Good News from the North East

I've just heard that Mordue Brewery (one of my favourites) is installing bottling machinery. This is confirmation to the world at large that last year's receivership, restructuring and re-financing is allowing Mordue to grow. Arguably, it's a brewery that failed to fully capitalise on its 1997 CBOB win. All being well the bottling of its tremendous IPA will give the brewery the national recognition it deserves. Lookout Brewdog IPA and Thornbridge Jaipur!

While in Newcastle last week my brother and I eavesdropped on a charver who looked distinctly out of place amongst the community arts project types in the Cumberland Arms. His friend insisted he drink Mordue IPA. His response? - "It tastes of fuckin' flowahs!" Isn't that a great advertising slogan? I can see the t-shirts now.

Take-home Casks?

I see Sainsbury's are now selling cask beer. Or maybe not.

Protz on the BEC Report on the Pubcos

I think we can assume that there's little difference between the views of Roger Protz and the views of CAMRA. I suppose, behind the scenes at St Albans there could be murmurings "what can we do about Roger, he's such a loose cannon," but I doubt it.

He has offered his (and therefore CAMRA's) response to the findings of the BEC inquiry into the pubcos. His comments seem driven by the naive anti-competitive ideology of the far-left. Please don't jump to the conclusion that by criticising it I must be some kind of Thatcherite greed-is-good Tory boy as it's certainly not the case. However, I do strongly believe that CAMRA's underlying far-left perspective inhibits and damages real ale (and is further reason I'm not a member).

"MPs slam power of the pubcos

Review of the beer tie must not hit independent brewers

Parliament's Business and Enterprise Committee (BEC) wants a full-scale review of the "beer tie" to be conducted by the Competition Commission -- but such a review must be careful to distinguish between the giant national pub companies and family and independent brewers.

The BEC's report this week correctly identified the high-handed activities of some of the pubcos, who charge tenants and lessees exorbitant rents while selling them expensive beer. Many people running pubco outlets have been driven into poverty and destitution as a result of their landlords' policies. The committee of MPs found that many lessees and tenants easrn as little as £15,000 a year in return for working long hours and often seven days a week.

But it's important for any future review to distinguish betweeen the pubcos and brewers who tie their pubs. The tie is the bedrock of independent brewers' business."

Well yes, sadly it is. Unfortunately though the regionals generally tie their pubs for all beer supplies and so often this means they're pally with the mass producers. It irks me that we get this special-case pleading by CAMRA/Protz for the regional cask ale brewers yet they use their ties to flog Stella, Carling, etc.

"If the tie were to be totally abolished, the national brewers would swoop on regional brewers' pubs offering them heavily-discounted lagers and keg beers."

So what? This fear wrongly supposes that a customer (a pub or a consumer) only ever makes a purchasing decision based on purely on price. It denies any qualitative difference between real ale and mass produced beer. It supposes that every pub will go for the cheap mass-market option. This is staggeringly naive, how does Protz view abundant contradictory evidence such as the car market – why aren't we all choosing KIAs, they're cheap? Could it be that Protz's real fear is that real ale will become the relatively pricey option rendering it the drink of the hated bourgeoisie?

"It would be a disaster for cask beer, the only sector showing any sign of growth at present. It would also mean the inevitable closure of many smaller brewers who would be unable to compete with national beer brands in their own pubs."

A disaster for cask beer? Really? What about the micros? SIBA reports that its members can only sell to about one in ten of pubs. Imagine the boost to the micros if they could sell to ten out of ten pubs. Protz again fails to appreciate that rival products compete on more than just price. What about flavour, craft, brand reputation and locality? Protz must have little genuine faith in real ale if he supposes that drinkers will desert it simply because something else is cheaper. Paradoxically and counterintuitively (to Protz at least) a higher price for cask ale may attract drinkers – higher price is often perceived as a sign of quality. I believe the currently bottle boom is partly driven by higher price, supermarket shoppers thinking to themselves "Stella's so cheap now it must be rubbish, I'll give those fancy bottles try, they cost more so must be better."

"In countries where the beer tie is illegal, the situation is far worse than in Britain. In the United States, where brewers are not allowed to retail beer, they sign sweetheart deals with large distribution companies that take only the products from one brewery. It means that smaller craft brewers cannot get their beers on to the distribution companies' trucks. The result is a market skewed in favour of the giant brewers and less choice for consumers."

Well, permit me a bit of vernacular – that's total bollocks Roger.

Could this USA be the same USA that had ten craft breweries in 1980 and something like 1600 today?

The situation with distributors is indeed a tough one. Individual states give licenses to distributors. In some states near-monopolies exist. The major difficulty for brewers is "exporting" beer across state boundaries, not selling beer locally. Inevitably companies like AB get the distribution licenses and getting a foothold in cross-state trade is hard work. The situation within any state is much easier. Breweries can sell to any outlet (although stock has to go through a wholsaler by law - a system that has pros and cons beyond the scope of this rant) and this has been key to the US craft brewing boom.

