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Status Update and a Couple of Links

Mittwoch Ruhetag

You might have noticed we’ve been quiet so far this week, and we’re going to keep being quiet for a few days yet.

We’re working to the final deadline on The Big Project and so all the mental energy and typing capacity we’ve got left after day jobs is going into that.

As we hit the final stretch, now’s your last chance to share memories of prefabs, estate pubs, theme pubs, real ale pubs of the 1970s, Irish pubs, Wetherspoon’s in Manchester in 1995, or 1990s gastropubs.

Please do — we need everything we can get!

There won’t be a News, Nuggets & Longreads post this Saturday but here are a couple of things you might want to check out:

1. Running Past uses a ghost sign on the side of a building in Hither Green as a way into the history of a long-gone brewery. (Via @untilnextyear.)

2. The BBC’s Seoul correspondent Stephen Evans has been tasting North Korean beer and pondering the difference between the fortress nation and South Korea‘I went to a crowded bar in Pyongyang, which was magnificent in its roughness. It was crowded with men mostly, chucking it back from rough pots like jam jars which, I remember, had chipped edges that gave a sensual, rough texture on the lips as the cold beer passed. The men stood in circles, the best way to drink beer.’

3. And finally, there’s this, which we haven’t got time to be distracted by right now, but which certainly provokes enough thoughts for a week of blog posts:

4. If you want more reading check out Stan Hieronymus’s Monday round-up and Jordan’s Friday history links.

10 replies on “Status Update and a Couple of Links”

‘Magnificent in its roughness’ — sounds like he was in possession of nostalgie de la boue, a common trait for French writers in the late 19th and early 20th century (though I do recall in possession of it in bar in 1980s Montparnasse, hoping Beckett would come in for a beer and a pee).

Re Waen: As someone who buys beers for a large establishment completely free of tie who are these brewers who sell for less then some others production costs? And why haven’t they introduced themselves to me?

As a rule the lowest price I have been offered per firkin is £55 (from a very established brewery) and as an average I expect between £70 and £80 for roughly 4% beer in a reasonably traditional style (no weird ingredients, mostly pale ale and bitter). I’ve not seen Waen beers on the wholesale lists but I have seen certain breweries who think their house bitters are worth £90 with very little reason as to why this might be so?

You probably project an aura of being far too above board 🙂

There are publicans out my way who won’t pay more than £60 for local beers. They’ll wheedle any deal they can out of brewers… ask for old stock, etc, I get it too “do you have anything out of date”… none of these folks are my customers.

What you’re looking for is two things:

1) Every now and then a desperate brewery will put out a bit of a “loss leader” sort of deal. These are usually short lived… but we have so many small desperate breweries that at any one time you can probably find one doing this. Most brewers I know are fed up with this situation. The thinking being there are simply far too many brewers for far too little free-of-tie demand… if someone is offering a deal every week, then nobody is making their margins.

2) There are some out there who will offer you an extra cask, off the paperwork, as an incentive to put in an order. This is so clearly dodgy that the general suspicion is that these casks are off the books everywhere – no duty, no VAT, etc. And you probably have to be a bit dodgy yourself to even be offered this…

Unfortunately, whilst well discussed and known, all evidence of this is pretty much anecdotal… especially if you generally travel in “all above board” circles.

As for the high end of the scale. A cask of best bitter is probably better priced at about £90… but the cask ale market is a bit of an ass, and good brewers who are in demand are dropping trad styles, or dropping cask entirely, as a result – because it really is a bum game to be in. (Personally I want a brewer or two dozen to come out and be far more open about costs and margins… mostly we hear all the complaints, but little evidence of where things are at… all situations are going to be a bit different of course*, but there are fundamental running costs … more data needed. I probably have a little more than most as I have conversations with brewers about this stuff, but don’t have enough data yet… other than to say that some really are in dire straights.)

[*One problem is there are tiny 1-man-band breweries funded by retirement or redundancy packages with no debts and owners with no rent or mortgage – and then there are those run by folk who have a rent to pay, and start-up debts to repay. So the market-wide analysis isn’t so simple… it never is of course.]

Right, anyway, it’s Monday and I have beer to sell! Morning coffee break over.

Perhaps publicans could also be as “open” to their retail customers as you are suggesting for brewers. In my rural area the median price of a pint of ordinary bitter is now over £4.00 a pint, with two in my village charging £4.20p. I know the brewers who supply these pubs and others in the area and the ex-VAT price they charge (£58.00p to £63.00p per firkin depending on the beer). So, it’s very much down to what I can only call the greed of some publicans who blame the brewer for just about everything.

I guess brewers and folk in my position consider pub GPs pretty open because we do generally know what they’re buying at.

Selling £60 cask at £4 per pint is… pretty bloody steep (74% GP). Pubs are an interesting can of worms… I know some tied pubs getting by quite well on 50% GP (your £60 firk would yield pints under £2.20… but they pay a lot more for their beer – more like £99 GK IPA @ £3.50 a pint), and others that are very similar but on 65% & FoT that moan about prices endlessly (they’d be charging about £3 a pint).

