Tuesday, 27 December 2011

Increase in HSBD

I got a DM yesterday on twitter regarding High Strength Beer Duty (HSBD). I was being informed that there may be more increases on the way. I can see this as being very likely. Thanks to the provider of the information, and for the kicking to get me to talk about more important stuff.

I currently have no firm information, it's a rumour. But there certainly are noises off stage left1 regarding this issue. Let us make sure this baddy is defeated.

CAMRA are championing an increase in the low strength relief. The family brewers would also like this to happen. Beer duty reduction for the big, efficient brewers would help pubs, apparently. This is something I disagree with, but it would certainly be politically beneficial. I feel certain that if the low strength duty band is increased it will almost certainly be countered by detrimental changes in HSBD in order to balance the books for HMRC.

We, the microbrewer, will see no benefit from the low strength discount. We already get 50% discount so we are told we can't get more. Progressive Beer Duty (PBD) which is the name for the discount given to microbrewers, is what has given the microbrewing sector a much needed boost. Erosion of this taxation relief will see the microbrewing industry start to dwindle.

Failure to see that the discount given to low strength beer is going to damage the microbrewing industry is a major issue I have with CAMRA. It is undoing the one thing for which I applaud the organisation.


1Stage left is a thespian term to indicate the side of the stage as seen from the actor's perspective. i.e. the right from the audience. In pantomime, it is traditionally the side the baddy enters.

Monday, 26 December 2011

Goodwill to all Brewers

I'm a day late really. This should have been written to go out yesterday, along with other Christmas Messages, from other brewers. Unfortunately, there has been a few things that have preoccupied my time, not least a festivity involving food, beer and swapping of gifts. Additionally, a minor PR faux pas, created by a number of people, and then inappropriately inflated by others, has consumed my mind for some of this time.

Publicity is an interesting thing. But firstly, I really have to remind readers that it simply isn't good enough to make great beer. It is important to make great beer of course, and it is pointed out that some breweries focus more on PR than really great beer, but great beer needs PR if it is to sell. Getting the balance right is a reality of business. A reality that is not limited to beer, although many people erroneously see beer as "different" which it is not. I understand that people who live, breathe and enthuse about beer are going to want it to be different from other products. But it is, at the end of the day, an FMCG. Pete Brown wrote last year about why he thinks it is dangerous to think of it like that, but, from a business point of view, that is exactly what beer is.

This situation is exaggerated by the fact that the vast majority of beer sells based on price and marketing success. Low value well advertised beer is what makes the best profits. This is true of beer, bread, cheese and beans. Product consistency plays a huge part and so does fashionability of tastes.

If you can accept these truths, as I do, you start to see the PR from all the brewers as exactly the same. They all try and claim to be different, but they are not. The ones that try to ignore the necessity for PR might trundle along, but ultimately survive due to a small and local word-of-mouth promotion. Although arguably this is PR of sorts and there is also nothing at all wrong with serving a  small personal market.

Of course the style of PR varies, but ultimately the same game is played by all. This became very obvious to me recently when I found ourselves in the middle of two good friends of mine, on opposite sides as I see it, both looking to maximise on the situation. For me, damage limitation was the key focus. I sensed the smell of blood had enticed one PR guru outside an otherwise successful, but false, altruistic shield.

That was a little bit of a long preamble to get to the point I'm trying to illustrate. What I've tried to do is not to be too outspoken and negative just to gain publicity. There is a lot of good and interesting things going on in the beer world, some of it happening at the smallest of breweries and some happening at the very largest. I've tried to maintain contact with most of this.

I have friends at Molson Coors, Fullers, that current big baddy that is BrewDog, as well as my peers in the likes of MagicRock and Summer Wine and local brewers to me like Stringers, Cumbria Legendary Ales and Hawkshead. Apologies if you are reading this and think you should be in the list, I could make the list very long indeed and I'm sure you deserve to be there.

A special mention should be made to The Kernel. It seems that everyone has to do that. But, it would be daft of a brewery not to say that the British Guild of Beer Writers brewer of the year 2011 was a good brewer, surely?

From time to time I see a spat between some of my friends. Sometimes I even wonder if banging their heads together might be appropriate. But still, at the end of the day, I go away and remind myself that we are all playing the PR game.

