Why the Micropub Association should be furious with Camra

The Micropub Association should be absolutely raging with the Campaign for Real Ale. Because under the misguided idea that it is “saving” the British pub, Camra is trying hard to make sure no new pubs ever get opened again.

Once again this is a case of not properly thinking through the implications of a proposed policy. What Camra wants to do is to try to make it much more difficult to close pubs (more on why that’s a stupid idea later). So why will making it more difficult to close pubs also make it much more difficult to open new pubs, in the way that the Micropub Association has been doing so successfully over the past few years, at a rate currently running at two a month (a better new pub opening record, afaik, than any pub company is currently achieving.)

The problem is that the restrictions Camra wants to put in the way of anyone trying to shut a pub means that landlords will be extremely reluctant to let their property be turned into a new pub. And similarly banks, building societies and other lenders will be deeply unwilling to give anyone a mortgage to buy a property they want to turn into a pub. Why? Because if the new pub business goes nipple-skywards after a year or three, the landlord now has a property that, under Camra’s proposed rules, needs planning permission to be turned back into something other than a pub. So instead of speedily being able to find another tenant, the landlord now has to go through the expensive and time-wasting procedure of getting the building “depubbed” again before it can once more become a coffee shop, an opticians or whatever. Similarly the potential mortgage lender is not going to want to risk having to repossess the building that housed a failed new pub business, and, again, having to find the staff, time and money to put in a planning application (do you know how long it takes to get a planning application through?) for change of use so they can then flog the place to a non-pub user. So – finance for people wanting to open new pubs is going to dry right up, because Camra has a dumb idea it thinks will help pubs stay open.

Indeed, the first move should anything like Camra’s “planning permission to close pubs” idea approach the statute books will be a rash of pub closures, as pub owners shut their marginal pubs before they have to seek local councillors’ permission to do so. But even if such a law did come in, does anyone seriously believe it would prevent a single pub from closing? Of course it wouldn’t. And trying to preserve failing pubs in aspic is a remarkably dumb idea anyway, because the ultimate effect is to damage successful pubs by depriving them of business they deserve.

The whole idea that pubs need special protection is nonsense, anyway, as I have frequently argued. Pubs are not sacred. The rights of pubgoers do not trump the rights of property owners. The disappearance of any pub is not the same as, eg, the disappearance of a Saxon church. Pubs are, and have always been, “churned” all the time: one closes, another one opens. (It may surprise you to learn that JD Wetherspoon has closed more than 100 of the pubs it has opened over the years). If a pub is making less money for its owner than it would under another use, the owner must have the right to maximise their income. If a pub closes, and a community feels it needs a pub, let someone open a new pub, in a more viable site with fewer overheads. Except that if Camra has its way, opening that new pub will be much more difficult.

Camra can’t even get its own arguments straight. It complains about pubs being turned into shops and then declares that “69% of all adults believe that a well-run community pub is as important to community life as a post office, local shop or community centre.” So – shops are important, too! Indeed, the reason why so many pubs are being turned into shops is because to many communities, local shops are MORE important than pubs, in the sense that more people use their local shop and spend more money in it, than use their local pub. I would guarantee you that any pub turned into a Tesco now has a wider selection of the community crossing its threshold, more frequently, than ever happened when it was the Duck and Dive, or whatever. Most pubs have a remarkably low number of real regulars, and the importance to the community that Camra ascribes to them in the 21st century is a product of sepia-tinted nostalgia for the times before the last old maid bicycled to Holy Communion through the mists of the autumn morning (G. Orwell).

If there is one single thing that would increase the chance of survival of the British pub – and I won’t yield to you, Camra or anyone in my desire to see our pubs strong and thriving – it would be a dramatic improvement in the standard of cask beer served in those pubs. Cask beer is (or should be) the unique selling point of our pubs, and Camra would do a far better job thinking up ways to improve the quality of our pints than inventing stupid tweaks to planning laws that won’t work, and will actually have a seriously detrimental effect on the efforts of people like the Micropubs Association trying to open pubs of just the sort Camra members approve.

How much is a pub worth? The Lib Dems don’t know

I don’t like people telling me what to do: very probably you are the same. I don’t just get angry at people telling me what to do: I also get angry when people try to tell other people what to do, arrogantly and without cause, people like James Watson, who holds the position of East London Pubs Preservation Officer for the Campaign for Real Ale.

I live in a nice Edwardian house that has a covenant in the original deeds which declares that it can never be used as licensed premises. Do you think that’s wrong? I think that’s wrong – it’s my house, and within the limits of the law, I should be able to do what I like with my own property. If I want to turn it into a freehouse called the Duck and Dive, then – provided I don’t inconvenience my neighbours more than is reasonable – that should be my right.

Turn that covenant on its head, and any major restriction on my right to do what I like with my property within the bounds of the law applies just as much – that is to say, if there were a covenant on this dwelling saying it could only ever be used as a pub, that it must be a pub for all time, that would be just as wrong. It’s mine, I own it – don’t tell me what to do with it.

James Watson, however, disagrees. A gentleman called Sandeep Johal has bought an old Victorian pub called the Prince Edward, in Wick Road, Hackney. I’ve never been in it, but from the outside it looks like a pretty typical East End boozer. Mr Johal wants to knock it down, and build a five-storey block of nine flats in its place. He owns it – it’s his property, and within the law, surely he should be permitted to do with it what he likes. Nine flats in Hackney – sit down now if you’re reading this outside London, but flats in E9 can go for anywhere between £500,000 and £750,000 each. I’d guess that even after the cost of acquisition and building, Mr Johal would be looking at a profit of £3 million or more, minimum. Is anyone going to pay him £3 million more than it cost him to acquire the Prince Edward, just to keep it open as a pub? Is he going to make £3 million in rent in any time under 30 years if it continues to run as a pub? (Clue – no, twice.)

