I’ll start this weeks column with a quick note regarding the forthcoming takeover of the London based Meantime Brewery by SABMiller.  Announced a couple of weeks ago, the move is symptomatic of what is happening in the trade on the other side of the Atlantic.  Large brewing concerns want their piece of the Craft Beer sector and as I said a few weeks ago, it is moves like this and the formation of “in house” craft brewers that will dilute the craft beer label over time until it becomes worthless.  Just as Molson Coors brought Sharps Brewery to give it a real ale brand which real ale drinkers recognised, Meantime brewery, incidentally part owned currently by a former Miller Brands director, will become the public face of the SABMillers new premium craft beer range.

Some might say that we have lost a leading independent brewer, but others have been saying it has been going more mainstream for a while now, concentrating on its higher volume core brands than innovating new beers.  Wherever the line lies, the truth is that some Meantime drinkers will move on from the brand due to the takeover, at least as many will be blissfully unaware of the news and keep drinking as before and an equal or more amount will not be bothered.   Whatever it loses will however be more than compensated for on the sales line by the additional bar space it gets from the SABMiller distribution network.  As a business deal there are no losers, however what this could be is the thin end of the wedge regarding the mainstream penetration of the craft beer sector.

But now to the main topic this week, I’ve been writing a lot about the craft beer sector over the last few weeks, so this week I turn back to the world of real ale.   Real Ale is what got me into good beer, so will always be the core of my drinking consumption.   I paid a visit to the Victorian Craft Beer Cafe in Halifax the other weekend, a business owned by the same team who operate and lease the Puzzle Hall Inn, Sowerby Bridge.  They started off with 4 real ale pumps and 10 keg lines, they have now doubled their real ale range to 8 pumps, on the day ranging from 3.8% to 7%.  I sampled one from each end of that range, as well as one of their keg beers.  All were good beers, of that there is no doubt however the real ales gave me more satisfaction and in a mixed session do 99% of the time.

The following day I was at the Beck, Brighouse for a couple of pints whilst my daughter was otherwise engaged in town.  I ordered a pint of real ale, the landlord offering me a taster (I say a taster, it wasn’t far off a half in reality) as others had said it was a bit too citrusy.  I like a citrusy beer so had no problem with it.  However the great thing about real ale is that it is a living breathing animal that changes over time as it sits in the cellar.  The beer was labelled as a hoppy beer, and I have no doubt that a few days down the line towards the last quarter of the barrel that it will be a subtlety different beer and fit the beer pump description a lot more accurately.  I’ve had real ale before where I’ve virtually had the first and last glass out of a barrel and you’d swear they were not the same beer.  This variety of taste is something you don’t get with craft keg.

The downside of this living, breathing animal is that it needs more care to keep it in condition, a small movement of the barrel can unsettle a real ale and make it cloudy for a while (although normally to no detriment to the taste if it was good before).  It needs time to settle before serving and has a more limited shelf life in the majority of cases.   But in my opinion the product is worth the effort from the people the other side of the bar.  It also leads to a good rotation of real ales in our pubs, giving us far more range than we would get if the equivalent lines were connected to a keg.

A good real ale is as good as a drink can get and there are thousands of them out there.  Whatever your taste, there will be a “wow” ale out there somewhere and with the quality of many of our brewers, it is something I experience quite often at the pubs who know how to select and keep good beer.  When the worse case scenario usually is “that’s a decent beer”, real ale can’t be doing that bad.

 

As soon as the legislation regarding large pub companies having to offer “Market Rent Only” tenancies passed late last year I predicted there would be a move by these companies to a managed estate where the “landlord” is merely a manager who is an employee of the pub company.   Currently it operates over 5000 pubs across the country, with only 16 of them being on a managed basis.

The structure of Enterprise Inns will radically change over the next 5 years, with over 1000 pubs planned to be sold in that period.  At the same time they expect to convert up to 850 of their current properties to a managed pub.   They currently offer 5 year agreements to tied lessees, so within this five year period all of their properties will see an opportunity to them to make this move, or conversely see the current tied tenant apply for a Market Rent Only review upon renewal.

They expect that up to 1000 pubs in their estate will move to this Market Rent option by 2020, leaving them with a core of approximately 2500 pubs operating on tied basis.  This change is a significant one for a company which has been effectively operating the same business model in its various incarnations since the 1989 Beer Orders, which at its peak operated over 9000 pubs across this country, nearly 1 in 6 at the time, a figure achieved through the buyout of former Whitbread and Unique Pub Company estates in the 1990’s.

