By Peter Haydon (Brewing Techniques - Vol. 6, No.5)
An observer of the UK microbrewing scene explains microbrewers’ battle to place their beers before the British public.
Whenever I try to explain the British brewing industry, I ask a question that seems to help people understand my viewpoint. “In 20 years of British microbrewing,” I ask, “why has there never been a microbrewing millionaire?” In this article, I shall attempt to answer that question.
The American and British craft brewing marketplaces are similar in many ways, notably in the apparent saturation of craft beer in the marketplace and the cautious drift toward brewpubs rather than micros. As in the United States, a handful of major companies dominate the UK beer market: Scottish & Newcastle, Bass, Whitbread, and Carlsberg-Tetley consume about 80% of the business. Whereas U.S. beer drinkers are tentatively beginning to bend their elbows over unfiltered, unfizzy real ales, however, UK consumers are reaching elsewhere. Lager sales now comprise over 50% of the UK market, compared to only 1% in 1960, and cask-conditioned ale today accounts for only 14% of all beer produced in the UK.
What happened to craft brewing in the UK? The answer is complicated. Independence doesn’t come easily in the UK. Americans live in a capitalist country; Britons just think they do. “To the victor belongs the spoils,” said New Yorker William Marcy, and one of the principal spoils is the right to write history. In Britain the Thatcher governments successfully managed to convince people that they believed in so-called free markets and that this belief was the revolutionary thing about the new-Right ascendancy. In fact, these governments merely believed in making life easier for big business. In the early 1980s an anti-Tory joke asked, “How can you say the Tories are not in favor of small business? Look how many businesses they have made small!” But the “free market” means a whole host of things other than making it easier for powerful firms to exploit their power. Sadly, this fact is probably understood by fewer than a thousand people in the United Kingdom today, and none of them work in the brewing industry.
“So what?” I hear you say. “Is the United States much different? For Thatcher, read Reagan: Isn’t Anheuser-Busch benefiting from substantial tax advantages while American microbreweries scramble for market access?” Yes, but the fundamental difference between the United States and the United Kingdom is that capital is available from a variety of sources, and if you present potential investors with a sound business plan, there is a good chance you will get the money you need. In Britain there is very little chance that the bank will support you unless you have the money already, in which case why go to the bank? But given the problems that British craft brewers have in getting their goods into the marketplace, it is hard to blame the banks. The evidence overwhelmingly supports the view that when we can get good-quality craft-brewed beers in front of the consumer, there is no absence of demand. Getting them there is the challenge.
In the 1980s, when the United Kingdom was home to about 100 craft brewers, they had 2% of the total beer market; today, craft brewers total near 400, but they still have only 2%. The figures are similar for the United States, so the following analogy applies to both countries.
If you look at the brewing industry as a street in which a group of rowdy kids is playing American football and running around as they like, the craft brewers are like the kids who get forced to play in the phone booth at the end of the street. But you can get only get a few burly football linemen into a phone booth; if you want to get more people in, you have to make the bodies smaller. You can get more ballet dancers into a phone booth than NFL linebackers, and you can get more nursery school toddlers in than ballet dancers. Now — and the squeamish can look away — all that the little kids in the phone booth have ever asked for is to be allowed to play in the street, but what chances would you give them if the phone booth door were opened? And remember — the big kids play as a team.
British microbrewers are in a Catch-22 situation. The big players conspire to make the smaller breweries uncompetitive, and when distributors are asked why they do not stock the smaller breweries’ products they reply, “Because they are uncompetitive.” The craft brewers of the United Kingdom have known this to be true for some time and have lived with it. It is one of the enduring ironies of the industry that those most open to the idea of true competition are those who are not allowed to compete. And lately the walls of the phone booth have started closing in even further.
The new order: When the British government decided in 1989 that the industry was anticompetitive and operating against the consumers’ interests, it passed a series of rules known as the Beer Orders. Principal among these was the Guest Beer Regulation, which stated that tenants (that is, the tied houses) of the largest brewery companies were allowed to take a cask-conditioned ale of their choice in addition to the brewery owner’s offerings. It was not a small change: The large brewery firms then owned the majority of British pubs, and in 1990 12,500 pubs were permitted to take a guest beer. As a result, a large number of breweries opened to supply those taps.
