Craft brewing

Why Are So Many British Pubs Closing?

More than a quarter of Britain’s pubs that existed in 1980 have closed their doors. Last year alone, the country lost some 1,100 pubs. What’s behind this trend?

One factor is spiraling real-estate prices, which provides developers with an incentive to convert pubs into houses and apartments. In just the last five years, the average house price has risen by 50 percent.

Another factor was a 2007 law banning smoking in public places.

And then there’s cost. A pint of beer is five times as expensive in a pub as it is in a supermarket. The price discrepancy is due in part to Britain’s tax code, which imposes a higher levy on pub revenue than supermarket revenue; and to higher staff costs in the service industry than in retail.

But there’s some good news for pub lovers. It is now possible to list local pubs as “assets of community value”, which makes development more difficult. Parliament recently scrapped an inflation-linked excise tax on beer, providing some price relief for beer drinkers. Last but not least, Britain’s craft-brewing boom has resulted in a more diverse selection of beer at the “friendly local”.

Beer…By the Numbers

  • Top ten brewers’ share of the craft beer market in 2015: 3.8 percent.
  • Their share of the craft beer market in 2009: 5 percent.
  • People employed by Ohio craft breweries: 2,500.
  • Ohio’s current craft brewery count: 190.
  • New York State’s brewery count in 2015: 240.
  • Its brewery count in 2012: 95.
  • Craft brewing’s impact on New York State’s economy: $3.5 billion (fourth-highest in the U.S.).
  • Boston Beer Company’s (ticker symbol: SAM) closing price on May 13: $150.04 a share.
  • SAM’s highest price during the past 52 weeks: $266.62.
  • Calories in a 12-ounce can of Budweiser: 145.
  • Calories in a 12-ounce can of Bud Light: 110.
  • Bud Light’s share of the world beer market: 2.5 percent (third overall).
  • Snow beer’s share of the world beer market: 5.4 percent (first overall).
  • Cost of a liter of Snow beer in China, its home country: $1.
  • Growth in Snow’s sales volume since 2005: 573 percent.
  • Is Regulation Hurting Craft Brewers?

    Matthew Mitchell and Christopher Koopman of George Mason University argue that craft brewing is hamstrung by regulation at every level of government.

    At the federal level, brewers need approval for their label art—this step can take 100 days—and depending on their ingredients and methods, their formula might require approval—which could mean yet another 60 days’ delay.

    At the state level, brewers face additional, and often redundant, rules. Some states’ criteria for getting a license are so broadly written that they invite arbitrary denials, especially if they let existing brewers exclude competition. Once licensed, craft brewers must contend with more legal barriers–the worst of which is the three-tier system, which requires brewers to sell their products through distributors. On top of that, many states’ franchise laws force small brewers to either stay in unhappy marriages with distributors or pay a huge sum for a corporate divorce.

    Mitchell and Koopman also note that regulators don’t have an incentive to look at the combined effect of regulations at all levels. They also believe that regulators are oblivious to the rules’ practical effect: preventing newcomers from challenging existing firms. (Which explains the persistence of the “bootlegger and Baptist” theory of regulation: restrictive alcohol laws hand an advantage to existing suppliers.) The authors also criticize governments’ efforts to “rescue” craft brewers by with targeted assistance, exemptions, and subsidies, contending that those measures are not only ineffective but also create economic inefficiencies.

    Why Craft Beer Can Save America

    American consumers are driven by the lowest price–a marketing approach pushed relentlessly by companies such as Wal-Mart. But author David Sirota sees a different approach. He points out that beer consumers are choosing quality over cheap, mass-produced American beer:

    Produced through the macrobrews’ low-price, high-volume process, they don’t contain high-quality ingredients, they don’t contain much alcohol and, thus, they simply don’t taste good. Knowing this, the macrobrews have logically designed their marketing campaigns to focus on everything (the can, the type of people who drink it, the logo, etc.) but the actual product. Indeed, if there’s one ubiquitous reference that macrobrewing companies make to the beer itself, it’s usually one telling you how cold the beer is or should be–a temperature that, quite deliberately, helps hide just how bad the beer actually is.

    By contrast, craft brewers, which are mostly independent small and medium-size businesses, know they can’t compete on a volume. They therefore promote quality and diversity.

    Sirota believes that the David-versus-Goliath competition goes beyond the brewing industry, In the years to come, in a variety of products, consumers will choose between China’s “Wal-Mart” model–low prices, cheap labor–and Germany’s “craft brew” model–high quality and high performance.

    State of the (Craft Brewing) Union

    After a spending a week in the Pacific Northwest, Mike Bristol of the eponymous Bristol Brewing Company (Paul couldn’t wait to use the word “eponymous”) is back at work in Colorado. On the brewery website, Mike reflects on the state of craft brewing in America. Despite a sick economy, the industry is strong. Did you know that craft beer has grown faster than any segment of the beverage alcohol industry? Or that it has grown for 35 years in a row?

    Mike has another fun fact: Half the population of America lives within ten miles of a brewery. (raises hand) There are two within ten miles of Chez Ludwig, plus a restaurant that serves beer from a brewpub in the next county.

    The Top Ten Craft Beer Stories of 2009

    With the year quickly winding down, beersage at BeerNews.org is out with the top ten craft beer stories of 2009.This year’s list is dominated by beer releases. including a beer with the highest-ever ABV. However, the year’s number-one story in craft beer involves social media: it’s gotten to the point that Twitter and Facebook are as essential to a brewery’s operation as malt and hops. Beersage adds that individual beer enthusiasts are turning to social media–but you probably knew that already.

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