Enterprise chief executive Simon Townsend said the company remained committed to the tenanted and leased division but its plan makes clear that its strategic objective is “to diversify away from a predominantly leased and tenanted business over time”.  He also said it will continue to offer tied agreements of up to five years in length but will focus on growing its managed estate.

Having a large number of tied tenancies on the books has become a poisoned chalice to such pub companies and expect Punch and its peers to make similar announcements over the next few months.  The statement by the Enterprise executive along with the announcements makes it clear that it wants to sell all the valuable real estate worth more as a plot of land and building than it is worth as an operating pub business.  Some of these sold properties will be kept as pubs, but expect to see a lot converted to “other retail uses”.

He also wants to take as many of their pubs out of the reach of the Market Rent Only legislation by making them a managed house, however they are limited by the money needed to upgrade an estate which has in parts been neglected from a maintenance and decor point of view.  Also given their debt pile which costs them £77 million a year in interest and the additional £26 million cost of refinancing the debt this year to the business, that is why they are only planning to move just under 20% of its pubs to this model in the next 5 years.

From my point of view, as a drinker and somebody who knows people who operate pubs, both within the Pub Company world and outside of this world as owners and freehold tenants, all of this is rather a mixed blessing. It can only be a good thing when it comes to more pubs getting the choice of where to buy their beer.  However I feel that the best pubs regarding turnover and profit line will be brought in house to the managed division, whilst the prime locations which are underperforming will be sold on a property and land basis.  This leaves the non prime locations who are not among the top venues regarding turnover and profit who will be allowed to go Market Rent Only.

Leases will only be offered on a 5 year basis, so if one of these Market Rent Only pubs suddenly finds itself in the middle of a new development and a upturn in financial fortunes there is nothing to stop Enterprise simply not renewing the lease and taking the pub into the managed division.  It allows them to cherry pick the best properties on a 5 year rolling basis letting Market Rent Only landlords take all the risk in developing the trade.  Again they have engineered a win-win situation for themselves, but are we really surprised by that?

This week, after a few weeks exploring the beer world far and wide, I’m going to discuss some of our local pubs.  Living in the area for 17 years now, I’ve seen pubs come and go, fall into the pits and rise like a phoenix from the flames.  I’ve seen too many turned into housing and many more forced to struggle due to the likes of Enterprise and Punch Taverns.  But there is a lot of pubs in the area who do a really good job of serving well kept ale and making you feel welcome, the two basic functions of a public house.

I’ve written about Brighouse many times before and the town has benefited from new entrants in the pub circuit, with Jeremy’s and Millers Bar being the headline openings recently.  Both are good bars in their own right and ones I visit on a regular basis.  Jeremy’s has developed a reputation for its live music, whilst Millers Bar is well known for its Craft Beer selection and the recent opening of their beer garden is attracting more families now summer is coming along.

But I’d like to discuss a couple of the established names in the town.  The Ship Inn and the Commercial / Railway Inn have been around for years, both traditional pubs which provide the two key roles of a pub as defined at the top of this article.

I’ll start with the Ship Inn.  I was a massive fan of the place when Mark ran the pub and got on really well with him, Jason and the team.  After they left, I didn’t go in for a long time and when I did start to go in again maybe a year later, I didn’t warm to the pub immediately, it took a long time to build up the liking for the place I had before, it seemed slightly cold to me and the ale selection seemed to take time to get right.

Brighouse, Old ShipHowever Marsha and her team have turned the place around totally now, although I still want the backwards clock returning above the gents toilets door.  The place now is as welcoming as any pub in the area, the rotating beer selection over 5 pumps is well balanced and well kept as is the range of real ciders and tap beers.  The pub has restored its band of regulars and is attracting a mix of people from across the spectrum.   It is a place where you will find other pub landlords drinking and there is no better sign that a pub is doing well if your local rivals are drinking there.  With the back pool room and live music, they have returned the place to what it used to be, a very good small town pub.   Recent refurbishments have helped brighten the place up and you are also guaranteed that very special welcome if you are an Ipswich Town fan and let it be known.

HAL-1058-51900-railway-200x150@2xSlightly out of town there is the Commercial / Railway Inn, next to the town’s train station.  I’ll admit now I only really started drinking there because Jason who previously worked at the Ship Inn worked there also.  This has been run by Trevor and Sue for many years now and it feels like an extension of their home, in fact, some might say it looks like an extension of someone’s home with a bar placed at one end.   The Commercial is good honest pub, it doesn’t try to do anything fancy, serving 3 rotating well kept real ales and a good range of tap offerings again with live music and pool room.  Like Marsha at the Ship Inn, I have a lot of time for Trevor, as it’s not just about pulling pints and taking the money, it is being part of the community and interacting with the people who live in the area.