Today, however, there are only about 1,500 pubs that host guest taps, and this number continues to fall. The largest reason for the decline is that the large brewers have been selling off their tenanted estates to private companies who happen to be exempt from the Guest Beer Regulation. Because these companies invariably negotiate exclusive beer supply deals with the brewers who formerly owned the pubs, the cynical might be tempted to conclude that the sales were undertaken mainly to avoid the Guest Beer Regulations, a possibility the British competition authorities are looking into.
Recognizing early on the trend of dominance by the major players, smaller breweries formed the Small Independent Brewers Association (SIBA) in 1980. It had become apparent that the existing industry body, the Brewers’ Society, was not interested in assisting smaller breweries. SIBA’s name was changed in 1985 after an impassioned debate at the association’s annual general meeting led by the late Jim Laker, a much-respected and greatly missed brewing pioneer and founder of Exmoor Ales (which was, incidentally, one of the early creators of golden ale, the style that will probably be the British craft brewers’ greatest legacy). Jim argued that “small” implied a mindset and not just a description of relative size. Small breweries, he said, wanted to be big breweries, if only they had the chance. The association thus changed its name to one with a meditative, inscrutable air — the Society of Independent Brewers.…Aaahhh! — but retained the comfortable acronym, SIBA.
The members: SIBA members fall into one of two categories. Full membership is available to independently owned brewery companies producing fewer than 700 imperial barrels (975 U.S. barrels) a week (though most members have much smaller operations). Other companies that share SIBA’s aim of promoting craft beer can join as associate members (currently most associate members are suppliers); associate membership does not confer voting privileges at the society’s annual meeting. SIBA admits non-brewers for two reasons. First, because SIBA member companies are small, the resources they can all contribute to the common pot are also small. SIBA’s associates thus make a valuable contribution to the viability of the organization. Second, SIBA recognizes the symbiotic relationship that exists between the brewers and their suppliers. The suppliers know that, to one extent or another, their own well-being depends upon the continued vitality of the independent craft brewers. And when SIBA lobbies for market access for its members’ products, it is also campaigning for greater job security for hundreds of employees of nonbrewing companies.
SIBA’s total membership is currently around 300, about two-thirds of all the brewing companies eligible to be members. Perhaps more breweries would join if the members were not expected to donate their time to maintaining the organization in addition to trying to run their own breweries.* Interestingly, no brewing company has ever left because it has outgrown the 700-barrel limit. Ironically, on the day that the society loses a member because it grows too big, SIBA will likely regard that loss as one of its greatest achievements.
SIBA’s main priority today is to convince the British government to introduce a system of proportional taxation for beer into the United Kingdom. Such a system is allowed under rules laid down by the European Union (EU), but is not compulsory. (As such it stands out among European directives, 99% of which are all too compulsory.) Britain is the only major brewing nation in Europe not to have approved such a system (known as Sliding Scale Duty, or SSD). Even the Czech Republic has adopted a version of the EU scheme, and their independent brewing sector is booming as a result.
The sliding scale system is permitted because the EU recognizes that smaller breweries are at a commercial disadvantage compared with larger companies. That view is universally held everywhere in Europe except within the British government; though its attitude does appear to be softening, it cannot bring itself to introduce SSD and yet cannot produce a convincing case for not doing so. Amazingly, SIBA has been asking successive governments for SSD for 18 years. A former SIBA chairman, Paul Soden, once shouted at an uncooperative minister, “We are desperate men, and we shall not go away.”
Craft brewers have not gone away, yet they have become more desperate. There is a mood of tangible despair in many sectors of the craft brewing industry, partly because the new companies squeezing into the crowded phone booth are ever smaller, both in size and ambition. As in the United States, fewer micros are opening compared with brewpubs, and the brewpubs often have no desire to expand beyond the requirements of their own retail needs. The despair is most evident among the companies that have been around for all or many of SIBA’s 18 years. These firms were founded by individuals who believed that a passion for good beer did not automatically imply a commitment to a cottage lifestyle; they simply believed that good beer should be brought to as wide a market as possible. They wanted nothing more than to see their companies grow, to employ people, and to have fleets of drays delivering their beer to an educated and appreciative market. In the early 1990s, this dream seemed a possibility. But now, in the late 1990s, it seems to these individuals like a Utopia that is forever out of reach — a mirage that, however far you crawl, is always just over the next sand dune.