Hackney in the days when there were more sheep about than hipsters

Hackney in the days when there were more sheep about than hipsters

Mr Watson says otherwise. He told the Hackney Citizen “The only reason [Mr Johal] wants to bulldoze this pub and build flats is for short term financial gain for himself” – James, you’re saying that as if it’s a bad thing – “at the expense of this community, and as a representative of a consumer rights organisation that champions responsible drinking, I think that stinks.” As a member of that same consumer rights organisation, and as a strong supporter of responsible drinking, I can’t see what either consumer rights or responsible drinking have to do with someone’s right to do with their own property what they want to.

According to the Hackney Citizen, Mr Watson then went off on a rant against hipsters, apparently based on the fact that the Prince Edward’s customers are largely working class and, in considerable part, of West Indian origin. The Citizen quotes Mr Watson as saying: “The problem with gentrified hipster Hackney is that you leave other people behind. You leave behind working class, dare I say poor, downtrodden people. [You may dare say, James, but I fear you sound like a pretentious, patronising prat for so daring] These are salt of the earth people who are not going to pay £5.50 for a bottle of craft beer. They want to be in a place where they recognise the food offering. Many of these people’s parents and grandparents have been coming here and marking their life events here for years. They are almost the forgotten people of Hackney, but these people are council tax payers and they have been here a lot longer than the hipsters.” There you are, Mr Johal: the rights of the people to eat sausage, egg and chips and drink cheap beer trump your right to do what you want with something you bought.

I love pubs, and I hate pub closures just as much as James Watson hates pub closures. (I quite like hipsters, though – I like the way they’ve brought the dimpled beer mug back into fashion.) I’m as sorry as James Watson is that the people of Hackney look like losing a place that has been a part of their lives since the 1860s. But the idea that because a building is or has been used as a pub, that makes it special and privileged, and deserving of protected status is nonsense. It’s just the same nonsense that saw the self-styled “pro-pub party”, the Liberal Democrats, pass a motion at their spring conference in York a couple of weeks ago under the title “A Better More Sustainable future for British pubs”, proposing to give pub tenants the right to buy their freehold at an independently assessed market value if their pub company puts the site on the market. But “market value” as what?

A premises might have a market value of £500,000 as a pub, since the returns on its usage as licensed premises would only support that valuation, but a value much more as a supermarket, if the returns on its use as a supermarket supported that value, and a value of millions if it was a suitable site for conversion into a block of flats. If the law the Lib Dems want brought in says the tenant can only buy his pub’s freehold at a price that reflects its higher value as a supermarket, or a block of flats, then if he buys it, he is going to struggle to cover his costs trying to run it as a pub. If, on the other hand, under the Lib Dem proposals, he can buy it at its value as a pub, but it is still worth more as a supermarket, or a block of flats, the first thing any smart tenant will do is flog the pub to Tesco, or a property developer, himself, thus (1) transferring hundreds of thousands of pounds of value from pubco to tenant and (2) still losing the “community” an “asset”. Is this really what the Lib Dems want?

The debate about “protecting” pubs from closure is conducted as if there were only a finite number of sites capable of ever being pubs, and every pub that becomes a supermarket, or a private home, or even a coffee bar means a permanent reduction in the number of pubs there could ever be. But this is total nonsense, of course: even in the days when it was much harder to open a new pub than it is now, Tim Martin, to name just one entrepreneur, was putting up his signboards on premises that had all sorts of previous uses: banks, cinemas, shops, post offices, and the rest. The same process is still going on, all around the country: the micropub movement, for example, has seen pubs open in premises that were formerly, to pick just a few examples at random, a butcher’s shop, an antiques shop, a taxi firm’s offices, a hairdresser’s, a dry cleaner’s, a pharmacy, a tattoo parlour, a kitchen showroom, a bookshop, a launderette, a bakery, a health food shop … you are, I’m sure, getting the picture. There are even a couple of micropubs opened up in premises that had been pubs originally, but which had closed 80 or 100 years ago. If the will, and the demand, is there, pubs can spring into being almost as easily as nail bars and tattoo parlours, kebab outlets and coffee shops.

Pubs don’t need their existence protecting by legislation because, as has been demonstrated hundreds of times over the past couple of decades alone, if the demand is there a pub will arise, and if the demand isn’t there, a pub will close. People get emotional when they read headlines that say “Village loses its last pub”, but almost every time the pub is closing because villagers aren’t using it in sufficient numbers – and if there really is genuine demand, there is little or nothing to stop a village entrepreneur opening a new pub, micro or otherwise, to replace the one that is closing. A pub is not an irreplaceable asset, the way a Norman church is.

If a pub is truly an “Asset of Community Value”, as defined by the Localism Act of 2011, then the community will be showing how much it values that asset by walking through the door and spending enough money every week to dissuade any pub owner from closing it. Truly thriving pubs, pubs that make more money as pubs than they would do as anything else, don’t need protection. It will be argued that many pubs would thrive without the overheads of the pubco on their backs: but this ignores the very considerable support, visible and invisible, the pub receives from the pubco, and the fact that any tenant buying a pub from a pubco won’t be getting that support and will now have the overheads of his new mortgage-provider on his back instead. It will be argued that some pubcos, desperate for money because their bondholders are putting the squeeze on, will sell even a thriving pub to a supermarket if it can get that quick hit of much-needed cash from the sale. But again, just as nobody will run a pub if they can make more from it as a supermarket, a supermarket operator isn’t going to run a supermarket in premises that would genuinely make more as a pub.

