Wednesday, 11 January 2017 16:05

Cask beer at a crossroads?

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MBW pic - cask filling

Tales of cask beer's demise are greatly exaggerated.

Despite the recent furore in the blogosphere, cask continues to grow. In fact, its share of the market has risen for four of the last five years and its market value has grown by 6.3 per cent over the same period.

The decision by Cloudwater - one of the most prominent names in the modern craft beer scene - to cease production of cask will make little difference to the vast majority of drinkers.

But that doesn't mean this development is insignificant. Even if it has little bearing on the here and now, it may offer an early warning sign for the long-term health of cask beer.

One thing is certain throughout all of this - cask is worth fighting for.

It is a uniquely British phenomenon and utterly integral to the beer-drinking experience in this country. It's romanticised and revered the world over and should be seen as a real point of pride.

Growing up in Manchester, this much was made clear to me from a young age.

I still remember a group of old timers berating me for supping a Stella in a spit-and-sawdust Sale boozer. Next time up at the bar, mithered into submission, I ordered a pint of Holt's Bitter and conceded that my elders did know best - on this occasion at least - and so began a lifetime passion.

However, we should not take it for granted. If cask beer is to continue growing, the industry must take heed of the current debate and not shy away from a number of key questions that have been raised as a result of it.

Two of the more significant questions appear to be:

  • Are brewers being paid a fair price for cask ale?
  • Does cask ale have a problem of perception, particularly among younger drinkers?

 

A fair price

One of the key reasons cited by Cloudwater for dropping cask production - and one mirrored by Buxton when they made the same call in 2015 - is that it simply isn't profitable enough, particularly when compared to keg or small pack.

There are many reasons for this but Cloudwater co-founder Paul Jones put his finger on one of the biggest when he said "traditional price points remain an increasingly compromising norm."

At risk of oversimplifying the matter a touch, this is the idea that price pressure linked to long-standing perceptions of cask beer means its value has been set too low.

We are witnessing a race towards the bottom, where brewers attempt to undercut one another in order to secure their share of an increasingly competitive market. Offers and discounts have become commonplace, often causing beer to be sold at a rate that appears unsustainable in the long term.

Such a situation can be seen as an inevitability in a free market, capitalist economy and once a product's value has been established by the market, it is hard to shift. But the current situation has been exacerbated by unbelievable growth in the number of breweries over recent years, with around 1,900 now fighting to sell into a decreasing number of pubs.

This is an industry where barriers to entry are low. On the one hand this is a major positive, as it means new products can be brought to market without the need for significant investment, but on the other hand it leads to a situation where hundreds of under-capitalised start-ups must fight incredibly hard to provide a sustainable living and achieve growth.

In this context who can really blame individuals for cutting prices in an attempt to gain a foothold in the trade?

It seems likely we will see a levelling out in the industry in the near future, where the number of brewery openings reaches something close to a balance with the number of closures. I would argue that, without significant and rapid growth in market share, it is a necessity given the difficulties many brewers face in even turning a small profit.

But would a reduction in numbers help to significantly relieve price pressure? It certainly wouldn't provide a lasting solution.

The idea that cask beer should be cheap appears to be more ingrained and, although consumer demand has played a role in establishing its value, the pub trade has also done much to suppress prices.

Anecdotally, many brewers attempting to price their products commensurate to the costs of production are met by resistance from publicans who insist on applying a restrictive price ceiling to cask beer, often regardless of style, strength or production methods.

And if local markets aren't tough enough, wholesale is being similarly squeezed. Reported price cuts applied to beer sold to Enterprise pubs through the Society of Independent Brewers (SIBA) Beerflex scheme - which apparently amount to £8 per firkin since November - represent the tip of the iceberg in this respect.

While cask brewers are facing cuts, Heineken, Molson Coors and Diageo all hiked beer prices last year because their size and clout make it a whole lot easier for them to dictate terms to the trade.

Consequently, the issue at hand is much bigger than Cloudwater and not simply a case of a handful of producers attempting to force new conditions on the market because they believe their products warrant it. An increase in the cost of basic ingredients, particularly in the midst of uncertainty over the value of the Pound, is making it harder for small breweries to make required margins on anything other than the most straightforward beers.