There are things I have a go at, CAMRA and The Portman Group being the notable ones. I feel they sit badly with what we are trying to achieve. That doesn't mean that I see them as an enemy, or even that I can't see their perspective. CAMRA and The Portman Group are tools of the brewers PR game too and the alignment brewers choose can influence their market position. These organisations are not brewers, and as I feel these organisations aren't trying to be friends with my part of the brewing community I feel justified in challenging them sometimes.

I try to be friendly with brewers who wish to be friendly with me. This is part of the reason why I deflect criticism of any brewer. I think it is bad form for anyone who is a brewer, or involved in the brewing industry, to publicly criticise another specific person or organisation. I don't always get this right, I'll admit. As a blogging beer writer there are times it is difficult to be sure where the line is, especially if important issues of an interest to readership are to be explored.

The PR stunt that does baffle me is the position of siding against nearly every other brewer and beer organisation. Equally, it does seem to be the one that is working the very best in terms of gigantuous growth for one brewer. This particular issue is very much work in progress for me, and under constant evaluation. I am, of course, constantly warned not to align with these forces which are apparently, I'm told, evil to the beer world. I certainly often worry about the fact that I seem to be doing so, even though I've now been lumped with every other brewer in the country.

The reader will know to what I'm referring, I'm sure. However, no one was named. Go and look at it again, there is an admission to generalisation. If you dissect the text you will also find that it is easy to assume that reference to oxidised beer flows through to every brewer, but in fact this is not quite what is being said. Is it in fact not just the same thing as every advert says? "You have to buy our product because everything else is rubbish" - it's the level of subtlety, or lack there of, that's all.

It disappoints amuses1 me when the PR arm of a big brewer tries to say "they mean you Dave, too" although this is, of course, just another move in the whole chequered game play anyway. Besides, there is the suspicion that jealousy, and perhaps even a little fear, is at play too. Luckily the pressure to choose between friends has been successfully ignored. I do hope to remain friends with both.

I am minded to ask the apparently bad-ass brewing friend if I'm included in the general lump of brewers that aren't the two best. Hopefully the answer will be a desirable one. Perhaps that way a mutual PR benefit can be gained.

And so, for the approaching New Year, there are many things that Hardknott needs to do. Alex has joined us this year and his passion and ability is a great benefit to Hardknott. I am confident that his role will grow with Hardknott and be a crucial part of the learning process too. For me, I hope one of the things we'll carry on doing is making more friends in the brewing industry. I can't promise that I won't criticise organisations that aren't brewers, but I'll certainly try not to take any sides with my brewing friends.


1I changed the to the more appropriate "amused" because actually, when looking from a distance, most PR simply amuses me, especially when people get upset.

Wednesday, 21 December 2011

Added value

Beer sales overall are dropping. They are dropping much more in pubs. This is a fact that can be backed up by hard evidence. I have here a copy of the 2011 BBPA Statistical Handbook. It is very good indeed. It shows for instance that beer sales in on "On trade" was around 67% of the total in 2000. In 2010 it was just under 51%. "Off sales" by comparison was less than 32% in 2000 but in 2010 only a shade under 50%. For the first time in history beer consumption in pubs, when you bear in mind "on trade" includes restaurants, hotels and other public drinking establishments, is no longer the dominant beer market.

There are many factors that are causing this. One, of course, is the fact that the traditional pub is no longer fashionable, or at least not as much as it used to be. Eating out has become much more popular and it is very evident that fewer and fewer pubs can survive with a pure wet trade.

An increasing awareness of the health harm that can result from excessive consumption of alcohol, and an increasing social stigma being associated with "binge drinking" and "alcohol related crime" led in part by the tabloid press, further damages the industry.

While some are worried that beer is becoming pompous and somehow above itself1, I have consistently and repeatedly argued that this is a good thing. People are turning away from beer and pubs in favour of the grape, home drinking and restaurants. Overall alcohol consumption is dropping, although having only dropped back to around the same level as the year 2000. More importantly the number of cases of drunkenness has decreased from around 20 cases per 10,000 people in it's peak in the 1970s to less than 5 per 10,000 now. The thing that does bother me a little about this figure is that the police may be less inclined to prosecute purely for drunkenness these days. Good job really, otherwise I suspect I may have been prosecuted by now, and perhaps some of my readership too.

