Friday, 3 February 2017

Never the twain shall meet

On his Oh Good Ale blog, Phil describes the stock of bottles left over after pre-Christmas over-buying. It’s very noticeable how they divide into two distinct camps in terms of both price and bottle size.
What’s the point here? Just to say that the market is segmenting, and that the prices on the ‘craft’ side of the street really are rather high, when you stop to think about it. On the other hand, having a segmented marketplace doesn’t necessarily mean that beer drinkers have to commit to one segment and no other, or even that brewers have to – although sticking to one market segment would save you the bother of managing multiple different price ranges, which would have to be a challenge. Playing both sides may even become a necessity. There may not always be enough people willing to pay the equivalent of £7-8 a pint for an unknown style from an unknown brewery (or collab); equally, there may not always be enough people willing to pay even a couple of quid for yet another familiar bitter from yet another mid-table brewery. Sadly, beer owes nobody a living.
In the typical supermarket you can see much the same thing – a large Premium Ales section of both bottles and cans, almost all in 500ml sizes, and a rather smaller Craft section, again a mixture of bottles and cans (although in this case you can buy single cans) almost all in the 330ml size. The average unit price will be much higher in the Craft section. How many beer buyers, in practice, mix and match between the two, rather than sticking exclusively to one and ignoring the other?

In a sense, the craft brewers have been successful in carving out a niche that is easily identifiable by pack size, and where they succeed in charging a relatively higher price. The same is true in pubs of “craft keg”, which is immediately marked out as something apart from cask, and again commands a noticeable price premium. While it lasts, that’s a good place to be, but ultimately a niche is self-limiting, and the time may come when people start wondering whether it’s really worth paying the same for a 330ml bottle of this as they can for a 500ml bottle of that of exactly the same strength.

Cloudwater’s retreat from cask may look like an astute business decision, but isn’t it partly a deliberate avoidance of going head-to-head with the big boys? And you do have to question whether Thornbridge’s move from 500ml to 330ml bottles, often at much the same price, and often for beers of modest strength, will prove to be limiting in the long run. I can’t honestly see that in a couple of decades’ time 330ml is going to become the standard size for off-trade beers, nor a half or two-thirds for draught in the pub.

8 comments:

  1. It's a bit odd that in general in pubs what you pay is affected by the ABV but it hardly comes into it in the supermarket (apart from a few very low abv ones going for a quid). For me personally I do mix and match between the two, but then the offer at Morrisons crosses the divide. But if it wasn't for the fact that I like variety I'd be sticking with the 500ml Proper Job at £1.50 each. I disagree with you though on the 330ml getting phased out. I think if anything in the long term we're going to see more of it. ABI will be pushing it, and we'll see more 4/6 packs just like you have for lager.

    Of course, the real big difference is when you go from the supermarket to the independent. But then the independent does give you beers that supermarkets just don't have (even Booths). I'm perfectly comfortable with that, in the same way that I'm happy glugging a bottle of wine at a fiver but quite like trying the 10 quid plus ones too.

    And seeing as you mentioned Cloudwater, I believe they're going to be exclusively canning in 440ml. Apparently this is the year of the 'big can'.

    ReplyDelete
    Replies
    1. Oh, I'm definitely not saying that 330ml sizes will be phased out, just that they won't take over the world. And the single-price PBA model in supermarkets has a similar stifling effect to flat-rate pricing for guest beers in pubs (esp Spoons).

      Delete
    2. Ah ok. I don't know, a couple of decades is a long time. If we were to follow the US path then PBA will end up becoming relatively niche.

      Delete
    3. But 12oz measures (often in six-packs) have always been the norm in the USA.

      Delete
    4. The price differential in pubs seems to be much more marked with craft beers than cask. Most places with a selection of cask will price the stronger beers higher, but the 8% stuff will only be 30 or 40p more than the 4% session ales. This I suspect reflects the increased duty. But in many craft bars, the 8% and above stuff is often double the price of the 4% beer.

      Delete
    5. It depends whether the pub/bar uses percentage or cash to calculate margins. Wholesale prices for "craft keg" ( defined by the brewer or wholesalers rather than the customer) certainly increase by more than the additional duty as brewers look to augment their margin for more marginal products, but retailers using percentage margins exacerbate the problem (as do many restaurants).

      Delete
  2. The big (and small) breweries would love to sell less beer at the same price. The only question really is whether they will be able to push the marketing enough to make it stick.

    ReplyDelete
    Replies
    1. Problem at the moment is that anyone cutting down production would have the gap filled by either a new brewery or another brewery increasing production to meet the demand at the previous price point.

      Delete

Comments, especially on older posts, may be subject to prior approval. Bear with me – I may be in the pub.

Please be polite and remember to play the ball, not the man.

Any obvious trolling, offensive or blatantly off-topic comments will be deleted.

See this post for some thoughts on my approach to blog comments. The comment facility is not provided as a platform for personal attacks on the blog author.