Monday, 20 January 2014

Brewing Bubble. I doubt it.

I read an interesting blog today by Turnip Ale, which you can see here: Turnip Ale. The authour is carrying out research into the reasons the breweries that are failing are failing. It's an interesting question and the authour acknowledges that even those ex-brewers who co-operate in the research may not be speaking the whole truth. I can't imagine too many conversations went like this: Q. "Why do you think your brewery failed?" A. "Because i am a useless tosser." It's in most people's nature to blame outside factors for their own failures so hey ho.

My contribution to this is to take a macro view of the sector and make sweeping generalisations about what I think is going on. No change there then, that's my thing.

The article I'm referring to used a phrase I don't think I've heard before, "Brewing Bubble." I suppose I know what that means but I'm not sure whether such a thing exists. My reading of the past 6 Cask Ale Reports by SIBA, which show locally produced cask ale volumes growing at approximately the rate that the producers are expanding in number and capacity lads me to believe that it is supply that is driving growth and supply is nowhere near the potential demand as the market matures.

There is an assumption in the article, I think, that if there was plenty of demand then no breweries should be going out of business. I don't agree with that. Ever since I started my brewery in 2008 I've heard a minority of brewers complaining about there being too many breweries. Keep an eye on these guys because among the established players they are going to be the ones who are going to decline.

Again, since 2008 I've seen a massive rise in the standard quality of cask ales which is expected by the market, purely because it has been driven by competition from new entrants who have by and large astounded me with the quality of their first offerings. So many excellent breweries have opened their doors in recent years that I find them humbling and inspirational in equal measure.

The upshot of this is a phenomenon something like Moore's Law. The quality and flavour of each pint of "The Average" cask ale is increasing every year. This poses a problem for some established "Micros" whose management tend to be among those complaining about the number of new breweries. I can think of some such breweries whose products were inspirational to me 6 years ago but by merely remaining consistent have faded by comparison to "Average." The beers haven't got worse, the competition has got better, way better. IBM would have gone out of business years ago if their products had been "Consistent." 

Many established brewers have recognised this and responded by keeping pace with the higher expectations of the marketplace or even outpacing it. These brewers are doing well. Even some big regionals have responded positively, some setting up microbreweries to brew interesting craft beers on their existing sites. The managements of these companies are to be praised for their efforts. They are sufficiently open minded to realise that harking back to the old days and pointing to the consistency of your beers that used to be good enough isn't going to wash.

When I go out I'm looking to taste beers that are better than mine so i can learn from them. That's one of the things that's responsible for my brewery's success so far: We've increased production by 50% every year since we started. We didn't do that by being consistent. We did it by looking, learning and working bloody hard with total commitment to being the best. I'm not saying we are the best but the important thing is that that's what we aspire to and that means continuous improvement is integral to what we do. If that doesn't sound like how you like to run a business then I suggest you buy a newsagents or become a taxi driver rather than open a brewery. If it sounds like your idea of fun, I'll buy you a drink at the bar at some award ceremony.

Cheers!