Thursday, 22 February 2018

When Do Breweries Sell Up?

So yeah, the Fullers buyout of Dark Star.

It's hard not to suspect that there will be more of this sort of thing to come, and Boak and Bailey have been pondering what you might want to look out for if you fancy playing "the prediction game." One of their conclusions is that breweries rarely seem to sell up in the heady hype-phase — it’s during the come down that they’re vulnerable.

In fact, I'd say that there's something else interesting here from that angle. A couple of years ago, at the height of the US craft acquisition fever, I noticed that a lot of the breweries being bought out were founded at about the same time. And that in fact, that there seemed to be a fairly standard age for selling up - a few years either side of 20 - and that this applied to a lot of British real ale breweries, too: Bath Ales, for instance, and Sharps. Since Dark Star (founded 1994) seem to fit reasonably well into that pattern, I thought I'd actually get some data and see if it stacks up.

Methodology: this is clearly a selective list, but it's selective based on what I can remember / have heard of - I haven't consciously picked and chosen examples to fit my theory. I've stuck to full acquisitions, or at least controlling stakes, rather than including partial things. The only example that I've deliberately excluded as a special case was the Brooklyn / Carlsberg takeover of London Fields. I've also ignored breweries that I wouldn't consider "newish" - Courage, for instance, or Hardy and Hansons, because I don't think it'd add much to the data. I generally haven't been particularly careful about how I define founding dates, having mostly gone with the first thing that I found on the web.

So here are the numbers:

BreweryYears IndependentAge When Sold
Camden 2010 - 2015 5
Wicked Weed 2012 - 2017 5
10 Barrel 2006 - 2014 8
Meantime 2000 - 2015 15
Sharps 1994 - 2011 17
Wychwood 1983 - 2002 19
Ballast Point 1996 - 2015 19
Elysian 1996 - 2015 19
Firestone Walker 1996 - 2015 19
Bath Ales1995 - 2016 21
Lagunitas 1993 - 2015 22
Goose Island 1988 - 2011 23
Dark Star 1994 - 2018 24
Boulevard 1989 - 2013 24
Achouffe 1982 - 2006 24
Ringwood 1978 - 2007 29

Make of that what you will.

Update: okay, here's one interpretation. With a few exceptions, people don't generally open breweries to get rich, they do it because it's fun and interesting. For the ones that are lucky enough to create a large and successful business the fun and interesting element keeps going for a while, but fifteen years down the line it starts to get samey. At this point "would you like to exchange personal control for a large amount of money (and maybe the opportunity to focus more on the parts of the business that you find interesting while we pay for some suits to handle the boring stuff)" seems like a more attractive offer than it did before.

Thursday, 15 February 2018

Getting what you pay for

It's good to see some talk about class and price in craft beer coming up again. For all that pricing issues generate endless bickering, it's a subject that shouldn't be ignored. How many people are put off by the cost of craft beer? Is it socially responsible to create a culture that has a financial barrier to entry? Should craft brewers be more concerned with making beer that's more widely affordable - affordable as a regular night-out drink, not just for one reverentially sipped half a month?

The focus in this last suggestion is often on ingredients. Picking and choosing high-grade malt adds to a brewer's costs. So does using large quantities of the currently fashionable hop varieties. So does picking fancy extra flavouring ingredients - single estate coffee or Madagascan vanilla pods. Could a craft brewer use less expensive raw materials, maybe just for one beer, to produce something that's still great, still representative of modern beer, but is affordable to a much wider market?

The problem with this is that ingredient costs aren't the whole story - in fact, they're sometimes a relatively small part of the whole story. Breweries are also spending money on, among other things, rent, wages, capital, utilities and transport costs and small breweries are generally going to be less efficient and less able to save money on those costs than a larger operation, even if they're brewing an identical beer. They won't have spent the effort ruthlessly optimising their process, their equipment and their business to keep overheads as low as possible.

In short, when you pay "craft prices" for a pint in a pub, you could actually be paying for quite a lot of things:

  • You might be paying to support a bar that's designed for comfort rather than capacity.
  • You might be paying to support a pub that doesn't compromise its character by doubling up as a coffee shop or a family restaurant.
  • You might be paying for beer that's been kept in chilled storage and sold fresh rather than being kept at ambient temperature for months on end.
  • You might be paying to support one of a number of a small, independent business rather than a larger and more efficient industrial operation.
  • Or you might be paying for more hops and higher quality malt.

I don't really have a simple pronouncement to make on what's right and wrong here. In practice, I suspect that a lot of different approaches can co-exist, from Punk IPA in Wetherspoons to the priciest teku of nanobrewed barrel-aged stout in a modernist craft-temple. But I do think that when we ask for beer to be cheaper, we need to think about what we'd actually be willing to compromise on to get it there, because just using unfashionable hops won't do it on its own.