Whilst the supermarkets and their relatively low pricing of alcohol must surely be damaging the industry, there is very little we can realistically do about this. The vast majority of the general public see the supermarket as a good thing. The pricing is perceived as good, everything is under one roof and you can park your car right outside the door. However, the supermarket does not provide for a smaller proportion of the population who want something different. I rarely buy beer in the supermarket because they rarely have the beer I want to buy. I often go to the pub and buy beer, sometimes it's even the beer produced in my own brewery. I do so for a very good reason.

Hardknott beers at Craft Beer Co - one of an emerging number of contemporary beer bars

I could set up a cask, or even a keg, in my brewery, or in my garage or kitchen and enjoy my own beer at a much lower price. And I have done on occasions. I prefer to pay a little bit more and drink it in a pub. Why?

Because the pub is warmer than the brewery. Because I can sit and talk rubbish about nothing with the friends I have at the pub. Because someone gives me my beer in a clean glass and wipes the tables down, the decore is better and overall the experience is much better than at the brewery or at home.

It bothers me a lot that there are repeated noises from many people about how the supermarkets are damaging the pub and beer industry by their cut price alcohol. Whilst this may well be true what we inadvertently do is reinforce this commonly held belief. We are telling people that beer is cheaper in the supermarkets, so people now believe that more than ever.

Pubs are special because they add value to the drinkers experience. Special beer in a growing specialist beer market providing added value because the beer is more flavoursome, stronger, shipped from lands afar or perhaps just a little bit daft only goes to strengthen the beer market and helps to grow the businesses that I hope the reader would like to see flourish.

Beer snobbishness is good for beer, not bad.


1I was going to link here to several posts by other bloggers, but I realise that none of them quite say that. But there does seem to be an undertone of the old "beer is the drink of the common people" and "Beer should not be too expensive or snobby"

Here are some posts, although I suspect the reader has already seen them.

Boak and Bailey and again

There are of course good points made, but I can't help feeling that there is a lack of joined up thinking when it comes to how we worry about how beer is sold, marketed and priced. It was the Daily Mail piece this morning that caused me to write this piece.

Tuesday, 20 December 2011


I'll be honest, this is an open and honest plea.

Beer is a low margin business.

A low margin business is one that might have a high turnover, might do lots of potentially profitable trade, but where the costs to profit ratio is quite poor; You have to sell lots of beer, take a lot of money, and turn it all around very quickly, if you stand any chance of making an honest living.

Of course, if you are a big brand which is wanted in a pub, you can demand that supply is only guaranteed provided the bills are paid, or that they are paid by direct debit. Unpaid bills or bounced direct debits are rewarded by the account being put on stop. No more bland mass produced lager for you, mate.

Even more secure is to operate the tied pub model.

In the microbrewery industry it is important to take the business you can. But taking that business can lead to difficulties. I don't like to say to the very well meaning pub manager who really wants to stock my beer "I'd deliver, but your head office hasn't paid the last two invoices"

Nearly everyone pays in the end. Even the one who was 10 months late and we thought we were going to have to take to court, paid in the end, although the distasteful joke made at the time left a bad taste that will ensure lasting memories.

But consider the readers salary. Consider that to make a reasonable living we would have to turn over at least 10 times our expected salary. Consider you, the reader, and whatever salary, income or other financial input you get. Consider that you might consistently be owed about 25% of the yearly payments due to you. How would you feel about that? How much would it cost you in interest?

Consider that we have 10 times that in monies owed to us.

We generally deliver beer having already paid 1 for the hops, malt, bottles, labels, cask finance charges, van HP, tank capex loans, cleaning chemicals, wages 2 and many, many other costs. Not too long after delivery we have to pay - we HAVE to pay - the beer duty.

Many pubs and bars pay cash on delivery. We love you very much indeed. A large proportion pay within 30 days. We love you by an amount that is imperceivably less than the aforementioned pubs. If everyone paid within 30 days I would not be writing this post. Paying within 30 days, or even a little bit longer, is how most businesses work. We're all in the same boat and we understand.

There are some bars who take delivery, take the money off the drinker, bank it, let us pay all the costs and still don't pay for the beer after over 60 days. If all our customers did that we would be out of business.

As it is, these bars and pubs are preventing us from growing our business.

You know who you are.

We know it's tough out there and we are all in the same boat. Money is tight for all of us and when you are in business you have to manage that cash flow as best you can. I'm sure pubs and bars have problems too, remember, we've been there too.

You could help us out here.