Many of Trevors long time regulars are like a surrogate family and they are looked after as they get older.  It is the modern continuation of the old school model where the pub was a service at the heart of the community, you knew peoples habits and you knew who to ask if something didn’t seem right.

For some older people, especially where natural old age causes memory loss / dementia, the pub can be the one constant linking the past to the present with things changing all around them.  They may not able to navigate to a new places, but they know the walk to their pub like the back of their hand.   If they visit a few times a week at lunchtime and eat there you know they are getting a decent hot meal that day and talking to people, keeping that critical social contact, avoiding isolation.  Bugger those who say beer isn’t good for you, when you get to that age, you deserve a few beers.

Pubpaper 805 – Brewdogs’ Equity for Punks 4

Posted: 23rd April 2015 by santobugtio in Pub Paper, Writing

Brewdog get a lot of mentions in this column, in fact out of the 234 articles I have done for Pubpaper, 43 have mentioned the Scottish brewery, about 1 in every 6 and this week I’ll be increasing the hit rate for mentions even more!

They made the brewdog_logo_detailnews last week due to the announcement of Equity for Punks 4, their latest fundraising share offering where they hope to raise £25,000,000 to develop their brewing capacity and provide funds to open new bars both in the UK and internationally.  The business by any measure is doing very well, revenue up nearly 400% over the last 3 reported years (and predicted to jump another 56% in the 2015 results), profit is up 1000% in the same period, figures any company would be proud of.

However the Equity for Punks investment is slightly different from a traditional issue of shares, it is not like the stock market where shares can move in price and be traded (well not yet anyway, plans are afoot to introduce a private trading platform for Brewdog shares, and they have not ruled out a public listing in the future).  When you buy shares in Brewdog, you naturally own a part of the company and get voting rights, but you get your benefits back in brand loyalty, through discounts at their shops and bars, the free beer on your birthday in a Brewdog bar, an invite to the party like AGM.

This is a very shrewd move from James, Martin and the team and a pattern that has echoed through the previous three Equity for Punk share offerings.  People invest in the company, then they invest in the company even more by using their discount to buy Brewdog beer and visiting Brewdog bars, it is the gift that keeps on giving for the company.   Just look at the extra benefits you get as an “Equity Punk”, first option on new beers, access to their beer box club and Abstrakt specialist beer club, all of these are extra cost items, all making more money for Brewdog.

You do not invest in Brewdog to make money (unless you are drinking so much Brewdog beer that your discount outstrips the cost of buying the shares), you are buying into the ethos of the company.  I wrote a few weeks ago about Brewdogs dilemma about its craft / mainstream future and by continuing with the non trading nature of the shares which encourages fans of both Brewdog and good beer to invest, they are sticking true to their roots back in 2007.

A lot of the money the company turns over goes back into the company, dividends are not paid out to shareholders.  The three main operators at the company, James Watt, Martin Dickie and Charles Greggor will own 74% of the company after this £25m issue.   Salaries for the directors are not excessive for a £30 million turnover company, with 3 directors on circa £125,000 with others on significantly less.  Employees are paid a living wage, not the minimum wage.  They are creating a significant number of jobs in the area, with 130 estimated to be created with the opening of the new plant this issue is funding.

The demand is obviously there for their beer, there is no other reason to build a new brewhouse triple the size of your existing plant at the cost of £3 million, just to keep up with demand.  There is also no reason to earmark nearly £9 million to open new bars here and abroad unless there is the demand for it.   It is not just over here where the demand is apparent, another £3 million is planned for a US based brewing operation to try and break this tough market with plenty of competitors, although links with US brewers from collaborations won’t hurt them at all.  Eight planned new bars and new markets will add new challenges, although owning a part of your distribution chain, via the planned set up of an “UK Import and Distribution Arm” will certainly help matters.

The core purpose is the same as any other brewer at Brewdog, get more beer to more venues in more countries as efficiently as possible, it is the subtle differences in how the company is run which puts the undeniably large company which Brewdog has become apart from the more mainstream brewers of its size.

