Wednesday, 30 January 2013

Are You Missing Something?

Are you missing something? You are if you haven't read this post by David Preston, and the very well thought out response to it.

To summarise: There is a conflict between reports of the beer industry being in steady decline and the current buzz around the industry.

Why are these two factors at odds?

Is it an artefact of only using stats that are readily available (e.g. data from electronic point of sale tills derived from larger on- and off-trade chains)?

Is it that the growth at the micro- to middle-sized end of of the brewing industry isn't being charted?

Is anyone recording total brewery output and/or sales across the whole industry, from the majors to the boys and girls brewing in sheds?

One further point not raised by David or his lone responder: What effect on this decline does drafting in the accountants to save £6.6 million by reducing the strength of John Smiths Extra Smooth from 3.8%abv to 3.6%abv? Is that part of the solution, or part of the problem?

Your thoughts please, if you have any on this subject.

36 comments:

  1. Still working out what we think about this as we research CAMRA/The Big Six/the rise of 'craft beer', etc., but there's a difference between a healthy beer market, and a large one.

    I think a healthy market is one with lots of suppliers, new entrants, and customer choice in terms of product, price and when/where to drink.

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    1. Great point - that's healthy for the consumer, and I guess ultimately healthy for raising quality levels. But if as a brewery you're used to just doing one thing, and can't change, you're going to struggle a bit, aren't you?

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  2. The microbrewing sector is apparently growing at 5-10% a year. The (overlapping) cask ale sector is in low growth or at very least holding firm.

    But of course the industry figures as a whole are most strongly influenced by what is happening to the big MNCs and regional brewers , and they're apparently in sharp decline.

    People who really like beer will have a lower price elasticity of demand, and hence will be less put off by increasing beer prices.
    People who really like beer tend to drink decent beer.
    Hence: decent beer is more likely to survive in a shrinking market.

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    1. Yes, I do wonder whether the reported decline is perhaps down to customers demanding a bit more for their money and switching their drinking habits, either out of the category altogether, or to more expensive, smaller production beers.

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    2. One factor that gets forgotten is that 85% of the adult population drink and every year loads of people die and loads of new entrants to the market arrive. Older drinkers tend to be set in their ways and largely unmovable regarding what they like. New entrants take a few years to decide what they like and are influenced by peers, zeitgeist, trends, fashion and dare I mention advertising. They will try things they do not like and maybe even pretend to like something because they think if they don't they will be considered a knob by their peers. People have different peer groups based on geography, social class, education and much more. One certainty is that every young drinker wakes up one morning to find they are old codgers and the hip young things of today have crap taste in jeans, trainers, music and drink.

      Market movement really does not require anyone to change any habit ever. If takes about ten years.

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  3. "recording total brewery output"? That'll be HMRC, good luck.

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    1. National Statistics:

      https://www.uktradeinfo.com/Statistics/Pages/TaxAndDutybulletins.aspx

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    2. Ooh, that's an interesting table. Total receipts for beer duty are clearly not keeping pace with inflation, and given the beer duty escalator, are clearly in decline in real terms.

      There's a pretty clear spike when HSBD was introduced, so from HMRC's perspective, that was a successful initiative.

      One further thing that muddies the water somewhat is the amount of revenue derived from people benefiting from full/any relief under PBD. In revenue terms, they are less valuable, but in industry terms (pints sold), they are quite important.

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  4. The mainstream market is is decline and a small niche maybe in growth but the 2 do not equate. A 5% fall in the mainstream is a sales loss several times larger than the whole of the niche craft sector. Success and growth in the niche craft sector is a good news story but not that relevant to the whole market.

    It is like saying Tesco have shut half their stores at a loss of thousands of retail outlets and jobs but heh I've got some good news. Mr Patel that runs the shop on the corner, he's opening another shop that his brother is going to run for him.

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    1. I'm unsure how to feel - I mean, I feel bad for the Tesco employees, indifferent to Tesco as a brand, and happy for Mr Patel.

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    2. Same here, but the overall story of beer and pubs is one of decline. Year on year people are drinking less and using pubs less. I am sure there are many reasons for this, not just one. Personally I think it related more to the decline of butchers, grocers & churches and social & community cohesion than smoking bans.

