THOUGHT PIECE the carling team
What Bugs Me About ‘Craft’…
…is that there is no definition, yet everyone reckons they know what it means! The term ‘craft beer’ is bandied about to denote small batch, local provenance, time served expert, quality, independence and generally better. It is also used as a stick to beat the multinationals whose brewers sit behind computer screens all day while bowing to every whim of the marketing department – allegedly! If ‘craft’ is worth seeking out, why do Cask Marque assessors regularly report inferior quality of beers from small brewers across the bar?
The meaning of ‘craft’ has been well explored over the years. Beer made in ‘small’ batches using ‘quality’ ingredients with a ‘robust’ flavour. But that does not define, small, quality or robust. Contrary to what ‘real ale’ buffs may think, the multi nationals are not brewing with tram tickets and potato peelings; they take as much care over the specification of the carbohydrate they use as the smaller brewer who will be paying a lot more for his. Some customers seek out local beers citing reduced food miles and sustainable companies making genuine efforts to reduce the carbon footprint all the way from sowing the barley seed to beer in glass.
A craft is an art or a trade that requires a special, usually manual skill and is derived from an old English term which has been around for a thousand years. The same word appears in the German Kraft. Think glass blowers, paper makers, bookbinders and barrel makers who take years to gather sufficient experience to do it properly. Today the term has overspilled as a catch-all adjective to tell us that something was handmade or produced with precision in a small quantity with the emergence of craft distillers, cocktails, bakers, coffee and chocolate.
Traditional has no room for innovation so we would not have NEIPAs or pastry beers, which is the case of the latter would probably be a good thing! As beer writer Pete Brown says, cask beer is for old blokes while craft is colourful cans made by young people. I would not go along with him suggesting that it is not craft when financial decisions drive activities, the reason breweries go bust is because the cash has run out!
To work with innovative materials and methods you need a grasp of the basics so it is gratifying that over half of SIBA members have obtained a SALSA (Safe and Local Supplier Approval) registration. Audited by time qualified brewers from Cask Marque, more and more buyers from the pubcos and supermarket are demanding the standard as a basis for reliable trading. It is also good news that HIT Training is organising its 18-24 month brewer (government approved level 4) apprenticeship involving twelve workshops at the University of Nottingham, the IBD General Certificate, a mentored at-work course of study and a final assessment by a time served brewer. Some 70 breweries are involved, 22 apprentices are now qualified with another 115 underway. Remember the Certificate of Brewing Competence from the old Incorporated Brewers Guild, it sounds very similar? I remain unsure whether a 14 day intense course at Brew-School fully equips the proto brewer for everything which the future may throw in his direction.
The phrase ‘craft beer’ was apparently first used by the Seattle Post – Intelligencer in the mid 1980s soon after the first micro breweries appeared in the West of the States. Fritz Maytag rescued the ailing Anchor Steam Brewery in San Francisco in 1965 while Jack McAuliffe was the first true micro with his New Albion Brewery in 1976. 1978 was the low point of US brewing with just 42 brewing companies in operation. Then the following year President Jimmy Carter removed the tax and restrictions on home brewed beer so many home brewers started dabbling. Ken Grossman opened a home brew supplies shop, learned to weld and founded Sierra Nevada in 1980, Bert Grant opened his Yakima brewpub in 1982, the BridgePort brewpub started in 1984 and Jim Koch (Boston Beer) in 1985. Since those early heady days, growth has been rapid and, despite Covid, sustained so there are over 9000 at the latest count. 2021 saw 710 openings and 176 closures.
The sector has done well and now brews over 12% of the nation’s beer. Boston Beer and Sierra Nevada have thrived now sitting at number nine and ten in the overall US volume stakes producing 1.75m US Barrels and 1.25m respectively (both from three plants) but admittedly some way behind the top three with Anheuser Busch at 78m, Molson Coors 43m and Constellation (Corona) at 23m.
We look at the States as its Brewers Association which looks after ‘craft’ interests has attempted a definition. To be a craft brewer, you need to be small which means below 6m barrels annual output and independent which means no more than 25% of the equity is owned by an alcohol producer which is neither small nor independent. So US craft brewers are not necessarily small. The upper limit crept up from 2m in order to keep founding father Jim Koch at Boston Beer within the fold as he branched out into hard teas, hard ciders and hard seltzers. Boston produces more of these products than beer these days
There was once an attempt to define traditional materials and methods which members could use. These foundered when potential members pointed out that rice and corn were indeed traditional American materials and had been in use for well over 150 years. Although American light lagers are not as robust as West Coast IPAs, brewing them demands just as much care as heaving over 800g per hectolitre of Simcoe and Citra into the copper in an attempt to obliterate any contribution from the other materials or indeed illicit microbiological activity! Thus more breweries were added including America’s oldest (1829) and currently the largest craft brewer, Yuengling at 2.6m bbl.