 

Pubpaper 806 – UK vs US Craft Brewing Scene

Posted: 22nd April 2015 by santobugtio in Pub Paper, Writing

I’ve discussed over the last few weeks the Craft Beer sector of the market and several times I’ve mentioned that to see where the UK craft beer scene will go, it is good to look at a country about 10 years ahead of us when it comes to the craft scene, this country being the USA.  In the States there is an organisation called the Brewers Association who represent large craft regional brewers, microbrewers and brewpubs.  The rules of its craft brewer designation are simple; that you produce less that 6 million barrels of beer a year (less than 3% of US market), you are less than 25% owned by mainstream brewer; the majority of its total beverage output is via beers whose flavor derives from traditional or innovative brewing ingredients and their fermentation.

The growth of craft beer in the states really started in 1985, at that point there was only 110 brewers in total across the whole of the the country.  Over the next 14 years that number multiplied by a factor of 15, with 1500 brewers operational by 1999.  The number of new brewers then stagnated for about 8 years hovering around that same 1500 figure.  However in 2007 an explosion started, four years later in 2011 the figure had risen past the 2000 brewery mark.  It only took just over another 2 years in early 2013 to reach 3000 brewers and in the following year another 462 brewers started up operations.

Put this into perspective, at the start of Brewing Association records on the number of brewers in the country in 1873 there was 4131 brewers recorded.  At this rate the USA will surpass this number in the next 3-4 years.  This number in 1873 was an historical high for the era between then and now.  The US brewing industry nose dived after this year for just under a decade, losing nearly half of the brewing operations in 1873.  The period from 1910-1920 was disastrous for the industry with numbers falling from 1568 to 669 brewers, the following year was prohibition and the registered numbers of course hit zero.  After alcohol was legalised again in 1933 numbers hit about 800 brewers by the start of the next decade.  This figure gradually drifting down to the figure I started this with in 1985.

In 2014, the scene is quite interesting in America, of the 3462 breweries (or 1 brewery per 92,000 people), only 46 are non craft breweries, of the remainder 135 are big enough to be classed as regional (producing more than 15,000 barrels), 1871 are microbreweries (producing less than 15,000 barrels) and 1412 are brewpubs (where at least 25% of production is sold on site).  The rate of closure of such breweries is low as well, with 7 brewpubs opening for every one closing in 2014 and 23 microbreweries opening for every one which closes.  Brew pubs of course are exposed to the risks inherent with production and retails operations, so the higher rate is no surprise.

Taking a similar set of UK based numbers (the best figures come from Society of Independent Brewers).  Brewpubs are not as popular in the UK as in the US and in no way make up nearly over one third of all brewing operations.  Looking at microbreweries as per the 15,000 barrel limit in America, the responses to this survey would put about 87% of brewers in this category (lumping in the small number of brewpubs with the pure brewing operations, deducting a few percent for the large national brewers and those small operations owned by them). If you assume this over the 1,285 breweries in the UK, then it mean that about 1100 of them are microbreweries, a healthy segment of the market.  The good news is that we have more brewers per capita with one brewery for every 50,000 people or to put it into perspective an average of 4 “breweries per Calderdale” (pop. 204,000), showing Halifax and the surrounding area punches well above its weight when it comes to beer production.  Our growth in the number of brewers is similar to that post 2007 in the US as well, another good omen.

The big difference between us and the USA is that their definition of craft is purely numerical and puts many of the brewers we’d simply call “Small to Medium” sized breweries who we’d not consider anywhere near “craft beer” into that category.  Is this a bad thing, not in this writers eyes, craft is a label and is being diluted by mainstream brewers every day.  It will become meaningless in the next decade or so unless we adopt a precise measure of the term.  Are we following the USA for its good points in developing a craft beer market, absolutely and if we develop our brewpub market as they have that would be no bad thing at all.

References

http://www.siba.co.uk/forms/BeerReport2014.pdf

http://www.brewersassociation.org/statistics/number-of-breweries/

http://www.brewersassociation.org/statistics/market-segments/

Imagine this.  Your pub has been around for close to 100 years and is considered a classic example of the pub architecture of the time, complete with tiled exterior and signage.  Inside the historical layout, fixtures and fittings have been maintained from when it was built unlike most pubs of its era.  Your pub is also being considered for grade 2 listed status and the following day may well see this status granted.

1421069_Carlton-Tavern-3The problem is a property developer based in Israel owns the building and land and wants rid of the building, only interested in the land it sit on.  You know this as only 3 months ago the land owner applied for permission to demolish your pub and build a block of flats with a ground floor bar.  Only 20 minutes by tube to Central London from two local tube stations a mere 7 minute walk away, the 10 flats could each be worth several hundreds of thousands of pounds.  This planning permission was denied due to the development not including the provision of funding for affordable housing units (all big developments in London have to pay into an affordable housing fund).