It will also be argued that in places like Hackney, the price of property is a threat to every pub, that the money to be made from redeveloping each and any pub site into blocks of $500k-a-pop flats means even the most thriving pub is in need of protection. That may be true, though I note that even around Oxford Street, where rents are truly shocking (this is no hyperbole – I saw a room full of experts literally gasp a couple of weeks ago at the news that the rent on an Oxford Street restaurant site was £2.3 million a year), pubs still manage to stay open. But I still don’t believe that if a building is a pub, it must be a pub for ever: I cannot see how somewhere that was operating as a nail bar, for example, suddenly becomes privileged because it has been turned into a pub. And I strongly believe that the only results of the Liberal Democrats’ new policy would be either to persuade some pub tenants suddenly able to buy the pub a pubco wants to sell to try to keep unviable pubs going at their own expense, with every likelihood of failure, or to rob pub owners of much of the value of their pubs and hand it to tenants for nothing, while still ending up with a closed pub.

(Parts of this rant appeared on the Propelinfo.com site on March 14 2014)

Moral panics, Tim Martin and motorways

Did you see the news? It was in all the papers last week, and on TV and radio too. Apparently someone’s opened a pub within less than 750 yards of a road.

Journalists, I’m sorry to say, love a moral panic. If we can get someone to be vocally outraged, our day is made. And there were plenty of people delighted to be vocally outraged over the opening of a Wetherspoon’s pub at a motorway service station. You would think Tim Martin, Wetherspoon’s bemulleted founder and chairman, had set up a stall on the hard shoulder of the M40 and was handing out free tequila shots and pints of wine.

A pub by a road

The Old Crown, Highgate, Middlesex, a pub alongside a road

Now, the point about this particular motorway service station is that it’s not actually ON the motorway – it is, indeed, all of 750 yards away, as the roadkill-sated crow flies. You have to pull off at Junction 2 and drive for a couple more minutes before you finally get to the Hope and Champion pub. It is because the pub is also accessible from the A355 that it was allowed to be built. Places serving alcohol at service stations only accessible from a motorway are still banned.

But the substantive point is, of course, that the Hope and Champion is no different from almost every other pub in Britain, in being by, near or actually on a road of some sort. Even mainland Britain’s most isolated pub, the Old Forge at Inverie, has a road running past the front door, though it doesn’t actually connect up to the rest of the country’s road system. Pubs have been opened alongside roads since Anglo-Saxon alewives stuck bushes on poles outside their hovels to indicate that a fresh brew was available inside. Plenty of pubs – hundreds, if not thousands – are still open alongside fast main roads, like the famous Ram Jam Inn near Oakham, a landmark on the A1 for generations of motorists. You can (or could – apparently it’s boarded up right now) drive out of the Ram Jam Inn’s car park straight into the A1’s northbound carriageway, where the speed limit is just the same (for cars, at least) as on a motorway: if you’re not paying attention, a 38-ton artic may leave its imprint on your boot. It’s a lot more dangerous than joining the M40 after leaving the Hope and Champion.

So where is the recognition that if you have hundreds of pubs like the Ram Jam Inn, then you can’t create a fuss about the Hope and Champion? Swamped in a sea of illogical spit-and-fury. The RAC declared that with a pub now open at a motorway service station, “the temptation to drink and drive can only be increased by easier access to alcohol,” without, apparently, considering that there is already easy access to alcohol for drivers in roadside pubs north and south, east and west. The safety campaign group Brake declared: “The opening of a pub on a motorway is deeply concerning, and presents a potentially deadly temptation to drivers,” without saying how the Hope and Champion is any more of a potentially deadly temptation than the Ram Jam Inn was to drivers on the A1, or the old Bull at Stanborough, near Welwyn Garden City, whose visibility from the A1(M) saw it featured in a 1980s TV ad, or the Royal Oak, Farnham, a Chef & Brewer pub about three minutes’ drive down the A355 from M40 Junction 2 and thus barely more inconvenient for motorway drivers tempted to get lashed than the Hope and Champion is.

The stupidest, most crazed response came from Sky News presenter Eamonn Holmes (well, the man’s an idiot anyway), who managed to call Wetherspoon’s PR spokesman, Eddie Gershon (very nice man, Eddie) the “devil in disguise” in a rant on TV, proclaiming that a pub would change a “perfectly nice” motorway services into “a scenario of hell”. It’s probably too cheap to say that for any rational human being, a motorway service area already IS a scenario of hell, but Holmes’s argument, apparently, was that coaches would pull up full of revellers from stag or hen’s parties, or football supporters. “One coach will pull in with a load of football fans, then a second coach will pull in with rival fans. What will happen then? You’re putting temptation in people’s way. You’re the devil in disguise – aren’t you? You’re offering a scenario of hell – are you not?” he frothed at Eddie G, who was far calmer than I would have been, and failed to call Holmes out for being an idiot who had apparently forgotten that coach parties of football supporters (1) have hundreds of other pubs with large car parks to meet their rivals in, and (2) won’t necessarily require alcohol for it all to kick off anyway.

