Of all the multiple nonsenses written about the acquisition of a minority stake in Beavertown Brewery by Heineken International, perhaps the stupidest came from someone called Kirk Hilton on Twitter, who declared this week that Logan Plant and his crew had “chosen to turn their back on the craft beer community” and “should know about the effect” its “sell out” had had on “the community as a whole”.
Let’s be clear. There is no “craft beer community”, any more than there is a “Stella Artois community” or a “Nescafe community” or a “sourdough bread community”. I drink craft beer, whatever “craft beer” is, but I certainly don’t regard myself as part of a “community” as represented by Kirk and his pals on the Facebook UK Craft Beer Forum, where, as part of the general tedious posturing, cask beer is regularly dismissed as “twiggy” and “boring”. That’s not a “community”, it’s a group of snobby elitists with their heads so far up their bottoms they can probably see their own tonsils. The laugh is that the hop-laden brews they love (and indeed I love many of them too) sprang from beers developed originally by people like Fritz Maytag at Anchor Steam and Ken Grossman at Sierra Nevada that were themselves inspired by the “twiggy” bitter beers of England: Anchor’s Liberty Ale, the first highly hopped Cascade-driven West Coast pale ale, sprang directly from a visit Fritz Maytag made to Keighley in Yorkshire around 1974, where he sampled Timothy Taylor Landlord.
What is particularly crass about the reaction from Hilton and the rest of the UKCBF crew is their demand that Beavertown must stay small, or else it is guilty of “betraying” the “craft beer community”. What they ought to be doing, of course, is cheering until the rafters shake at the success of one of the best four or five start-ups in the UK beer business, which will now be able to bring its beers to even more drinkers.
Logan Plant, like all successful businessmen, wants to see his business grow even larger: only a fool, frankly, sits on something that could potentially become massive and declines to allow it to grow as big as possible. (The reason why that’s foolish, in case you can’t work it out, is because what will happen is that someone else with fewer scruples about making a fortune will come along and replicate what you’ve done, overtake you, steal your market because they’ve grown big enough to have the marketing clout to do so, and put you out of business.)
However, like others – Meantime, Camden Town, even BrewDog – Plant discovered that there are few or no ways to bring in the money required to step up to the next level without shaking hands with Big Capital. The £40m Heineken is pumping into Beavertown will enable it to build (if the Caterer’s figures are correct) a 275,000-barrel (450,000hl) brewery on three acres of land, tn tims the size of their current plant, creating 150 jobs. For a company founded only in 2012, that’s fantastic. But as Plant told the Caterer, when he first looked at how to get the cash for that project, “Crowdfunding simply couldn’t achieve the funds we need, so that option came off the table quickly. We then started looking at private equity, which initially looked solid. However, the more we looked at the offers, it became clear that it was only an option for the short to medium term.
“That was when we concluded that the most sensible and stable option was the one that sat furthest away from our minds at the start of the process, one that at first glance felt alien but on closer and more detailed inspection offered us boundless opportunities to grow and develop in the right, safe business manner: finding another like-minded brewery as a partner.”
The finance people Plant used in the negotiations with Heineken, incidentally, are Arlington Capital Advisors of Georgia in the United States, who were the same gang that advised BrewDog last year when the Aberdeenshire lads sold a £213m stake in themselves to TSG Consumer Partners, the $5bn San Francisco-based private equity firm that owns Pabst, the American “industrial” lager brand. You might think that as a result James Watt is being a tad hypocritical in declaring that BrewDog will no longer stock Beavertown beers after Heineken bought a minority stake in the East London firm – I couldn’t possibly comment.
What too few people in the craft bubble fail to grasp is that the overwhelming bulk of beer sold in the UK – nine pints in 10 – is mass-produced, and if we want that to change we have to cheer on those successful craft beer brewers who are attracting investment to grow larger, and expand the craft beer market. Ah, but as Kirk Hilton tweeted to Beavertown: “You’re not craft beer any more.” Silly Kirk thinks he can spot the change in the taste of a pint of beer the moment someone else buys a stake in the brewer that made it. Fortunately the UK Craft Beer Forum represents perhaps 0.08 per cent of all British beer drinkers, and Beavertown, I am sure, will succeed and thrive without its approval.
Whatever you think of Camden Town Brewery’s beer – and enough people like it to swallow more than 300,000 pints of Hells lager, Gentleman’s Wit and the rest every week – the company’s expansion in under seven years from nowhere to third-biggest brewer in London, with two of its beers, more than any other craft brewer, in the list of top 100 pub brands is hard not to hail.
Now it has made the biggest investment in a new brewery in London since Guinness revealed its Park Royal plant in 1936, 81 years ago. On Saturday Camden Town let the public have a first look round its 57,400 square feet production facility in East London which actually started brewing a month ago, and is capable of producing 200,000 hectolitres a year (122,000 barrels in Fahrenheit), more than ten times as much as the original railway arches brewery in Wilkin Street Mews, NW5, opened 2010, and with the potential to rise to 400,000hl a year. Several hundred people covering the spectrum from hipster to sceptical elderly real ale fan (he knows who he is), including families with toddlers in buggies, took advantage of the free tickets, and the offer of bars, food stalls, music, games, beer at £4 a pint and trips round the brewery (with one free beer), and ignored the rain, to travel to Ponders End to see what £30 million of shiny German stainless steel and other assorted high-tech beer-making equipment actually looks like. Continue reading A look round Camden Town’s new Enfield brewery→
A total of £50m has been raised in the UK over the past four years in crowdfunding efforts by more than 40 different craft breweries, and half a dozen craft beer retail operators who have tapped tens of thousands of – overwhelmingly male – investors.