If you are a drinker, make sure your favourite bar or pub knows you want our beer stocked. That way we can put more pressure on these bars to pay their bills on time. A reason why it's not stocked might be because we've decided not to supply due to non-payment.

If you are one of our well-meaning bar manager customers who are at the mercy of some head office bean counter then please communicate to them that they are damaging the craft beer scene by delaying payment inappropriately.

If you are an aforementioned bean counter and are reading this then I'm very surprised, because frankly, I didn't think you cared about decent beer. But then, I suspect I'm right on this one, and you are probably not reading this.


1or at least have our suppliers breathing heavily down our necks threatening to stop us brewing because we haven't paid. If you're reading, Mr Supplier, we love you more than you know for being as tolerant as you are.

2Sorry Alex, I know that might not be quite true, but we love you even more.

Sunday, 18 December 2011

Leaning towards extreme

Hardknott for the faint hearted?

I can never claim to have led an ordinary life. Sunday, for instance, is not about washing the car or cutting the lawns. OK, sometimes it is, but only because it is well past needing to be done and I've not been able to squeeze those essential, but tiresomely boring jobs into my schedule at any other spare time.

An ideal Sunday for me would be something that raises the pulse rate a little1 and might involve a little bit of outdoor sport with an element of adrenalin. Climbing is my most favourite pass-time, when I get a chance. Rock climbing in the summer and snow and ice climbing in the winter. Sadly, since leaving regular employment just over 8 years ago, the time consumed in the pursuit of a reasonable level of income from being self employed seems to have rather limited my time available for pure pleasure.

My approach to beer is somewhat similar to other aspects of my life; anything but mainstream. I could probably sell more beer if I concentrated on making low cost pale session bitter. My view is that Hardknott is about something different, something challenging, and something that sets the pulse racing. It's not for everyone. It's probably not even for the majority.

I recently wondered if Continuum was too extreme for it to be really successful. I know that due to it's very high hop loading, right from bittering hops, through late aroma hops and ending with a stupid level of dry hopping in tank, it clearly strikes fear into those meek drinkers who get vertigo when faced with high level hop compounds. My love of crystal malt as a belay for protection against unbalancing, when on the edge of top level hop exposure, often attracts criticism.

My daughter, Sarah, has just turned 14. That fact in itself only goes to strengthen my biggest fear of all; my advancing age resulting in my knees no longer being able to cope with some of my favourite activities2. I was very much younger and fitter 14 years ago when that bundle of fun made an entrance into the world. Having a birthday at this time of year can be troublesome for the girl, as less attention to birthday presents are given due to everyone being consumed with the details of our ever increasingly burdensome Christmas celebrations.

She's a clever cookie, takes after her Dad, recently requesting climbing equipment for presents. That's easy, I thought, you can never spend too much money on beer or climbing equipment. Of course, the detail of exactly what to get would require a little bit of thought. Given that the weather this time of year is unpredictable, climbing gear might not get used until the summer and an all weather solution was needed.

Looking at a blank wall in the brewery and suddenly a devious plan was hatched. A quick look at the internet revealed that climbing wall holds were easily attainable. Job sorted, daughter happy, and I now have a climbing wall in the brewery that I can play on whenever I like.

"Dad?" you know, in the both cute but irritating way that only daughters can do.
"Yes Sarah?"
"Just because we now have a climbing wall, you know you can't get out of taking me proper climbing in the summer, don't you?"
"Oh, I suppose so" I say, pretending that I'm reluctant, but really, pleased that I'll probably now get bullied into spending more time away from work and doing something I really enjoy
Thinking about Continuum, I like it the way it is. I know other people do too. I left a well paid job to take up a career in an industry I enjoy being part of. I have always concentrated on doing things in an off-the-wall shunning-the-mainstream approach to my business. A little bit extreme, pushing into areas of risk and incurring costs that often cannot be recouped due to the very low margins that exist in the beer industry.

I've been in the bottom of a glacier crevasse, on top of many mountains, broken my leg skiing, nearly frightened myself to death more times than I care to remember being half way up a rock climb that really I shouldn't have been on.