The Spaniards, Hampstead

The Spaniards, Hampstead, another pub by a road

What is even more frustrating than the illogicality of these arguments, and the willingness of newspapers, TV and radio programmes to give people space to promote these ridiculous claims, instead of slapping them about the head and telling them not to react as if drivers are like toddlers at a supermarket check-out, who can’t resist grabbing for the bad-for-you goods on display, is the framing of the debate about the availability of drink once again as an argument solely about intoxication and its evils. It’s something the whole drinks industry, from producers to retailers, colludes in, and it’s why personally I believe setting up the Portman Group was an extremely bad idea, because its existence plays to the anti-alcohol lobby’s agenda-setting. By banging on about “responsible” drinking, the drinks industry’s own warrior in the “alcohol awareness” wars destroys the main argument for drinking: that it’s fun. No one is ever allowed to say that drinking is fun, because fun and responsibility don’t mix.

Which means that another recent news item, one that ought to have been a powerful weapon in the fight against the sort of wowsers who rage against pubs being opened near roads, has been largely ignored, because it doesn’t fit the anti-drink message, and the pro-drink lobby seems too frightened of the puritans to pick it up out of fear that they’ll be accused of encouraging drinking whose primary purpose is other than being “responsible”. I’m talking about the discovery by the Medical Research Council in Scotland, reported two weeks ago, that a pint in the pub with friends is good for a man’s mental health. Well, of course, you are saying, that’s obvious. But having a proper study point up the positive sides of drinking is such a change from the torrent of negativity about alcohol normally corroding the public debate that the industry really should be making much more of it.

The researcher behind the study, Dr Carol Emslie, said: “We have to understand drinking is pleasurable, it’s sociable, it’s central to friendships. If you ignore that part of it then you are not understanding the context in which people drink. You’re drinking together, you’re laughing and joking and it’s uplifting. It helps you to open up and relax. It was very much the idea that alcohol or drinking in these communal groups had this positive effect on your mental health.” Exactly. But could we ever see an ad campaign that said: “A pint with your pals – it’s good for your mental health”? It may be true, but nobody seems to want to say so.

Of course, the anti-alcohol army, unable to dismiss a properly conducted piece of research completely, still tried to sneer. Dr Evelyn Gillan, chief executive of Alcohol Focus Scotland, told The Scotsman newspaper: “Drinking together in the pub may be a positive way for men to build relationships and seek support from each other, as long as this isn’t at the expense of a damaged liver or other health problems.” Please, Evelyn, lighten up. Have a drink.

Still, at least the public are generally more sensible than Sky TV presenters. A survey by the local newspaper in Bucks asked people: “Should the Wetherspoon’s M40 pub at Beaconsfield be allowed?” At the last looking, the response was 83 per cent saying “yes”, with just 17 per cent saying “no”.

A slightly shorter version of this rant appeared on the Friday Opinion page of the Propel Info websire on Friday January 24 2014.

The words nobody wants to hear about the on-trade

Get out the pitchforks and the blazing torches: I’m about to talk again on the subject of pub companies and their tied tenants.

Pint-holding lionThe trouble with trying to have a rational debate about the tied pub system, where pub tenants have to buy their beer from a list provided by the company that owns their pub, is that a fair number of pubco tenants have lost a great deal of money trying to run their pub, and, understandably, they’re angry – very angry. Naturally, they’ve looked around for someone to blame for their losses, and the obvious culprit, as far as they are concerned, is the pub company. Clearly, they say, if the pub company had not been charging them so much rent for the pub, and so much extra for their beer than that beer costs on the open market, then they would have been able to make a success of their business.

If anyone tries to suggest that maybe the pubco isn’t totally responsible for their failure as pub-running entrepreneurs, that person will be subjected to howls – screams – of outrage and fury. The pubco, its failed tenants will insist, is a scam, a conspiracy designed to rip off people who only want to make a reasonable living and who are prevented from doing so by the despicable activities of the company that owns their pub and conned them into signing a lease on it. You, however, for daring to suggest anything otherwise, are (and this is only a selection of the names I’ve been called in the past couple of weeks) a writer of “inaccurate, delusional gumph”, “peddling, paid or not, pubco propaganda”, a “lazy sofa-lounging beer blogger” (I like that one – I might have it printed on a T-shirt), “a zombie”, “a lazy journo who can’t grasp the subject”, someone who “very obviously [doesn’t] know what you’re talking about, either that or you are a liar”, “arrogant, patronising, blinkered and myopic”, and “a denier, a make believer, a fantasist”.

However, it’s clearly nonsense to suggest that the pubco model is responsible for every operator of a tied tenanted pub who goes belly-up, when you consider the following simple fact: one third of all small businesses – regardless of the sector that they are in – fail in the first two years. You would expect, therefore, even given the cushions that tenants of pub companies have around them (the cheap start-up costs inherent in someone else leasing you the premises in which a going business is already running, free training on how to run a small business, free advice on tap from the pubco BDM, or business development manager, assigned to them to help out, help with promotions, discounts on everything from insurance to Sky TV, and so on) that a considerable number are going to crash quickly, simply because that’s what small businesses do.

Even if they get through the first year and are beginning to succeed, counter-intuitively, perhaps, it is when very small businesses start to expand that they are most in danger. According to the credit monitoring company Experian, when a business grows to six to 10 employees, the flexibility it benefited from as a micro-business starts to disappear. Fixed overheads become greater and cash flow starts to cause more serious issues if not carefully monitored. From cases I have studied, it is cash flow that seems to do for most, if not all pub tenants whose businesses collapse: not having the ready money to pay the VAT man, the rent, the bill for the beer, the power companies and so on. Indeed, cash flow problems probably cause most small business failures: I had a mate who ran a micro-brewery in Hertfordshire, and his business went under because, although on paper it was profitable, his cash flow was wrecked by pubs not paying him for the beer he had delivered, and the taxman wouldn’t wait for his own slice.