As SIBA’s general secretary, I am also its resident agony aunt. Even during my tenure of less than a year, I have seen this despair deepen. Several senior members of the brewing fraternity have confided in me that the principal reason they do not just throw it all in is their loyalty to their staff.
Despite the gloom of the previous paragraphs, the fact remains that the craft brewers of the United Kingdom have had an influence out of all proportion to their size. They have reinvented the lexicon of beer, bringing as many new approaches to brewing as there are craft breweries. Britain’s craft brewers walk off with almost every brewing trophy going. They have created new styles (golden ales, wheaten ales), put life back into flagging styles (IPAs, stouts, and porters), and provided the stimulus for the new way the public looks at beer.
*On 1 October 1997, SIBA appointed its first paid official, the general secretary, a post it is my great privilege to hold. My first task was to organize the society’s annual general meeting and 18th birthday. In the United Kingdom, 18 is the drinking age, which marks a transition from adolescence to adulthood. SIBA is making that transition.
The craft brewers have also sparked some creative thinking in other aspects of the brewing industry. Without doubt the most exciting source of ideas in the brewing industry currently is the National Hop Association (NHA). Its front man is the quintessentially English-named Rupert Ponsonby, who divides his time between his London-based PR firm and his barley-growing estate in Oxfordshire. Rupert is the brains behind the Beauty of Hops competition, which encourages brewers to consider the individual merits of hop varieties in the same way that the wine world has been revolutionized by concentrating on varietals rather than traditional growing regions. He is also the inspiration for the curiously named BLOBBB competition, which stands for Back Labels on British Bottled Beers. BLOBBB rewards brewers for the quality of information displayed on their products and encourages them to help educate the consumer with slightly more detail than the usual “Made with choicest hops and barley.”
Ponsonby’s Beauty of Hops Competition was the direct inspiration for the Wheat Beer Challenge, one of the world’s most exciting brewing competitions, if not yet its best known. The Wheat Beer Challenge is an attempt to get brewers to demonstrate their creative ability by tearing up the rule book and devising a wholly new beer style by means of a fusion of British brewing technology and European wheat brewing heritage. As a bonus, it encourages craft brewers to develop new styles of beer that will sell during the summer, when ale sales suffer as people seek more immediately refreshing drinks. (This leads to even slower ale sales and a loss of confidence in the quality of ale, because the more slowly it sells the more rapidly it spoils.) Most brewers who have entered the Wheat Beer Competition complain about how difficult it is — a backhanded tribute to the value of the debate.
Rupert’s most recent brainstorm has been the Curry Competition, a challenge to brewers to devise ales that go well with curry and spicy food. Britain’s countless thousands of Indian restaurants tend to sell either English lager or similar Indian-named and (maybe) Indian-made lagers, a choice owing more to the retail convenience of lager styles than to any compatibility with food.
Behind the laudable Mr. Ponsonby stand the hop growers themselves. Since the British, normally seen as prudish when it comes to matters of sex, are happy to see the hop get its oats (if you know what I mean), unlike more fastidious farmers elsewhere (continental lager brewers refuse to use fertilized hops), most English hop production is suitable only for the production of English and Belgian ales. And because ale sales in the United Kingdom are falling, demand for English hops is falling. In fact, hop production has been declining throughout the century, and today it is less than 50% of what it was 30 years ago. The rise in popularity of nitrogen beers and the increasing use of generic alpha-acids in the form of iso- and tetra-hop extracts mean that even commercial ales can be made with cheap German and Chinese products.
The English hop producers have fought back admirably, however. They have started dialogue with brewers that was unknown only a few years ago. They have experimented with new dwarf varieties such as First Gold, which, because of easier pest management and harvesting, has led to the first increase in hop acreage since the Second World War. The new hop varieties have found ready supporters in the newly educated climate that the NHA has worked to create.