      The story of craft beer isn't the overall story of what is happening in the beer market. It is the story of a few nice middle class people finding an enjoyable and harmless pastime paying through the nose for weird grog. A nice but meaningless story. Like those same people buying a free range organic chicken or buying some cheese at a farmer market. It is nice, harmless, moderately interesting that they are doing that, but not really world or game changing.

      In the range of importance, the decline of the pub industry is actual news. The rise of craft beer is the bit at the end of the news that isn't really news but meant to cheer you up.

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    3. Oh Cookie, you are a one. By meaningless, you seem to mean "of no financial benefit to big business"?

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    4. The younger generation (ie currently U25) have grown up surrounded on a daily basis by anti-alcohol messages that vary between being mild exaggerations and outrageous lies.

      As a result of this, I think a big part of the problem is that the current 15-25 generation simply has not taken to beer, pubs, clubs, alcohol in the way that every previous generation in living history did. Just look at statistics, or go on a student website and read all the anti-alcohol comments. We'll be entering a new Victorian era of prudish dullness if we're not careful.

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    5. No, by meaningless I mean about as relevant to most people as the bit at the end of the news about some pandas coming to a zoo. It's nice but doesn't change the world. Of course it has meaning to those involved in it, just not to the 99.9% of the population that constitutes everyone else.

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  5. I think the rise of craft beer is part of the story of the rise of ALL THE NICHES. If you like rare funk, there's a booming community. If you like Turkish super hero films, there's a community for that, too. As a friend once memorably informed me, there are even websites for people who are turned on by tossing off into upturned toupees. (Never checked.)

    So, yes, beer, overall, will be less important. The bit that survives will be healthy, and those who take an interest will do so because they want to, and not because of some weird expectation of class/gender behaviour.

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    1. You haven't lived 'til you've spunked on a wig.

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    2. That reminds me I haven't read Savage Love this week.

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    3. I suspect meeting up with beer geeks, bloggers etc on a twissup is cleaner and less messy than such internet sub cultures. I am less likely to get anything in my hair.

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    4. Oh god no. Midget porn, toupe porn I can sort of live with. Beer geek porn? Please no, say it ain't so. I don't want to know what they do with the giant wine glasses.

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  6. Reminds me of the reaction of the biggest trade association here a couple of years ago. The production of beer had fallen overall by 8% (the previous year by 6%) and they said that it had been the worst year since the fall of Communism. However, if you asked the smaller regional brewers, most of them would tell you how happy they were with their results, to which you'd have to add the almost two dozen new microbreweries that had opened in the same period.

    It might be the same in your neck of the woods. A handful of companies that produce most of the beer have had bad years and that has pulled the whole industry down.

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  7. pyo makes the point that 15-25s haven't taken to beer. That may be so, but one sure fact is that they haven't taken to pubs because they can't get served due to the ID regime.

    My generation spent a lot of money in pubs between the age of 16-18. Most of us had jobs which meant disposable income. So pubs were our Facebook and Twitter. I wonder what percentage of the beer market was due to underage drinking in the 70s and 80s?

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    1. My 17-year-old correspondent tells me fake ID is really easy to get if you want it, but he also tells me (and I believe him*) that he's never gone down that road, & consequently never bought beer, ever. When I was his age I'd been drinking in pubs with my mates for two years. He quite likes beer when we give it to him - pale-ish and bland-ish beer in particular - but it is something his parents let him have. He's going to have a lot of catching-up to do, at later and more responsible ages, as is his entire generation.

      *He's a lousy liar.

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    2. The thing is, beer is one of those acquired tastes. Its not particularly nice at first for an underdeveloped palate, but once you "get it" you don't want to drink anything else. Due perhaps to the lack of pubgoing and general cluelessness about alcohol, there is less peer pressure on young men to acquire the taste of beer, so a lot of them simply never do. As a result, a group of 18 year olds that would previously have all been drinking Carling are now going to the pub and ordering pear ciders or all sorts of weird spirit concoctions.

      *and, as I said above, a lot of youngsters don't go out at all and simply stay at home and play WOW or COD and make sneery remarks about people "who have to drink to have fun" (and then wonder why they can't get a girlfriend).

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    3. They might be too busy in the company of a nice young lady to bother with pubs for all you know.

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  8. The BBPA say they have revised their statistical methodology to take better account of micro-brewers and independent importers. While the overall figures show the same kind of decline over time, the absolute values are greater than they were before.