Continue reading

In praise of Ted Tuppen

It is a truth universally asserted, at least in the comments section of the Morning Advertiser, that Pubcos Are Evil, their business model consisting solely of luring the naive into their sticky webs, where, entrapped, the poor victims can be sucked dry of all their money and spat out, poorer and sadder. All their policies, the pubcos’ highly vocal opponents proclaim, from charging their tenants more for their beer than the cost of that beer to freehouses to the ways they deal with struggling publicans trying to stay afloat, are Evil, Evil, Evil. Pubcos, the antis assert, should be broken up, or at the least highly regulated, with the dreaded beer tie taken away.

Ted Tuppen as Gabbitas

Ted Tuppen creeps round the wood one way …

Now, there’s no doubt that one model, the highly leveraged pubco, turned into a slow car crash, as running up billions of pounds of debt to buy thousands of pubs and grow as big as possible turned out to be an OK plan in an economy that was doing well, but an absolutely dreadful idea in an economy that was tanking and with income from pubs  falling.

But it doesn’t need much analysis to realise that the idea that pubcos constantly, cruelly and deliberately exploit their tenants, that they maximise the tenants’ pain for their own gain, is nonsense. The best, most efficient way for a company owning pubs to make the maximum amount of money is to ensure the people running its pubs make the most money they can, too. A failing tenant is no use to any pubco – indeed, every tenancy that fails costs a pubco thousands of pounds, in lost revenue and lost rent, plus all the associated expenses of closing a pub up temporarily, finding new tenants, dealing with the fall-out and so on. Pubcos, I can tell you, because I’ve talked to them about it, invest much today into trying to attract the best possible tenants, and providing them with training and support.That’s rather more than used to happen 30-plus years ago when it was the big brewers who had all the tenancies, and too often all they wanted to see in a prospective tenant was a pulse and a deposit.

Stephen Billingham is Thring

… Stephen Billingham creeps round the other way

Yes, you can point to cases, some of them high-profile, that show pubco tenants who have put huge efforts into their pubs, and subsequently crashed and burned, with, allegedly, only hindrance from their pubco. But I’d bet on most/nearly all pub failures being down to people simply not having all the necessary talents to run a pub: as I am about to assert several more times, it doesn’t make economic sense for a pubco to do anything other than put as much effort as it can to keeping a tenant on the road and a pub open.

The claim is that the big pubcos take an unfair share of the profits made by the pubs they own, that they make “huge excess profits” by forcing “the publican and ultimately the consumer” to pay high prices for the beer they buy. But there is no evidence I know of that beer in pubco pubs is more expensive to the consumer: how could it be, for very long, when the consumer is free to go where the beer is cheapest? Nor would it make business sense to restrict the choice of beers in a pubco pub compared to free-of-tie houses, if a wider choice of beers gives freehouses a business advantage over pubco pubs, because once again pubcos would be damaging their own revenues by driving customers away through restricting beer choice. And, indeed, the evidence is that even tenants of the biggest pubcos can choose from many hundreds of different beers from several hundred different breweries. Oh, and there’s not a lot of evidence right now of “huge profits” at the pubcos, though that, of course, is down to trying to pay down the huge debts the bigger ones accumulated when they were expanding. Continue reading

BrewDog couldn’t be more wrong in wanting an ‘official’ definition of craft beer

Ancient Order of Frothblowers“Never be afraid to be controversial” is less a statement of policy and more like a reason for living, as far as the BrewDog guys are concerned. Last week James Watt, the brewery’s co-founder, put up on his blog an impassioned argument putting the case for an “official” definition of craft beer to be adopted in the UK. Below is my response, published originally over at the day job, showing how he’s completely wrong.

I won’t yield to anybody in my admiration for James Watt’s abilities as a guerrilla marketeer. He and Martin Dickie, co-founders of Brewdog, have skillfully turned a small independent brewery in – with the greatest respect to the people of North Aberdeenshire – the rear end of nowhere into one of the leaders of the small independent brewery sector in the UK. They now have a reputation among many beer drinkers as perhaps the most iconoclastic, “edgy” brewers in the country, a growing empire of their own bars around the UK, and a presence on the shelves of leading supermarkets and in any “craft beer” bar worthy of that name. From last month the pair even have their own TV show, Brew Dogs, on the Esquire cable TV network in the United States, where they travel across America, visiting bars and breweries and creating “locally inspired” beers. Fantastic. And yet, Watt’s latest campaign, to try to get an “official”, “industry recognised” definition of “craft beer”, to “protect the fledgling craft beer movement in the UK and in Europe” and also to “protect and inform the customer”, suggests to me he doesn’t actually understand the business environment he is working in as well as he thinks he does. What is more, his arguments for the need for an “official” definition of craft beer are entirely nonsensical and totally evidence-free.

Watt says the reason a proper definition of “craft beer”, “to be recognised by both CAMRA and SIBA and also at a European level by the Brewers of Europe Association” is required is because of “three words – Blue Fucking Moon”. Just like many small brewers in the US, he is clearly annoyed that Molson Coors’ Belgian-style wheat beer comes in packaging that could pass as a product from a much smaller operator, and does not declare itself in huge type to be made by one of the giants of the American beer market. He quotes approvingly Greg Koch of Stone Brewing in California, who also wants to define “craft beer” as something in opposition to “the industrialised notion of beer” that has been “preying on the populace for decades”. Unfortunately it’s not clear if Koch, or Watt, are really interested in “saving” the drinking public from “industrialised” beer, or protecting their own sales from a much bigger rival.