Success brings the attention of the big boys who can promise improved distribution capability and materials purchasing power. Anheuser Busch has quietly mopped up a number of smaller brewers under its ZX Ventures arm, Molson Coors masquerades as Tenth and Blake while more recently Japan’s Kirin has been active under its Lion umbrella buying New Belgium and Bells, which now have to disappear from the list of craft brewers.
The growth of small brewers is not of course confined to North America, The UK, despite Covid may still have over 3000, France has 1450 while innovation may be somewhat constrained by the Reinheitsgebot, Germany has 853. Italy has 872 and Switzerland a massive 933. In the UK the sector got a leg up in 2002 when Chancellor Gordon Brown introduced Progressive Beer Duty (Small Brewers Relief) using an EU model which originated in Bavaria. Up to 5000hL, small brewers pay half the duty rate which tapered up to 30,000hL when full duty would be payable. That upper limit was extended to 60,000hL in 2004. The rate is not linear with a 25% discount at 10000hL and only 12.5% at 20,000. The cut was designed to allow smaller brewers to invest in plant, vehicles, equipment and perhaps even a small laboratory. The number of small brewers then increased dramatically but the rate of growth has now slowed and that is not all due to the present pandemic.
The British Beer and Pub Association (BBPA) says that in 2019 there were 47,200 public houses in the UK. That is a 22% reduction since 1990. Today 23,400 of these pubs were independent, 13,900 are owned by Pub Companies and 9,900 were brewery owned. Back in 1990, brewers owned 69% of pubs and 31% of pubs were independent.
We all know it is a competitive market out there and immediately post SBR the large pubcos were negotiating discounts from the smaller guys which quickly eroded the new increased margins. Protest was pointless as there would always be a competitor willing to practically give his beer away. Some micros deliberately remained below the minimum 5000hL saying expansion beyond that was uneconomic thus constraining growth. The Independent Family Brewers were not happy either and some joined SIBA to try and influence the policy. They wanted the ceiling raised to 200,000hL as allowed for under EU legislation. Rupert Thompson at Hogs Back went on record saying that the wholesale price of cask beer had not moved in real terms for the last ten years. Customer choice may have increased but the price of a pint of cask ale in my local is £3.55 while a pint of standard keg lager at the same %ABV is £4.40. Cask Marque is currently collating national information supporting its view that cask beer should be a premium product in view of the increased care needed in its production and dispense and should be priced as such. It is a moot point whether a premium price will improve quality across the bar!
Some work by Trembler and Trembler in the States in 2005 plotted the production cost per barrel against output and showed that economies of scale continued in a linear fashion up to one million barrels where costs flattened out. It is strange then that the HM Treasury did not agree and went the other way. It has proposed that the lower limit be reduced to 2100hL and was not minded to extend the upper limit beyond 60,000hL. 2019 figures from the BBPA show 1810 brewers below 5000hL, 150 up to 60,000hL, only 12 up to 500,000 and eight above that.
A lot of fuss involving less than two dozen brewers at the top end and perhaps 150 at the lower. Of impact to the whole drinks industry are proposed changes to the duty banding system to level up the rates paid by different types of alcohol. Why should sparkling wine be higher taxed than still, why should fruit ciders be taxed more than their 100% apple cousins? Why should RTDs made from spirits cost more than the equivalent sucrose solution fermented in the brewery? Why should high strength loony ciders pay 7p a litre duty while the same strength beer has 29p? Then there are fortified wines which pay 20% less than beer (if you can get it to 15%ABV) and 30% less than a spirit. Overall there are 15 rates – three for beer, four for cider, seven for wine and made-wine and one for spirits with tax based on volume, litres of spirit and hectolitre %ABV for beer. Consultation is currently ongoing for a long overdue simplification based on litres of pure alcohol.
It began in 2020 and the Government plans a standardised series of bands, 1.2- 3.4% ABV, up to 8.4%, up to 22% ABV and above 22% ABV. Above 8.5% there will be a standard rate across all categories of £25.88 per litre of alcohol and above 22% of £28.74 which is the same as the current rate on spirits. Beer will pay £19.08 between 3.5 and 8.4% which is the same rate as on today’s band of 2.9 -7.4%. Cider will be taxed on alcoholic content based around on average strength of 4.6%ABV and will be £8.78 per litre of alcohol, still a lot lower than beer. The wine band is unchanged at 11.5%ABV but a robust Shiraz at 15% is going to cost more.
There is also a provision for lower tax on cask and keg products going into the on- trade. Beer will then pay £18.13 and cider £8.34 provided it is between 3.4 and 8.4%. The proposals currently demand the container size is higher than 40 litres, which is a firkin, forgetting the plethora of 30L kegs out there for specialist products and pins which help mid-week cask trading to finish a container in less than the limit of three days. Hopefully industry pleas will be listened to. Consultation continues and legislation will be drafted for the 2022 budget for implementation in February 2023.
As a parting shot. Is BrewDog with a fully automated brew plant and an output of over half a million hectolitres still a craft brewer?