It is unlikely that these initiatives would have come from the hop industry had there not been a craft brewing sector with open minds to germinate the seeds of these ideas. The sad fact of the brewing industry before the arrival of the craft industry was that it had collectively lost its way. The sterile, carbonated beers that provided the impetus for CAMRA’s revolt were a success because so much postwar beer was not very good. Beer was mild, best, or a standard stronger ale, with Guinness ubiquitous as an additional pub offering. The advent of the craft brewers forced the larger breweries to join their smaller brethren in reviving seasonal ales, to follow their lead by introducing new styles, and most recently to take the gutsy plunge into bottle-conditioned ales, which must give the accountants who run these companies sleepless nights.
Home brewers have had their influence too. A number of them have made the transition to professional craft brewer; a good example is John Davidson at Swale Brewery in Kent, whose remarkably hoppy beers never fail to win praise. More important, home brewers have been able to remind the professional brewers of the things they had forgotten. For example, Dr. John Harrison of the Durden Park Beer Circle has made a life’s work out of deciphering the old recipes from countless old brewing books that were gathering dust in various brewery archives (1). Durden Park has become synonymous with old-style beers. Its members meet monthly and offer up their efforts for inspection, as often as not brewed to a recipe unearthed by Dr. John. The brewers are merciless, absolutely blunt. Any defects in a beer are pronounced upon and debated, and the hapless brewer must wait until the entire circle of his or her peers, some 30 or so brewers, have dissected the brew. Brewers whose beer is not up to the mark have been known to confess their guilt like Stalin’s victims at a show trial.
The quest for quality beer has led to the formation of the Craft Brewing Association (CBA), a 400-strong movement of amateur brewers headed by James McCrorie whose dedication to authenticity and quality is much to be admired. They have done much to shift the popular perception that homebrewed beer in the United Kingdom is cheap and nasty, with the emphasis first and foremost on the “cheap.” The CBA had booths at the Great British Beer Festival in 1996, 1997, and 1998, and the public got to see brewing in action for the first time. We look forward to continued contributions and growth from this home brewing organization.
The skill level of most British home brewers, however, still does not come close to the culture of quality that exists in the States, and much of the homebrew scene is still focused on offering quantity at a low price rather than quality. One reason that the U.S. home brewing scene is so much livelier than that of the United Kingdom is that Britons have always been able to walk to the local pub for a reasonable pint of beer. We were not subjected to the lack of quality or variety of brands and styles that sparked both home brewing and microbrewing in the United States. Despite the best attempts of the accountants, I know of no brewery on this side of the Atlantic that has seriously considered brewing with rice.
The picture I paint is mixed. Positive ideas, flourishing debate, innovation, entrepreneurial flair, and sincere belief all bang away stubbornly at a glass ceiling imposed by the larger brewers and pub companies. Unfortunately, the field of competition is not based on quality but rather on marketing spending. Scottish & Newcastle, Britain’s largest brewery, has devoted £20 million worth of marketing efforts to making sure that the Foster’s label it acquired displaces Bass’s Carling (formerly Black Label) from the number-one-selling lager slot — all the while reducing coverage of their own brands (which include Younger’s, MacEwans, and Courage). The strap-line they have chosen for this campaign is, “He who drinks Australian, thinks Australian.” What S&N knows but isn’t telling is that Australians do not drink Foster’s, which is now selling a fraction of what it did a decade ago in its native land.
The British public, blissful in their ignorance, appear to be keen to aid S&N in the fulfillment of its goal. Young men take the encouragement to drink lager to heart as they embrace all that is new, and the British brewing industry, which produces some of the best beers in the world, is content to let them drink pale imitations of German Pilseners rather than encourage them to feel proud of their own brewing heritage. Craft brewers are mere pests who, disappointingly, turn out good beer, and they believe in a set of values that larger brewers cannot comprehend. Innovation, energy, and integrity are not values that the brewery accountants wish to hear about. For this reason, craft brewers must be confined to the phone booth, and a soundproof one at that — which is why there are no British microbrewery millionaires.
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