Watt insists that the British craft beer movement is being held back because of the lack of an official definition of craft beer, and “the US craft beer movement has only been able to grow as it has because of the US Brewers’ Association’s official and accepted definition of craft beer.” Naturally, Watt fails to give any evidence for these assertions, because there isn’t any. They’re total nonsense. Good grief, the definition Watt points to only came into existence eight years ago, in 2005, when the Brewers’ Association was formed of a merger between two other industry organisations and the combined membership decided to rig the rules so that the “big guys” would be excluded from their club. Nobody ever said before 2005: “I’m thinking of trying Stone Brewing’s Arrogant Bastard Ale, but without an official and accepted definition of craft beer, I’m really not able to.” The boom in the US craft beer scene over the past 30 years has not been because anybody came up with a definition of “craft beer” and suddenly “craft beer” was able to take off: but because a wave of new producers dedicated to making small-batch, artisanal, flavourful beers met a wave of consumers happy to drink those sorts of beer.

This mistaken idea that consumer movements can only prosper when they have “official” guidelines to channel their enthusiasm leads Watt to assert that while “we want retail stores, bars, restaurants and hotels all to have a craft beer section in their offering,” it is “almost impossible to get them to commit to this without being able to offer them an official definition of what craft beer is.” More evidence-free nonsense. I don’t believe that any supermarket, any bar owner, any restaurant ever said to any small brewer: “I’d like to stock your beers, but without a definition of craft beer I’m just not able to do so.” Watt also declares: “What we don’t want, is for them to a create a craft beer section in their shop or menu only for this to be carpet-bombed by beers that are not craft.” What’s the matter, James – afraid that if a bar is selling Blue Moon alongside 5am Saint your beer will do badly?

The truth is not just that trying to define craft beer is impossible anyway. Watt suggests that the definition should be a completely circular one, that “craft beer is a beer brewed by a craft brewer at a craft brewery”, with the argument then devolving onto what a “craft brewer” and a “craft brewery” are – but his idea that the Campaign for Real Ale, an organisation Brewdog regularly chooses to battle with, would back any definition of “craft beer” Brewdog and SIBA might come up with is another nonsense.

The real point is that, despite Watt’s fantasy, any “official” definition of craft beer, will have little to no impact on the marketplace. Those operators who might be defined as “craft beer brewers” and “craft beer retailers” seem to be doing very well in the UK without any official definition of what they are making and selling – and in any case the UK’s small brewery movement seems to me to be well beyond the “fledgling” status Watt is trying to claim for it. If Brewdog is trying to trip up the likes of Sharp’s – now owned by Coors and thus, under the definition that Watt would like to see made “official”, not a maker of “craft beer” any more – Watt really needs to realise that getting craft beer “properly” defined will make no difference at all to the amount of Doom Bar being sold across British bar tops. Overwhelmingly the beer-drinking public, in Britain, in the US and elsewhere around the world, care nothing for “official” definitions of what they are drinking: that goes for the minority who are “craft beer” drinkers, and, of course, the vast majority who prefer those beers Watt and Koch define as “the industrialised notion of beer”, and wouldn’t drink a craft beer if you gave it do them free, no matter what category you said it was in.

Over to you …

PBD, the issue that splits British brewing

A model of a brewery constructed on a half of a barley seed made by Ukrainian miniaturist Nikolai Syadristy

Now THAT’S a microbrewery: a model of a brewery constructed on half of a barley seed, made by Ukrainian miniaturist Nikolai Syadristy

If you want to start a punch-up, gather together some brewers from small operations, producing less than 5,000 barrels a year, add some brewers from larger concerns, producing 60,000 barrels or more, clamp a steel helmet on your head and then ask them to discuss Progressive Beer Duty. Never mind about discussions over the exact definition of “craft beer”, or whether keg beer is a valid choice for an artisanal brewer, PBD is the issue that splits the British brewing industry. Smaller brewers eligible for the tax cuts that PBD gives them, which can be equal to as much as 24p a pint, insist these are essential to help them compete with larger firms, and that as a result the choice to the British beer drinker has been greatly widened since its introduction. Larger brewers insist that PBD distorts the market, and that it unfairly hampers them in competing for business from the pub companies, because the pubcos, naturally enough, go to where they can buy beer cheapest, which means from those brewers being taxed 24p a pint less.

After a couple of news stories last week featuring two brewers, Arran Brewery and Black Sheep, who talked about the adverse impact PBD had on their own businesses, I wrote a comment piece for the day job about the inevitable distortions PBD causes in the marketplace. All taxes cause distortions: that’s just how economics works, and tweaking or adjusting taxes so that some sections are treated more lightly than others creates more distortions. You may feel the distortions that PBD creates are worthwhile because of the boost it seems to give to very small brewers, or you may feel that PBD is unfair and needs either serious tweaking or scrapping. Views seem to pretty much fall either way depending on whether the person expressing an opinion is a large brewer or a small one.

After my opinion piece came out, there was a minor twitterstorm, with small brewers totally denying Paul Theakston of Black Sheep’s thesis that pubcos were turning to smaller, PBD-entitled breweries to, effectively, snaffle that 24p-a-pint tax rebate for themselves. I had the commercial buyer of one medium-sized pubco, with more than 1,000 pubs, contact me specifically to deny that his beer-buying was influenced by whether or not the brewer he was buying from was entitled to PBD and could therefore afford to sell to him more cheaply. I had one small brewer demand: “Is there really a significant volume of market-distortingly cheap beer coming from small brewers?” Well, Black Sheep lost 6,000 barrels of pubco beer sales in the last financial year, and Paul Theakston appears to blame PBD allowing smaller rivals to sell cheaper beer. Another small brewer declared that PBD “helps a less efficient brewery compete, which is the idea.” But I don’t think I’m alone in believing that business shouldn’t be a handicap race, with the best being forced to carry a greater burden so that those not so good can have a chance of crossing the finishing line first.