This won't cause the death of cask but it could cause the market to become truncated, disposing of higher-end products and placing focus on a more limited pool of styles and production methods. This doesn't bode well for continued evolution and innovation, and it curtails cask beer's ability to stay flexible in adapting to changing tastes.

Could this create a risk that younger drinkers who are less well-versed in the traditions of cask beer will turn increasingly towards modern keg beer, which can provide them with greater choice and 'excitement' wrapped up in a more premium image?

At this point it's impossible to say but such questions are certainly not without foundation.

 

A problem of perception?

Within a free market economy, it isn't sufficient to simply state that brewers should receive a fair price and expect it to become so.

Market forces will largely determine price so, instead, more needs to be done to shape expectations of cask beer within the trade and among consumers.

One of the major problems is that there appears to be a leadership void within the industry.

Stateside, the Brewers Association has put in an incredible amount of effort to promote US craft beer, demonstrating an impressive commitment to education and training, while also campaigning and lobbying on behalf of its members.

Is there anything comparable in the UK? Unfortunately, feedback from brewers about the merits of SIBA appears to have become increasingly negative and there is a belief among many that the organisation does not truly have its finger on the pulse of a rapidly-changing industry.

The Beerflex scheme might help producers to reach a wider audience but it also appears to force them to accept prices that are only sustainable in the long-term if beer is cheap to produce.

As price declines, it is likely choice on the bar will follow the same path in the majority of pubs. Cask is already offered as nothing more than a tickbox exercise by too many venues and this will not change as long as price is valued over quality.

In the circumstances, it's not difficult to see why your average consumer - with limited knowledge of cask beer - might view big lager brands such as Peroni or San Miguel as more premium products. Too often, choosing cask ale is akin to taking a turn on the roulette wheel.

Is there call for the industry to do more focused work with pubs to drill home the value of cask beer and the need for good cellar standards? It certainly seems so.

But better education should be offered to brewers too, as there appears to be a severe lack of structured, technical training on offer.

With barriers to entry in the beer industry so low and training limited, many start-ups are self-taught and quality standards have become more inconsistent as a result. That's before taking into account the chancers and under-qualified opportunists who see low barriers to entry as a chance to make a quick buck. A strong industry body could make some quick gains by proactively providing help and guidance where it is deemed necessary.

On top of this, there is still a serious need for improved consumer education. And although no other organisation has done more to create a sustainable future for cask ale than CAMRA, it should share a degree of culpability here.

Even if there is a focus on beer quality at an organisational level, this doesn't seem to be filtering down to the membership clearly and consistently enough. Too much misinformation is still perpetuated and not enough work done to educate consumers about common beer flaws and what causes them. Without revisiting the beer clarity debate for the millionth time, this remains an area where there is a fatal lack of understanding but it is one of many.

As a result, CAMRA beer festivals too often do not represent the cream of cask beer and regularly provide the consumer with more reason to believe it is nothing more than a cheap, unreliable commodity.

Drawing on personal experience, I remember one occasion where I was warned off a heavily-hopped IPA ("too hazy") and a smoked beer ("you can have it but I'm not giving you your money back") but pointed towards a pale ale that I had previously discovered was loaded with acetaldehyde for no other reason than it was pin-bright and "in great nick". Clearly, such situations only serve to undermine the good work done by CAMRA.

It could also be argued that a discount culture has taken emphasis away from beer quality. I fully understand the need to make beer affordable for all but if too much value is placed on vouchers and reducing the price of a pint, doesn't this shift focus towards volume drinking rather than enjoyment of flavours? If getting pissed is your aim, there are better options than cask beer.

 

Future challenges

I don't want to labour my previous point because, to make it clear, CAMRA is not the enemy here.

But it feels as if we are close to reaching a crucial point for the long-term future of cask beer. In the past, it represented the obvious choice for the more discerning beer drinker but the explosion in keg beer among modern craft brewers could change this, and the situation will become even muddier as the multinationals pour more money into marketing their own 'craft' brands.

Now, we are starting to see the emergence of drinkers who self-identify as 'discerning', yet turn their noses up at cask. At the same time, the majority of new craft beer venues appear to be prioritising keg over cask, while modern, mainstream bars feel are ticking the indie box by devoting a couple of keg fonts to a distributor's craft brands.

The kind of beer-heavy events that target younger demographics - often incorporating independent food, crafts and music - are also focusing on keg. Even Indy Man Beer Con, seen as the flagship event for the UK's modern independent scene has gradually phased out cask over the four years since its inception.

