This post may not be about what you think it is, but then it might be, lets be ambiguous; much like craft beer is. There is no agreed definition of craft beer in this country. Some of the countries biggest names tried to come together to define it but failed. BrewDog, Beavertown, Camden and Magic Rock created United Craft Brewers with the aim of defining craft beer in this country. This is Ironic given that, following the news on Friday that Magic Rock had completed a 100% takeover from Australian giants Lion (who also own Four Pure), that each of these companies, barring BrewDog who sold 22% of their business to a private equity firm, is no longer independently owned.
So what is craft beer? It is a genuine question. Is it simply a marketing term, or does it refer to a style of beer? Is it to do with the size of the brewery (as in America) or is it something else? Let me know what craft beer is to you, it would be interesting to hear what that means to you. I know what it means to me. I raised this query in a group for independent bottle shop owners on FB and there was disagreement on there, so even those who sell it do not agree.
Indepenent Craft Brewers
As mentioned, Lion group purchased Magic Rock last week adding to their acquisition of Four Pure last year. To give you an idea of who Lion are they also own Castelmaine XXXX, Tooheys and brew Beck’s, Heienken, Guinness and Stella under licence in Australia. They are themselves owned by Kirin Holdings, a Japanese company who make a whole swathe of alcoholic and non-alcoholic beverages, Pharmaceuticals and Bio-Chemicals. Very craft beer.
In light of this information would you say that Magic Rock and Four Pure are craft beer? If they are still brewing the same way creating the same great beers that we know and love, will they still be craft in your view?
In the statement released on Friday, Lion said that they were still on the lookout for more opportunities to purchase UK craft breweries; and they wont be the only ones. Beavertown sold 49% of their company to Heineken, Fullers have sold to Asahi, Camden are owned by InBev and there are many more.
What is the issue
For me there are two issues, one of which you may view as self-serving but I clearly have my own interest in this industry.
The first issue for me is transparency. For some craft beer drinkers, it is about supporting small independent brewers who are doing their own thing. People want to support small passionate brewers, and not be putting money into the pockets of executives. Obviously, there are still loads of these around. However, those who are labelling themselves craft when they are actually Heineken/Castelmaine/Asahi by another name are pulling the wool over consumers eyes. For the discerning and informed customer this is not a problem as we see through their marketing. For those less informed this could be viewed as a deception. You could argue that if the beer is good then what is the harm, it’s a fair point, but for me as an independent shop owner it is damaging in another way.
The race to the bottom
As a result of these takeovers we are seeing more and more craft beers appearing in supermarkets, this is inevitable and great for consumers. The problem with supermarkets is that they have a lot of buying power and are more than happy to sell items for zero profit; as indicated in this tweet from Hop Burns and Black, a fantastic London independent bottle shop. When these companies, with huge financial resources, take over breweries and get their beers into Supermarkets, who also have huge financial resources, it results in a race to the bottom in terms of pricing. They can take the hit, and the do so for one reason. To kill the competition.
For the consumer this is fantastic news. You can now buy Magic Rock Cannonball at less than I can buy it trade. But what does that mean in the long run. Well for people who see those beers so cheap and then come into my shop it makes me look hugely overpriced. That means I lose trade, will get a reputation for being overpriced and, if comes to the worst, we close. Okay that is a bit dramatic, but it’s not completely unfounded.
This is what the supermarkets want. This tactic is exactly what their business model is about. They did it to the bakers, fishmongers and butchers and perhaps the bottle shop is next. Their goal is to monopolise the market, in as much as they are allowed, and it is always the independent businesses that suffer. Once they have driven prices so low that the independents are gone, prices will steadily increase. This will encourage more independents to open, maybe do okay for a year or two, until the supermarkets notice a slight drop in their millions and drop prices again. And round and round it goes.
Oh yeah, when they do big discounts at Christmas and other important dates of the year it is not their way of thanking you for being a “valued customer”. They know these dates are incredibly important to small businesses and can literally make or break their year. The more trade they can steal from independents at these times by offering insane discounts the better. A bad Christmas, Mother’s Day, Valentines day etc. could be the nail in the coffin for a struggling small business.
Am I part of the problem?
Short answer is yes. I shop regularly at supermarkets, we do our weekly shop at one and always have done. Money is tight, guess what I am not a wealthy man, and I know that this is the same for many of you. However, little changes can help. We have started to purchase our meat and fish from independent businesses as much as possible, and already buy all our bread from independent bakeries (I also get my alcohol from one as well, but that’s cheating). I do not eat at chain restaurants, unless there is no other option. It is a small gesture but it really helps, I can tell you that as a small business owner.
Every time someone comes and buys something from me I am genuinely happy. I appreciate every purchase and when someone comes in and makes a larger purchase it can literally make or break my day. This is not emotional blackmail, I am just giving some perspective. To look at it another way, by spending money locally you are also helping to boost the local economy and your local community. Figures show that money spent in local businesses is far more likely to be reinvested in the local community. The chief executives of the major supermarkets don’t give a shit about your local community and you are nothing but a figure on a spreadsheet to them.
Back on track…
So what is craft beer? You tell me.