Anyway, here’s the original opinion piece in full: I look forward to reading everybody’s comments!

The unintended consequences of Progressive Beer Duty

It’s a bitter irony that Black Sheep Brewery, one of the most successful of the “new” small breweries, now finds itself badly hit by a tax regime specifically fought for, and brought in, to encourage new small breweries. The problem is that Black Sheep, which brews excellent beers at its home in a converted maltings in Masham, North Yorkshire, is, after 21 years, no longer small – or, at least, no longer small enough to qualify for Progressive Beer Duty.

PBD, brought in by Gordon Brown when he was Chancellor of the Exchequer in 2002, means any brewer making, currently, no more than 5,000 hectolitres of beer a year (a little over 3,000 barrels in old money) pays only half the normal excise duty, which, after VAT is taken into account, means an effective subsidy of 24p a pint. It gets complicated after that, as the tax relief slowly falls off with rises in production, but eventually full excise duty is payable on every pint once a brewer’s production goes over 60,000 hectolitres. The idea, as put forward by SIBA, the small brewers’ association (which had been campaigning for PBD since 1989) and the Campaign for Real Ale, was to enable small brewers to compete better, by removing some of the cost burden on them, and thus to encourage new entrants into the market and, as a result, improve consumer choice.

There is no doubt that new entrants have hit the market in a mighty tsunami: the number of breweries in the UK has boomed from around 450 in 2002 to some 1,150 today, a 155% increase. Gordon Brown has certainly had a lot to do with that explosion of new small breweries. But almost all those new entrants are competing in a minority segment of the British beer market, cask ale, and while cask ale may not be declining as fast as the overall UK beer market, it’s certainly not expanding. Those brewers under the PBD ceiling are, effectively able to sell their beer in a tight market up to 24p a pint cheaper than a brewer like Black Sheep, which finds itself having to pay full tax because it has been successful enough that it makes more than 60,000 hectolitres of beer a year. (It is not just Black Sheep that suffers from what many regard as an unfairly tilted playing field in this way, of course: so do almost all the old-established family brewers, from Fuller Smith & Turner to Adnam’s to Robinson’s.) The wholesale purchasers of beer (that is, the pubcos, mostly), naturally enough, go to where they can get it cheapest, and that is from those brewers who brew 60,000 hectolitres or less.

As a result, Black Sheep has found itself squeezed out, losing 6,000 barrels of pubco business in the 12 months to 31 March this year, and turning from profits of more than half a million pounds in 2011/12 to a loss of almost three quarters of a million pounds in 2012/13. Black Sheep’s founder, Paul Theakston, said: “Our Achilles heel has always been in our cask beer sales to the national pub companies, where … a policy of buying an increasing proportion of their cask beers from microbrewers, thus taking advantage of a significantly reduced buying-in cost through Progressive Beer Duty, has been the order of the day.”

What is happening, of course, is that the cost savings from PBD, instead of going to the small brewers, are going to the big pub companies, who can use the existence of a large number of alternative suppliers versus a comparatively small number of buyers (a condition known to economists as monopsony) to beat down the price of the beer they buy and pocket themselves a considerable slice of the 24p saved through PBD. This should not be a surprise to anybody. Indeed, it was specifically predicted in 2001, before Chancellor Gordon Brown even introduced PBD, in an article in the Journal of Small Business and Enterprise Development by three economists, Geoff Pugh, David Tyrrall and John Wyld, called “Will Progressive Beer Duty Really Help UK Small Breweries?”

It’s a firm rule in journalism that the answer to any headline with a question mark at the end of it is always “No”. That normally only applies to such tabloid-style headlines as “Did the SAS kill Diana?” and “Will your pet give you cancer?” But the answer to the question Pugh, Wyld and Tyrrall posed seems to be pretty much in the negative, too. After a great deal of economists’ algebra, they concluded that, in the short term, “The overall effect of PBD will increase the profits of individual breweries, increase distributors’ profit and increase the quantity sold on the final market [because of a lower price].” However, “Over time increased profit for small breweries will attract new entrants … for the distributor, the ability to spread or reassign orders among an increased number of suppliers enables the price to be renegotiated downwards … the distributor is able to transfer increased profits from small brewers to itself.”

In other words, PBD gives you lots of breweries all right, but all that does is increase competition, squeeze profits in the brewery sector back down to where they were before PBD came along, and boost profits for the pubcos. That’s great if you’re a pubco, but it’s pretty tough if you’re Black Sheep, because you are suffering all the pricing pressures PBD allows pub companies to put on brewers, without being able to take advantage of PBD yourself. It also discourages those really small brewers who find themselves becoming successful from growing too much: earlier this week Gerald Michaluk, the MD of the Arran brewery in Scotland, which produces that country’s best-selling bottled craft ale, admitted he was delaying expansion deliberately to try to stay below the PBD threshold: “We have modestly grown the business because of our not wishing to exceed the half-duty production threshold without first upgrading our brewery on Arran to make the savings necessary to be able to afford to pay the extra 24p per bottle in tax that an increase in production would bring.” Any tax regime that inhibits growth and investment is a bad tax regime.