1421068_Carlton-TavernThe owner of the pub asks you to shut the pub for an “inventory”, however a few hours after you leave the pub you get an urgent phone call saying the bulldozers had moved in and the pub was being ripped apart, fixtures, fittings and all.   By the time you return and a planning enforcement team from the council turn up, the majority of the building is in ruins with one of the four walls partially intact.  You can still see the sports trophies on shelves and the flat screen TV mounted on an interior wall.  An empty glass still sits on the table in the now exposed bar.

sparkling-ales_3261461bThis is what happened to the Carlton Tavern in North West London.  The timing was no coincidence, one day before grade 2 protected listing could have been granted, leaving the land owner next to no chance of building the valuable flats.  The pub was in good condition with trading more than viable, there was no commercial reason to shut the pub on its own merits.  Pure greed drove this action.   At least most land owners and pub companies have the courtesy to run the pub into the ground before forcing the tenant to leave and then closing the business.  The company who did this, CLTX, makes Enterprise Inns look like the model of good business ethics.

There is now a good chance that the site will stand empty for a time whilst Israeli owner tries to get planning permission for a second time from a seriously miffed off local planning authority in Westminster who are considering legal action regarding the unauthorised demolition.  The local community has lost a good pub, the landlady and staff have lost their jobs and no good has come of the whole sorry affair.

It is a shocking story and I can only hope they don’t get a £100,000 slap on the wrist and then get permission to build the said block of apartments a month later.  I hate to be a cynic, but I suspect this is what exactly will happen.  But is it any worse than losing a pub to one of the big supermarket local chains.  When property is leased to Tesco or Sainsburys it is on a long term lease of at least 10 years and often up to 25 years.  Do you think it will be converted back to a pub when Tesco decide to close the store, no it will become another retail unit or the site will be converted to housing in one form or another.   Once the pub leaves the building it rarely returns, its patrons move on elsewhere, other places take its position in peoples drinking habits.

luddendenfoot_coachandhorsesThere are some premises which are too big for the demand in the area they reside in, that I do admit and they will never be commercially viable again.  Locally in Calderdale at Luddenden Foot, the area now has a relatively healthy pub stock for its size with the ever present Old Brandy Wine and the Weavers serving the local population.  However a stones throw away from Weavers on the main road is the Old Coach and Horses, which has been a number of restaurants since shutting as a pub.

The place is big as I remember from eating there once, you’d need a lot of the village to fill the place.  The pub has been boarded up for at least 5 years now and is becoming an eyesore along with its cavernous car park.  I’d not object to the site being reused for another purpose, but the difference here is that its life as a pub is over, the Carlton Tavern’s was not.

 

 

Brewdog are the biggest craft brewery in the UK at the moment from a commercial point of view.  In 8 years they have grown from a 2 man operation brewing 55 pallets of beer a year to a company owned by 15,000 shareholders, turning over nearly £30 million per year and employing 360 people.   Their beer is now consumed in 55 countries across the globe.  They brewed 90,000 hectolitres of beer last year, equating to 16 million pints and this is served across 26 of their own bars in 9 countries.

These are impressive numbers for any 8 year old company, profits are up 69% to £4.9 million, slowing from the phenomenal profit rise of 383% for the the year 2013, but figures most businesses would be delighted with nether the less.  Looking below the figures (from February 2015), their UK bars are all holding their own against local competition.  One of their smallest bars, Leeds Corn Exchange turns over about £7,000 per week, whilst the larger regional bars such as Manchester, Birmingham and Liverpool are all taking at least £16,000.  It’s biggest turnover comes from their London branches unsurprisingly.with Shepherd Bush taking £21,000, way behind Shoreditch which trumps it with £27,000 per week.

Overall they take nearly a million pounds a month from their bars across the world, making up £11 million of their £30 million turnover.  This means their average bar takes at least £8,000 per week in the tills, a figure which is probably higher when you factor in bars which opened part way through the year.  No doubt the higher prices than you would pay at other nearby non craft beer pubs contribute to this turnover.  Taking their base price for Punk IPA, which from memory is about £4.25 a pint, and that this beer accounts for over 50% of their beer sales, this means each bar on average sells about 1600 pints per week when you taking into account food and snack sales.