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  9. I think it's worth baring in mind that the '...current buzz around the industry' could perhaps better be described as 'within' the industry (which includes beer bloggers and some other beer geeks of course). Even assuming there is a buzz 'around' the industry, it's probably only really extends to approximately '1' Beer Belly width. The vast majority of beer drinkers and pub goers are experiencing absolutely 'No' buzz with regard to beer and brewing because drinking beer is merely an ever less important accompaniment to their real life.

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    1. So basically anyone interested in beer is getting confused by the signal-to-noise ratio around "craft" beer at the moment?

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  10. Not really Zak, it's just that of all the people still using pubs, only a tiny minority are actually 'interested' in beer, most just drink and enjoy it. Any 'buzz' there may be is not really being felt outside of the inner sanctum of beer bloggers and beer geeks. Perhaps this has some bearing on the 'conflict' you've noticed.

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  11. Interest in beer has tripled amongst the general public!

    So instead of 1% giving a monkeys about what it is that is getting them drunk, now 3% do. :-D

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  12. The analysis of the overall market for beer in the U.K. (and as elaborated in numerous comments above) is persuasive but at the same time, it is really a question of definition. Many who are committed to craft and traditional beer hardly consider mass market lager beer. I mean, it is beer of course, but it is as if you have two circles overlapping currently. The overlap is in the fact of some producers producing both kind of drinks but with the market largely segmented (separate brewers of mass market and craft/traditional beer), and in the fact that the remaining pubs, many of them, sell both kinds of beer.
    Whether those circles will merge so that, say, lager becomes 10% of the overall beer market may be highly unlikely, but still the separate and vibrant craft/trad beer circle is widening and that is valid unto itself. I don't really see an overall issue for the real beer fans because even if pubs significantly decline from here - unlikely I think - you will always have bottled sales and also, more brewpubs will emerge partly to replace the lost pubs. There are few now to be sure, but they will increase if too many pubs will close that sell craft beer currently.

    I think the main factor by the way to explain the fall-off in the mass consumption of beer is not the anti-smoking ban or the drinking and driving laws but the massive increase in wine consumption since the 1960's. This factor, common to the U.K. and North America, has IMO forever altered the old beer drinking pattern but at the same time it leaves room for the craft/trad beer sub-market to grow and flourish.

    Gary

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  13. Until there are truly independent figures that are actually split into meaningful metrics (so that it's possible to separate all politics via loaded stats) it’s pretty much impossible in my mind to see exactly what's happening.

    e.g. CAMRA consistently highlighting the closures of pubs with little to no publicity about pubs that are actually opening. I accept that there is a downward trend in this area but let's split the statistics to more meaningful metrics rather than simply on the geographical location of a pub.

    Let's see the stats on how many freehouse pubs are closing versus tied pubs closing? I suspect the figures will be rather different and not particularly the type of stats that certain people in the industry will want to see made public.

    Create and perpetuate the notion of a failing pub industry and the government will be forced to intervene and help out with financial Elastoplast’s? Is that the hope for certain players in the industry?

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  14. In my town there are a very large number of young (16-25) who never go to the pub. They may go to a club late on after sitting at home drinking (or other stimulants)

    London is very, very different with lots of middle class, downy chinned, spiky hair types talking about craft beer. It wont last. In ten years time they will have moved back to wherever it is their law practice is and the next fad will be Uzbeki Ice cream or oyster snorting.

    In the real world the trend away from pubs will continue. And I mean pubs, not restaurants in what used to be pubs.

    No one I know under 35 is a pub regular, for those slightly older its different, but they tend to be after Sunday lunch, not a night on the tear.

    The wet only pubs around here that are left open are dying on their feet. Blaming it all on the beer duty as CAMRA insist on doing is nonsense.

    In 20 years time most pubs will be mediocre food outlets where someone who does not want to eat will be made to feel like a leper by staff with name badges who say 'Hi' when you walk in.

    Real beer drinking is dying a death, the current fad among a very small group of middle class bloggers to get all poncified and Jilly Goulden about it is a side show.

    Food matching, tasting notes, floral finish, hints of oak and asparagus. What a load of oblox.

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  15. That's a very heartfelt moan, but what's you're actual point? That pub culture isn't what it was?

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