Granted, these are largely middle-class, urban phenomena  but tastes are often forged in the UK's cities before filtering through to the regions. Just take a look at the growth in popularity of grime music among the country's youth for evidence of that.

The situation is far from grave but an adjustment in attitudes may be required to ensure the continued rude health of a British icon. It's a time for open dialogue rather than argument and entrenchment.

 

 

Footnote - a working class drink?

Throughout the current debate about the price of cask beer and its long-term economic viability, a common refrain has been the idea that, as a traditionally working class drink, it should remain affordable to all.

Although well-intentioned, this premise is somewhat flawed.

When brewers and industry figures call for a fair price for cask beer, they are not simply asking for an arbitrary increase across the board, rather a relaxation of the idea that all cask beer should come in beneath a certain price point.

Beer made using more expensive methods and ingredients should naturally cost more but there is nothing to stop products that are made more inexpensively continuing to be sold at low cost. It is the same distinction that is made between premium and basic product ranges in every supermarket across the country.

The idea that cask beer should remain cheap is a sweeping generalisation that ignores more powerful factors at play in society.

Quite simply, LIFE is more expensive and many people can't afford to pay for the absolute basics, let alone cask beer.

The burden of providing society with life's simple pleasures does not hang on the shoulders of hard-working brewers but rather our politicians.

In fact, by forcing brewers to accept less than a fair price, we are doing nothing to address social inequality. Many of those producing cask beer, particularly at the smaller end of the market, earn below the average wage and many would be considered part of society's JAM (just about managing) segment that has become such a popular topic of conversation for the Conservative Party.

In short, the solution to the problem of the poorest within our society being unable to afford basic goods will not be solved through suppression of cask ale prices.

In this sense, Steve’s comment below about beer duty provides food for thought. Britain’s regressive beer duty, which stands significantly higher than any of the other top six brewing nations across the EU, is an example of how the Government has played a leading role in making beer less affordable for all.

Proportionately, this tax hits the poorest in society hardest and means margins across the brewing industry are heavily squeezed. Unfortunately, it’s not something we’re likely to see change any time soon.

Read 2667 times Last modified on Thursday, 12 January 2017 11:52

2 comments

  • Comment Link Steve Wednesday, 11 January 2017 18:04 posted by Steve

    While I agree with so much of this, there's a rather hefty elephant in the room that's not been addressed by anyone, that of the tax on beer.

    I don't personally believe that beer should be more expensive over the bar, it needs to stay at a level where it's affordable for the majority. For this to be commercially viable for smaller breweries though, the amount of Duty has to come down. Rather than getting Joe Public to pay more over the bar, we need the Government to take less.

    But then, Joe's quite happy to pay more for a mass-produced yet consistent (poor) quality bottle of lager and always has been.

    CAMRA have identified beer quality as something that needs addressing, but poor and short training courses have given some people the idea that they then know everything needed and they go off spouting misinformation.

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  • Comment Link Rob P Thursday, 12 January 2017 13:26 posted by Rob P

    Connor - great post and I agree wholeheartedly with the majority of what you've written up. A couple of points:

    Turnover in trade runs at about 110% - getting bar staff to consistently serve lager correctly (right glassware, right pour - not swirling it around to get a head etc.) doesn't happen (roughly 80% of mystery guest visits fail). Beyond the initial proposed education of brewers and landlords - there's a massive hill to climb to get the rest of the trade on board with getting Cask right.

    Duty is a killer to the trade - but realistically the best we can hope for is a reduction in the annual increase, rather than a reduction. As you flag above, life in general is more expensive and expenditures for pubs will only go up. Accordingly the actual cost of the beer only makes up a proportion of the price of a pint. Increases in the cost of energy, rent, sky/ BT will only cause the cost of pints to go up quicker.


    Interesting to hear your view that Cask is a working man's drink - it's particularly middle aged and middle class in London (and I imagine the most of the south).

    Related to that, I've always been really impressed with how Craft Beer Co & The Draught House have remained steadfastedly supportive of Cask. Particularly that they've
    got a customer base who are willing to pay parity for keg and cask beers. As particularly well run chains, with clued up staff and managers - this reinforces for me your suggestion that greater education is the road forward.

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