Of course when you look at the higher turnover premises, it is no surprise that they are the bars which are the food and drink units, it is well know that wet and dry units increase their turnover and profits massively on their food margins if successful.   Their sales at Shoreditch, which is very much food and drink led are about what Marstons expect from their premium premises, so they are definitely competing with the mass market money wise.

Back to looking at the beers, their normal strength beer dominates sales with 92 pints in 100 being beers such as Punk IPA, 5AM Saint, Dead Pony Club and Fake Lager (you might know it better as This is Lager in Wetherspoons).  This is Lager /  Fake Lager make up nearly 6% of their beer sales, which means Wetherspoons are giving them probably close to £1 million per year for the beer.   That is the story of Brewdog last year in numbers, lets step back and look at the bigger picture.

I asked the question a few weeks ago regarding when Brewdog will have to make the choice of craft or mainstream when they reach critical mass, my view on this has changed.   Profit growth will continue to slow until it becomes a steady figures somewhere in the teens, size comes with costs, salaries and overheads and this will bite into those huge profit jumps.  The key is whether the owners push to try and recover bigger profit growth as a priority or accept this steady growth as the sign of a stable mature company.   If they choose the latter with care not to over saturate the country with Brewdog bars, and prioritise the quality and range of beer up, then there is no reason why they cannot stay “craft” but sell big.  If Martin Dickie or James Watt ever sold up to commercial investors, that badge would be off in an instant, these two and the “Punks” in the Equity for Punks share issue program are the key to not slipping into the mainstream camp.

As you see in the USA, size is not the definer of “craft credentials”, but it is the brewers ethos in the eyes of the public and who owns the company (there are strict rules to being in the USA Craft Club, Goose Island is no longer craft beer now it is owned by Molson Coors).  As I said 2 weeks ago, craft beer is a lot more mature in the USA than the UK, it is one of the few times it is sensible to look at the states to see how market can grow and survive with it principles intact.

This week, a catch up on the world of beer.   Lets start with the good news that the Small Business, Enterprise and Employment (New Clause 2) Bill, otherwise known as the law which will allow large pub company tenants the right to move to a Market Rent Only (MRO) agreement, where they can buy beer from a supplier of their choice (but still be mandated to stock a selection of PubCo agreed brands) has got royal assent meaning it is now enshrined in law.  The government has said that the new pub code will be amended to include the MRO legislation and the new pub code adjudicator will be up and running by May 2016.

However there is still secondary legislation to follow to deal with short term leases, franchise managers and deferral of MRO in exchange for investment by the pub company.  We have to be careful that this is not used by the PubCo’s to sneak in watering down measures which will make the act favour them more.    I would expect to see some transfer of pub assets ahead of the implementation date from those brewery linked pub operators who are just over the 500 pub limit to “new companies” who just happen to have supply deals with the same brewery, the aim being to cut their size to 499 pubs or less as to avoid being covered by the act of law.

Whilst on the topic of big brewers, Marstons is buying out the beer operations of Thwaites, the Blackburn based brewer and pub operator.   This deal is the final step of integration between the two companies as Marstons has been brewing the mainstream Thwaites brands for just over a year now.  The opening of a £10m brewery in the area producing the mainstream beers for some of its own pubs and hotels (which it will be retaining) and its craft brands is still going ahead as planned.  Marstons already owns the regional brewers Jennings, Ringwood, Wychwood, Banks’s.

The risk of course is that the range of beers from Thwaites will be reduced to a handful of core products.  Wainwright and Lancaster Bomber will of course be pushed out into the Marston estate as these are national brands.  Their Dark and Smooth keg brands should continue to be offered as well.  The Craft Dan beers which are released each month should be safe as these will stay in the Blackburn craft operation, but I’d expect a marked reduction in their quarterly beer releases, as well as more Marstons brands beers moving into the Thwaites pubs chain, a consequence of the accompanying supply deal for most wet products between the new owner and the acquired company’s pubs.

There is a link between these two stories.  When Marston bought our Jennings, Ringwood and Wychwood, they also took on their pub estates at the same time, with subsequent sell off of premises where they were not profitable enough or did not suit the needs of Marston regarding building or location.  This time they were never part of the the equation.  They were only interested in the brewing arm they already had the contracted out production for.  The classical thought is that a bigger pub estate will mean economies of scale regarding head office costs, regional administration and reduced purchasing costs due to increasing volume.   Marston are already over the 500 pub limit by a factor of three with 1500 pubs, so it would make no difference re the legislation.   Thwaites has 300 pubs so would add significantly to the size of the Marstons estate, but more importantly their pubs would be subject to the new legislation as part of the bigger group.  This way they escape the MRO / Free of Tie options which will be granted to pubs in the parent company.