Could you unpack that GP calculation? I’ve been trying to work it through with the calculator & then with Excel, but I can’t get anywhere with it – unless I reckon on 58 pints to the firkin, which sounds way too low (as we know, that poor firkin barrel’s nine gallons in all…).

Hm…

(60 / 68) / (100 – %GP) * 100 * 1.2
a b c d e

a: £ cost of firkin
b: yield (pints) from firkin – pessimistic-ish
c: inverse of %GP – to reduce pint cost to 1% of pint price
d: Um… the number 100? Converting the 1% price to the full ex-VAT
e: Apply VAT

The key part is that the “GP” the the % of the ex-VAT price above the cost price of the goods.

£4.20 is steep – but it may not be greedy, it could just be a business just trying to cover costs in the face of declining footfall. 10% of pubs make good money, 90% are struggling, there’s not much in between – so by that definition 10% of landlords are “greedy” and 90% are charging too little.

The trouble is that there’s a lot of big fixed costs incurred before a pub even opens the doors. Obviously every pub is different, but broadly it’s a quid for the beer, a quid for the staff, a quid for everything else (rent, rates, logs for the fire, capex, profit) and then add VAT to get a £3.60 pint. A city centre pub might pay 60p/pint rather than 30p/pint on rent (with rates pro-rata), but will spend less per pint on staff because they serve 3x the pints with 2x the staff.

Labour is a killer for quieter pubs, because you can’t have 0.8 of a person behind the bar, you have to have at least one body. But if you’re opening noon-11 with a bit of tidying up before and after, you have 12 hours at £7.20 for >25 year-olds, NI brings it up to just about a round £100/day. Ideally you don’t want a minimum wage person, you want someone with a bit more experience who costs £8-10/hour behind the bar.

So, just at a minimum you need to sell at least 100 pints per day to keep that labour cost down to £1/pint. If you’re selling 80 pints per day then staff costs alone creep up to £1.25/pint ( and all your other fixed costs expand pro-rata too), which means your pint cost goes up from £3+VAT to £3.50+VAT = £4.20/pint.

Piling down on a Friday and Saturday night isn’t the answer, as when it’s busy the pub will need more staff to cope – what really helps pubs is going on a weekday when there’s not enough work to fully occupy 1 person on the bar, but they feel they have to be open and employ that 1 person. It also helps throughput on the cask lines, which helps everyone.

So I suspect the publican really wants to blame governments for hiking the minimum wage, and customers who aren’t drinking as much as they used to – but he can’t do either of those things, so he makes noises about the brewery instead.

I know of one microbrewery in the NW doing 4-for-3 on a range that includes one beer at £63 list price (ie £47.25 – not had that one, but the £66 (£49.50) beer is pretty decent), which seems suicidal, and I know of another that was getting down to £53 for 20-odd barrels a month, but has crept up to £60 or so. I’m guessing they had some big new tanks that needed throughput, but now they’re getting the volume they don’t have to push so hard to fill them.

As has been said, it’s so hard to generalise, with breweries operating to different business models, regional differences etc. I’ve also eg known some breweries taking the mickey on single-cask pricing but as soon as it’s clear that you’re interested in regular supply, 20% comes off the inflated list price even for small quantities. And obviously there’s discounts for bigger quantities. But for 2-3 firkins (ie 9 gallons) for direct delivery from a local, not particularly fashionable microbrewery in the Northwest (5-20 barrel brewkit in an industrial unit kind of company), you’re looking at :

£63-68 +VAT for standard session bitter – brown/pale 3.8-4.0% with British hops

+£7-10 to add fashionable hops – fair enough, instead of 0.25kg/cask of £8-10/kg hops like Challenger/Bramling/Fuggles you’re looking at 0.4kg/cask of £25/kg hops like Amarillo/Citra (if you can get them at all).

+£7-10-ish for being in the Southeast – I don’t have many datapoints for this, but it feels about right from what I’ve seen. Obviously land and labour prices are higher, and customers can perhaps bear higher prices?

£+5-10 for a brewery with a bit of a reputation

£+3-6 to add fruit etc

£+10 per 1% ABV – I know at least one brewery who literally prices as (£x + 10* ABV).

£-2 to +£5 for beer on brewery swaps

£+10ish for a national wholesaler (varies quite a bit)

£+35-70 via a tied deal (but the pub comes at half the rent of a free-of-tie pubco deal)

£+10-25 for steel keg (volume equivalent, so adjusting pricing of a 30l keg by 72/53) – premium really seems to go up for breweries with a reputation among the craft bars)
£+20-35 for key keg (ditto)

£+25-65 for 500ml bottles (volume equivalent, again reputation allows the higher end, desperation keeps you near the lower end). 330ml cans seem about the same per volume, some breweries push one over the other.

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