt, in taking part. Elsewhere spirits are back in growth or the growth in cider threatens ‘the pint’. They are players in the game and they have every right to try and win. Pubs are closing at an alarming rate, but some of the best bars ever are opening up and down these islands. Supermarkets are slashing the price of beer…. but they are dedicating ever more space to speciality ales and lagers. No, the perfect beer world is here warts and all, best that we see the game board, get stuck in and plan our moves ahead.

Oh, hang on……….damn!!