Companies such as Enterprise and Punch are too big to split up into 499 pub units without significant costs.  However for those who have a similar number to Marstons, creating “North”, “Central” and “South” pub divisions would incur not unreasonable costs if it means they can avoid the legislation and safeguard their tied house revenue streams.  Industry experts predict a significant number of pubs will fall into the “managed pub” or “franchise” category when tenancies expire, something I’d not disagree with.  Pub company rent reviews are typically every five years, so we will have to wait until 2020 until the first full cycle across all of their estates takes place.  This gives PubCo’s above the limit time to manage their tied tenancy pub numbers downwards, via various methods, with the target of hitting 499 pubs.

When the Beer Orders 1989 came in the Big 6 brewers got around it with PubCo’s, the same companies will probably avoid this again, hopefully I am wrong, but I fear not.

Pubpaper 801 – The Streets (and Pubs) of London

Posted: 28th March 2015 by santobugtio in Pub Paper, Writing

Last week I had the pleasure of spending 3 nights in London, giving me plenty of time to explore the city and its pubs.  A few points for the uninitiated, you very quickly get used to the fact when you order a pint of a decent ale or beer, you will get very little change from a fiver, if that covers it at all.  It is however very easy to find a decent beer by the sheer number of pubs.  The second thing you realise is the point of an integrated mass public transport system.  I was staying out in Welling, about 11 miles outside of the heart of London, to get there or back, it takes at least 2 trains and a bus, followed by a short walk.  This takes about an hour, tube trains are every 3-4 minutes and buses every 10 minutes.  Imagine this is Calderdale, you’d be waiting for an eternity for connections, and the Oyster Card is a godsend if you ever visit for more than a couple of days.

The size of the centre of London seems quite daunting initially, but you soon get used to it and learn rough bearings to most areas, both on foot and by tube.  It makes for an interest nights drinking, the varied scenery being a big bonus after dark.  The first night I did a pub walk via Parliament Square, Soho, Covent Garden, Embankment and London Eye.  The second ended up being a pub crawl back in Soho, with the third night involving some very good food and drink in the Tower Bridge area.

deanswiftStarting with the last night, me and my host went to the Dean Swift, a craft beer bar on a side street off the river.  The beers were excellent, with a good selection from our local breweries such Summer Wine and Magic Rock and nice collection from the capitals many breweries.  The food was as good, with the jerk chicken being as good a meal as I had in the city.  The service was excellent and I’d not hesitate to recommend you visit if you are ever down there, with beers typically between £4.50 and £6 for a good real ale and craft beer.  The walk back to London Bridge station along the river gave amazing views past Tower Bridge and onto the distinctive office buildings which are dominate the skyline.

The_clarence_pub_london_may2005The first night, I started my night with a pint of Camden Hell at the Clarence just off Trafalgar Square (part of the 35 strong Geronimo Chain in the Capital).  The ale selection was also good with 4 pumps, with some solid local brews as well as a number of respectable craft keg taps.   The bar is your typical modern pub, stripped wood, but it has kept the original dark marbled frontage from 150 years ago.  The food offerings looked good as well, but my dinner that night was at a Lebanese restaurant down near St Martins in the Field where the national beer which came with the meal being pleasant but not very interesting.

dog-duck-pub-soho-london-photosThe second bar was the Dog and Duck in Soho.  I returned to this pub for dinner and a number of drinks the following night to meet up with the friend who I was staying with.  This is part of the Nicholsons chain who have 45 pubs in London (and operate 3 pubs in Leeds including the Scarborough Hotel near the station).   The first night, the beer was very average there, with the My Generation Session Pale Ale, not really standing out.  The second night there I moved onto their craft beer range and had some nice beers, although my drinking colleagues were on the real ales and seemed to have no problems with their beers.  The Ultimate Chicken Burger also hit the spot nicely for dinner, with the rest of the menu typical chain pub fare. Beers were £4.50 to £5.00 similar to the Clarence.

phot499On the way back to hotel at Old Country Hall I popped into Gordons Wine Bar (the oldest in London) on the embankment on recommendation of Hugh at Cross Keys, the inside of the bar is small, but the drinking space entirely honed out of low rounded vaults.  The wine is not cheap starting at about £6 per glass and going up to silly money.  Sadly the inside was full, so I enjoyed a glass of the “house red” on their long outside terrace area.  I’m no expert but if you enjoy your wine, sherry or madeiras , the range on offer would more than keep you happy.