Black Sheep’s answer to the problem of competition from those with a better tax deal is to shift over, in part, to a sector where very few of those 700 new small brewers since 2002 will compete – keg beer. Announcing the move, Robert Theakston, Black Sheep’s MD, said: “I am aware of the preconceptions surrounding keg, but the opportunity the keg market brings is not to be dismissed. It will allow us to reach into the types of venues that can’t justify cask beer. There are an awful lot of sports clubs, hotels and restaurants than can only take keg beer that we currently can’t trade in.” This cannot be the result Camra would have wished for when it campaigned alongside SIBA for Progressive Beer Duty: one of the best-known (and best) new cask ale brewers being forced into making keg beer because PBD has brought so much competition into the cask market.

The Bass red triangle: things AB-InBev won’t tell you

Bass pale ale labelThere are stupid marketeers, and there’s AB-InBev. The Belgo-Brazilians have decided to rename one of the oldest beer brands in Britain, Bass pale ale, a literally iconic IPA, as “Bass Trademark Number One”. It’s a move so clueless, so lacking in understanding of how beer drinkers relate to the beers they drink, I have no doubt it will be held up to MBA students in five years’ time as a classic example of How To Royally Screw Up Your Brand.

The move is predicated upon the red triangle that is found on every bottle of Bass pale ale, and on every pumpclip of the draught version, being the first registered trademark in Britain. The generally accepted story is that after the passing of the Trade Mark Registration Act of 1875, when applications to apply for trademark registration opened on January 1, 1876, a Bass employee was sent to wait overnight outside the registrar’s office the day before in order to be the first in line to file to register a trademark the next morning, and that is why the company has trade mark number one. There is no evidence for this story: but it is certainly true that a label with the triangle on it, and the words “Bass & Co’s Pale Ale” is indeed the UK’s Trade Mark 1, having been the first to be registered on New Year’s Day 1876.

So why now rename a beer that has been around since the 1820s, when Bass first started brewing a bitter pale ale for the Far East market, after an event that happened when that beer was already 50 or more years old? Because AB-InBev is flailing around for a way to rescue the beer, once the most famous in the world, from the miserable position it has been in since, to be honest, long before what was then Interbrew acquired the Bass brands in 2000. Some idiot marketing focus group got together and tried to think of a unique selling point for the beer: and the only one they could come up with was that it bore the UK’s first registered trade mark.

As Pete Brown has already remarked, this is pretty much a result of the AB-InBev mindset, which knows far more about trademarks than it does about beer. Bass pale ale is a beer with a fantastic heritage: it was, for more than a century, a hugely highly regarded brew, globally as well as in the UK (my grandfather told me that before the First World War, he and his pals would scour North London looking for pubs that sold draught Bass), so much so that it suffered more than anyone else from lesser brews being passed off as the red triangle beer. That was one reason why Bass was so keen to register its own trademark as speedily as possible.

Before we continue, here’s a panegyric on Bass from a book published in 1884 called Fortunes Made In Business which will show you how much Bass was an icon:

Continue reading

In Bruges

In Bruges

In Bruges

I first drank in the Brugs Beertje in Bruges in 1985. I didn’t realise at the time that it was then only a couple of years old: it already felt like a classic beer venue, small, comfortable as an old suede gardening glove, welcoming as your favourite cousin, the walls lathered in Belgian brewery memorabilia, the selection of hopped beverages extensive and eclectic.

At the time, it was pretty much unknown outside Bruges: I was guided to it by a pamphlet listing the city’s beer outlets that I picked up in the Bruges tourist office while trying to find a hotel. Would the tourist office in any British city have carried a list of good local bars and pubs in 1985? Would the tourist office in any British city carry a list of good local bars and pubs today? Not, I think.

Despite Britain and Belgium each being soaked in beer culture to their respective marrows, there still, 40-plus years after the founding of an organisation specifically set up to encourage appreciation of British beer, seems something much more celebratory about Belgium’s relationship with beer than you find among the British generally. Belgians seem far keener to announce to everybody their beery wonders than we do in Britain, eager to hand you the massive beer menu when you sit down in the bar, cafe or restaurant, happy to let you know that this little country of 11 million is one of the four or five greatest brewing nations in the world, and pleased to point out that they make more unusual beer styles than anywhere else, too. Continue reading

In defence of old men with beards

OMWBAWYIt happened, I’m guessing, about the time that the first wave of Camra members were hitting their late 50s and early 60s, that is, at the beginning of this century. If “real ale” had been pejorated almost from the beginning as the drink of men with beards, generally accompanied by sandals, soon after the millennium the cliché became old men with beards, sitting in a corner of the pub clutching a half-filled glass of something tepid, lifeless and tan-coloured in their wrinkled, liver-spotted hands.

Rooney Anand, viridian monarch at Greene King, seems to have been one of the first to favour the expression, complaining in 2002: “It’s time to explode the myth that real ale is for old men with beards. It’s not, it’s for everyone.”

Since then, the meme has trundled on, gathering speed: “Cockermouth brewer Jennings hopes to use Cask Beer Week to shatter the stereotype that bearded old men are the only ones who drink real ale” (Times and Star, Cumbria, September 2004); “real ale … seen as only for old men with beards and beer bellies” (BBC website, December 2005); “pubs full of old men with beards who drink real ale” (Farmers’ Weekly, April 2008); ” real ale drinkers … smelly old men with beards” (Metro, October 2008); “Normally when people think real ale, they picture old men with far too much facial hair, reeking of pipe smoke” (Metro again, August 2011); “real ale drinkers … crusty old men with beards” Hull Daily Mail, October 2011; “Real ale … for old men with beards and woolly jumpers” (Scotland on Sunday, October 2011); “real ale … a flat, warm brown liquid that old men with beards drink” (Bristol Evening Post, April 2012); you’re getting the idea. Continue reading