I've run a pub3, started a brewery, sold the pub, made strong beer, week beer, well-hopped beer, had a pop at CAMRA and The Portman Group. I do these things because this is who I am, what I do. I make the beers I want to drink, and I shouldn't have to apologise for that. I write about the things I want to write about, I don't think I should have to apologise for that either. Inevitably this blog is now shaped by the fact that I run a brewery which is trying to make money out of brewing the very beers I like to brew. Getting to the markets that might return sufficient margin for me to continue to make these beers does require a rather extreme approach to marketing and this is always going to upset a few. And sometimes I get a little scared as a result.

But, a little bit of what scares me is what keeps me feeling alive.


1Now look, there really wasn't any need for you to think that.

2There you go again. But, although the fear of ceasing to be able to manage that is also there, I am told there are little blue pills that might keep everything in that department functional long after it ought to be.

3And really, that in itself I could fill a book with those stories.

Monday, 5 December 2011

Just The Tonic

We received a letter from The Portman Group the other day regarding a complaint made against Vitesse Noir by a member of the public......

I've just written the response.

Portman Group
4th Floor
20 Conduit Street
London W1S 2XW
By Post, Email
and Open letter published on Dave’s Blog
05 December 2011
We note your letter dated 2 December 2011 regarding a complaint from a member of the public. We note your nine member companies, who between them represent a major contributor to the alcohol market. We recognise the need for pacification of the unreasonable pressure put on our industry by neo-prohibitionists who fail to recognise that the vast majority of drinkers are responsible and moderate. We note that the clever marketing campaigns conducted by your member companies, with their benefit of major marketing budgets, often subtly tread a fine line of your code. We note that major lager brands for instance often sponsor sport implying that by drinking that product you automatically become a sportier person. Additionally, adverts on the T.V. that suggest by drinking a product one’s party will be wild and raunchy must surely sail close to The Portman Group’s code of conduct.
We note that the majority of the volume of the products your members companies make are easy drinking, manufactured to a budget and a quality that is unlikely to challenge the taste buds of the drinker and sold in a manner that is designed to maximise volumes of sales. We respect this position and understand that this is what the majority of the law abiding drinking public is happy with.
We note that The Portman Group has no jurisdiction over us and is unlikely to be able to take action over this particular product, namely Vitesse Noir, as it is predominantly sold direct by us to a very small specialist market. The product is highly unlikely to be sold through supermarkets, which is where the majority of risk to public health would be.
We are a very small company. Our products are designed very much for a small, niche, and discerning customer base. To enable us to get to our target market we require a strong marketing message and it is disappointing that an organisation which is funded by major alcohol producers is seeking to interfere with real innovation and enterprising commerce. In the current economic environment it is the small producers like Hardknott who are likely to lead an economic recovery. Seeking to inhibit our success is inappropriate and unreasonable.
This particular product is inspired by an American Craft Beer the likes of which is very rare in the UK. It is part of a Craft Beer movement in the UK which is showing drinkers that a few well chosen drinks at a higher price is more responsible than looking for the lowest cost deal and drinking it in large quantities. It is highly flavoured and priced as a premium product and as such is recommended by us to be consumed only as a digestif. If the label is read in context it is clear that this is the case, and furthermore the label carries a warning, which the complaint has chosen to ignore.
It appears that it is the word “tonic” which is being picked out as the offending word. It is worth pointing out that pre-packaged “Gin and Tonic” is now a regular product in many supermarkets and is manufactured by at least one of your members. Additionally, several of your members regularly feature adverts in mass media citing gin and tonic as a refreshing pick-me-up.
We believe the risk to the general public of the innocent and obviously tongue in cheek wording on the labels of our bottles is insignificant. Indeed, we expect that our customer base will have all the intelligence needed to control their own health and wellbeing and are unlikely to believe that our little quip has any basis in truth. We believe our customers are intelligent and discerning and we market as such.
The product is manufactured in very small batches and we are unlikely to ever reach the manufacturing capacity that would cause this product to represent a public health risk.
We believe that for small artisan producers like ourselves a different approach to marketing is required. We will therefore wish to be allowed to progress with our business without interference from an organisation who is funded by major alcohol producers.
I note that this is not the first time The Portman Group has antagonised producers in the Craft Beer Sector. Hardknott recognises the importance of a regulatory body within the industry to prevent inappropriate Government legislation hindering the lawful and responsible actions of all of our industry. However, it is clear to me that The Portman Group is unable to consider the needs of the small artisan producer. Should a representative of small producers be required then we would be happy to help and thereby avoid further uncomfortable confrontations.
Dave Bailey
Brewer, Doer, Force Majeure.