The second21156640 night started at the aforementioned Dog and Duck before taking a diversion into O’Neills, the craft beer I had doing the job, before finding ourselves in Crobar.  This pub really takes it rock and metal seriously and I loved the place, the beer was a mix of decent session ales and a range of mainstream and craft beers, with slightly more reasonable prices than other pubs I visited.  A totally different atmosphere, but friendly never the less, and one I’d recommend if that is your thing.

Back to good old Calderdale next week, but for now Happy Supping..

 

 

Pubpaper 800 – Will Craft Keg exist in 10 years?

Posted: 14th March 2015 by santobugtio in Pub Paper, Writing

As a big fan of craft beer, this seems a strange question, but it comes off the back of a bet I’ve had with a local real ale pub landlord. I’ve been bet that “Craft Keg will not exist in 10 years”, that it’s fad will have passed. It is only a small wager, £10 increasing with inflation, probably enough to buy 3 pints of the stuff when it comes to pay day, but it shows that keg beer still splits some parts of the beer world.

It started with a chat about my day out in Leeds as detailed in last weeks column, and I got asked a simple question “Is Craft Keg just Keg Beer”. The answer when you take away all the branding is yes, it is beer dispensed from a keg with CO2 or 70/30 added, that is a fact we cannot deny. Is the term “Keg Beer” avoided now by modern keg beers due to its links with the late 60’s to mid 80’s homogenisation of the brewing industry and the resultant set of bland keg bitters, ales and mild beers, along with the decimation of dozens of local beer brands who were primarily cask ale producers.

12PageIMG92-5Possibly so, lets take an example, of those who have heard the “Watneys Red Barrel” or “Watneys Party Seven”, how many have actually drank it. Probably a minority percentage, but these names are well known among the beer world as what was bad about keg beer at the time. There was probably dozens of others just as bad, but Watneys is the usual sacrificial lamb for the period. Lets not forget that the 1970’s necessitated the need for CAMRA to be formed to help campaign for a stop of the decline of real ale production and pubs selling cask beer.

John_Smiths_Extra_Smooth-1368011287Keg beer was what was killing cask, so there is a historical feud going back over 40 years and still existing today with the CAMRA leadership. If you look at the mainstream keg beers in our pubs today with brands such as John Smiths Smooth, Tetleys Smoothflow, Worthington’s Creamflow and Boddingtons Draughtflow, you can see their point. These are the direct descendants of those 1970’s bland mass produced beers. There is the older generation, probably the one before myself, who went through this era and it has probably put some of them off keg beer for life and frankly I don’t blame them one iota if the current mainstream face of keg beer are the brands above.

This is where I stop agreeing with a certain pub landlord. My thoughts are that in 10 years craft keg beer will still exist and be a healthy sector of the market on trade. However a lot brands we now call craft beer or craft keg will be far more widely available across the pub estate of this country thus losing their craft tag and will just become another premium beer offering on the bar. Like now, there will of course be a large number of small craft breweries who produce small batches of beer and will be mainly available in the local / more specialist bars and shops and more will join them over the next decade although the growth we have seen in the last 10 years in brewery numbers will slow down. Such a boom cannot last forever and it will start to reach saturation point eventually.

LogoA number of brands will move into the ranks of national producers of good quality keg dispensed beer (I’m deliberately dropping the craft tag here). A prime candidate being Brewdog who are arguably the largest craft keg producer in the country at the moment and are building an ever expanding bar empire. Their beer is available across most of the Wetherspoons estate with “This is Lager”, there beer is also in most, if not all, major supermarkets. They have plans to grow even more, but the management will come to a point in their growth where they have to choose the path between remaining a craft brewery (abet a very big one) or expanding and risking becoming the mainstream.

GooseIslandLogoThe other danger to the sector is that the major volume producers will try to penetrate the Craft market and dilute the term enough to render it no value in differentiating genuine beers in that sector. Look at where Craft Keg started, in the USA the craft breweries were formed to fight against generic national brands like Coors and Budweiser. Over time they took a chunk of market share from the majors, so the big brands started to buy up the bigger players in the craft market quietly (ABInBev buying Goose Island), and are now forming separate “craft” breweries. However the regional craft keg scene is going from strength to strength still, and several players (such as Samuel Adams) are now national brands in the USA.

To see where the future might head, look to a country 10 years ahead on the craft beer path.