In 2003 I showed the creator and owner of Sierra Nevada Brewery Ken Grossman the beery sights of London. We talked extensively about the differences between the US and UK systems, he said "I couldn't have done what I've done in your system."

In Britain, the national pubcos -- Enterprise, M&B and Punch -- need and deserve a thorough investigation and should be told to change their ways. But any investigation must also recognise the vital contribution that independent brewers make to local communities and must be allowed to sell their beers through their own tied estates.

Well yes OK Roger. If you must have it that way let's make sure they can sell only their beer in their tied pubs. I don't see why the regionals should be granted use of the tie system if they use it to flog us mass-produced beer they've bought cheaply from the big boys. That seems reasonable. Let's call it the Sam Smith's Rule.

It's Official: Pubcos Are Evil (and CAMRA supports them)

The House of Commons Business and Enterprise Committee has published its report on the Pubcos.

You can find the full report here.

A rosy picture of the pubcos it ain't. I've so far only studied the first six of eighty or so pages. These quotes should give you a flavour of the findings:

"Our call for evidence gave us two irreconcilable pictures of the industry. The first presented a picture in which pubcos operating the tie were able to give their lessees considerable support, and in which the admittedly higher costs of tied products were offset by lower rental and extra support and services. The second picture, which came from individual lessees and from campaign groups, was of an industry in which the higher costs imposed by ties meant that lessees were at a disadvantage to free of tie competitors and pubcos used their superior bargaining power to exploit lessees, in many cases failing to carry out their contractual duties, while refusing to give lessees in difficulties any leeway. "

"There is a worrying pattern in the evidence presented to us of lack of support for lessees, of verbal agreements not honoured, and, on occasion, of downright bullying. "

"We have no confidence that the advantages of the tie outweigh its drawbacks."

"The practice of pubcos selling buildings they no longer require with restrictive covenants preventing their use as a pub should be banned."

"However, our provisional view is that the tie should be severely limited to ensure there is proper competition in the market."

"As is noted elsewhere in this Report,8 in evidence to us both Mr Thorley of Punch and Mr Tuppen and Mr Townsend of Enterprise Inns made assertions which, on investigation, proved to give a partial picture, or on one occasion were positively false. We recognise that those giving oral evidence may need to simplify a complex picture, and that slips of the tongue may occur, but these repeated slips have undermined the reliability of their evidence. "

No doubt the remaining seventy-something pages will reveal more unflattering insight into the pubcos.

So, I hear you ask, what does CAMRA make of all this?

Mike Benner:

“Camra supports the principle of the beer tie provided that the higher prices licensees are required to pay for their beer supplies are balanced by a lower rent, credible business support and the option of stocking a guest beer.”

Like a turkey supporting Christmas, CAMRA once again declares explicit support for the tie. Yes folks, the very same tie system that prevents microbreweries selling to nine out of ten pubs and that screws pub tenants. Sure it guarantees sales for the regionals (so many of whose beers are duller than ditchwater) but it seriously inhibits new entrants into the market. It holds back real ale.

The whingeing "stocking a guest beer" demand is cop-out. What CAMRA really means to say is "we want special case treatment for real ale such that any pub regardless of tie obligations must stock a real ale supplied directly by a brewer we approve of". Wrong wrong wrong.

Day of Reckoning?

The Business and Enterprise Committee Inquiry in to the pubcos will publish its findings on May 15th.

Story here.

Note the final paragraph: 'The Campaign for Real Ale has said it will consider making a fast-track “super complaint” to the Office of Fair Trading (OFT) about the beer tie, after the report is released.' If the OFT has any balls it will respond "That's the same tie system, the anti-competitive practice you support, isn't it CAMRA? You can't have it both ways: end the tie for companies you don't like; retain it for the companies you do. Now go away and sort out which way you want it."

Beer Tax Petitions

I was quite saddened to see the paucity of signatories to these petitions on number10.gov.uk

"We the undersigned petition the Prime Minister to Reduce taxation on Alcoholic draught beers sold and consumed on Licensed premises. Submitted by albert humphreys of licensed trade – Deadline to sign up by: 24 January 2010 – Signatures: 384"

"We the undersigned petition the Prime Minister to axe the beer tax. Submitted by rachael rogerson of south elmsall united services club – Deadline to sign up by: 14 August 2009 – Signatures: 19"

"We the undersigned petition the Prime Minister to REDUCE BEER DUTY TO THE DUTY LEVEL OF MARCH 1ST 2008. Submitted by KIERON BARTON of CHILLI MARKETING – Deadline to sign up by: 16 June 2009 – Signatures: 34"

I suspect that almost all petitions on the Number 10 site are ignored and they offer only a slight letting-off of steam rather than a being a genuinely useful method of influencing the government. The three I've listed above look pretty amateurish. Perhaps an internet blogger has the time and inclination to create a well written and informative petition that we could all publicise? Perhaps we bloggers should temporarily put down our swords about issues like sparklers and the merits (or otherwise) of CAMRA and use our powers of rhetoric for something useful.

Comments please.