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Brown: Don't over-price craft beer

By Pete Brown

- Last updated on GMT

Craft beer: Can we justify the UK prices?
Craft beer: Can we justify the UK prices?

Related tags: Cask ale, Beer, Stone brewing company

The premiumisation of craft ale has been a fantastic boost to pubs throughout the UK but, as Pete Brown explains, push the margins too far and customers will soon start to walk away.

One of the more controversial aspects of the recent beer revolution is that our perceptions of what beer should cost have been completely torn up.

‘Craft keg’ and imported bottled beers are creating price premiums that would have been unthinkable a few years ago, and for the time being at least, people seem prepared to pay them.

But British business has always had a ‘wide boy’ streak running through it. When people are prepared to pay, say, £5,000 for a Cartier Tank watch, for every retailer who decides to stock that watch and create some theatre around the sale of it, there are 10 that will find knock-off fake watches and flog them for more than they are worth. Similar behaviour happens across all products, and now, it’s happening in beer.

Inflation

The rapid price inflation goes back to the arrival of American craft beers in UK bars. It’s not unusual to see, say, Stone Ruination IPA on the bar for £5 a half pint. But there are some very good reasons for this.

Firstly, as with any imported beer, there’s a steep duty tariff to pay, especially if it’s in the typical American IPA range of 6%-9% ABV.

Secondly, we’re paying for the American craft movement’s astonishing commitment to product quality.

Chilled

Recently I spoke to Bob Pease, CEO of the American Brewers’ Association (BA), and champion of its hugely successful export programme. In the US, brewers are committed to what Bob calls a ‘cold chain infrastructure’ of temperature-controlled distribution. From the moment the beer is packaged to the moment it gets into the drinker’s hand, it is kept chilled at every stage. The BA recommends a temperature range of 50°F-55°F (or 10°C-13°C, which is also Cask Marque’s recommended cellar temperature for cask ale).

“Time, sunlight, oxygen and temperature fluctuation — these are the enemies of craft beer,” says Pease.

If beer is stored at too-warm temperatures, the bright, vivid hop aromas that characterise American pale ales quickly fade. Left long enough, they’ll be replaced by an unpleasantly stale, papery character. In the worst cases, high temperatures will encourage bacterial growth that will sour the beer.

When it comes to shipping abroad, the cost of cold chain infrastructure multiplies at the same time as the risks of spoilage. “To keep the beer in perfect condition we have to insist on reefers [refrigerated shipping containers], which can be cost-prohibitive for many,” says Pease. “Finding an importer who can do it is difficult, but if they want the beer, it has to be chilled.”

And that’s why your Stone Ruination IPA costs £5 for a half.

Justify

Most drinkers don’t know this. Which is why, if a British brewer creates a beer with a similar character to Stone IPA, it can cost almost as much, even though it might be travelling six miles rather than 6,000, and it’s not even kept chilled over that shorter distance.

Because it costs more to package, ‘craft keg’ beer should cost more than cask or real ale. But this factor doesn’t get you anywhere near the price of an American import, or the prices being charged in some bars. That, sadly, is often down to the British instinct for profiteering.

One British craft brewer, whose beer I find priced variously in pubs between ‘understandably expensive’ and ‘blatant rip-off,’ agreed to speak to me about this off-the-record. Assuming his beer was sold from the brewery at the same price, I wanted to know why it was so different at retail.

Rip-off?

“It is a very touchy subject as everyone has different margins to work towards,” he says. “Some pubs pay higher wages than others, some have different rents and different aspirations, but some just rip people off.”

And it’s not just pubs that are to blame. “There is a brewing issue here also, as many brewers think, ‘Stateside beer is getting this price, so that’s what I’ll charge,” says my contact.

According to the recent Generation Rent report, 20 to 45-year-olds are giving up on the idea of ever owning a home, with the percentage saving for a deposit on a property slumping to just 43%.

This means they have more disposable income, which might explain why they’re prepared to pay so much more for drinks than they were a few years ago.

But the trade cannot rely on this goodwill forever. When these drinkers realise they are being ripped off by artificially-inflated prices, they’re likely to decide that the whole craft beer movement is a scam, and vote with their wallets.

If that happens, the industry will have squandered the best opportunity it’s had for decades to engage a new generation of drinkers.

Related topics: Beer

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3 comments

DO YOU GET WHAT YOU PAY FOR

Posted by Michael Harper,

If you are going to be diverse and try and sell "craft beer" rather than mainstream kegs or cask. Then at least make sure you do it well. It's called craft beer not make it cheap and sell it high beer. The craft bit has been done Mr retailer, now your job is to make sure you deliver the beer to your paying customer in great condition. GREAT BRITISH BEER! It's not luck thats its great.

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Don't just blame the retailer

Posted by Malcolm Nicholls,

Lets not just blame ripoff pub operators here and sympathise with the poor downtrodden artisan brewer. In recent negotiations I have been expected to pay for the installation,mpay keg deposits on UK brewed products and been told that a packet of dripmats amounts to marketing support.

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con men?

Posted by ken nason,

Well the great fashion concious population fell for the taking of a garment and putting a motif on it and charging many times the price of the garment. Forgers see this gullibility as a way to fortunes

Why not those selling craft beers,without the logo sewn on of course?

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