More than half the money raised went to just one company, BrewDog, the maverick Scottish brewer, recently valued at almost £1 billion, but other big beneficiaries of the remaining £23 million raised include Chapel Down Group, owner of Curious Brew, which gathered a total of £5.66m; Camden Town Brewery in North London, which raised more than £2.75 million from 2,173 investors via Crowdcube before being sold for £85 million to the international giant AB Inbev in December 2015; Innis & Gunn of Edinburgh, which raised £2.2 million from almost 1,800 investors; and the Wild Beer Company of Somerset, which brought in £1.8m from just over 2,000 backers.
The money is continuing to roll in: Redchurch Brewery in East London recently closed its second fundraising drive through the crowdfunding platform Crowdcube, raising another £433,000 from 688 investors to add to the £497,000 it brought in last year. Also on Crowdcube, The BottleShop, a craft beer importer and distributor with, currently, three bars of its own and plans for more, has just closed its own equity crowdfunding campaign with £403,000 in funding from more than 380 investors
Top 10 UK brewery crowdfunding efforts
But how many of those investors will ever see a decent return on their money, other than the warm glow of owning a small slice of the maker of their favourite beers? With three quarters – 18 out of 25 – of the companies involved for which financial records have been published reporting losses for their last financial year, the answer is likely to be: “Not many, and even then, not for quite a while”. The UK’s financial watchdog, the FCA, warns in the section on crowdfunding on its website: ” It is very likely that you will lose all your money. Most investments are in shares or debt securities in start-up companies and will often result in a 100 per cent loss of capital as most start-up businesses fail.” Earlier this year the Guardian quoted figures from the Insolvency Service showing that 19 drinks manufacturers went sternum to the sky in 2014, 23 in 2015 and 24 in the first nine months of 2016.
Yesterday’s announcement that Marston’s is acquiring the Charles Wells Brewing and Beer Business for £55 million and loose change (or “working capital adjustments”), at a pretty conservative 5.5 times ebitda, adds another five historic old brewery names, Courage, McEwans, Young’s, William Younger’s and Wells, to a portfolio that already reads like the line-up at a quite good small beer festival circa 1990: Marston’s itself, Banks’s, Jennings, Thwaites, Ringwood, Wychwood, Brakspear, Mansfield, Mitchells (with Lancaster Bomber) and, if you include beers Marston’s brews under licence, Bass and Tetley.
It will give the company six working breweries, and more than 50 “ale” brands, from Bank’s mild to McEwan’s Champion. That’s around twice as many as its closest rival, Greene King, which runs just two breweries, its own original home in Suffolk and Belhaven in Scotland, and continues brewing under the names of just five vanished brewers: Morlands, Ruddles, Ridleys, Hardy’s & Hansons and Tolly Cobbold. On the retail side, however, Greene King owns around 3,100 pubs and bars, making it the third biggest operator in the country, Marston’s “just” 1,750 or so, meaning it vies with Mitchells & Butlers for fourth place.
So what’s with Marston’s policy of adding ever more seemingly pretty similar “twiggy brown bitters” to its line-up? I interviewed the company’s chief executive, Ralph Findlay, two years ago, right after Marston’s had acquired Thwaites’s beer portfolio and made those beers available to all its pubs, and he was pretty specific about the desire to increase further his already considerable ale offer: “Choice is where the market is at,” Findlay said. “Range is something you simply have to have, both for licensees and their customers.” Even after the Thwaites acquisition, he said. Marston’s would continue to look for “opportunistic” purchases if they came up: “We look at potential acquisitions that are consistent with our strategy and which can contribute to our return on capital. We have had a strategy over the past five years that’s not been reliant on acquisitions, though we’ve made them when it’s been opportunistic to do so, such as the acquisition of the Thwaites brewing business. I think we’re in the fortunate position of having an incredibly strong beer range from the various breweries that we’ve got. It’s a strategy that is undoubtedly working.”
Why not, like others, just buy in beers, rather than buy breweries? Because, as Findlay says, it’s a strategy that is working. Marston’s also revealed its half-year figures yesterday. Own-brewed beer volumes were up two per cent, in a declining market. Sales were up three per cent, to £440.8m. Average profit per pub was up three per cent. Like-for-like sales were up between 1.6 and 1.7 per cent. More City analysts than not continue to have the company as a “buy”.
Should we mourn the capture of more beer brands by one large company? Not in this case, I believe, and the reason is something you probably don’t know, because Marston’s has never, curiously, made a big parade about it. Five or so years ago, Marston’s brewers made a mighty oath that they would not let any of their beers continue to go on sale in clear glass bottles, believing that the dangers of the product they poured their hearts into being light-struck and skunky through not using brown bottles was too great. The company’s marketeers accepted the brewers’ ruling, something that brewers at no other large UK ale brewery, apart from Fuller’s have been able to achieve: Greene King, Shepherd Neame, Hall & Woodhouse, all sell some or several of their beers in clear bottles, and even Charles Wells has at least one several of its brands, includingWaggle Dance (originally, history fans, made by Wards of Sheffield Vaux of Sunderland, then Vaux, then Young’s, and thus about to be on its fourth fifth owner) and the Burning Gold iteration of Bombardier (as the Beer Nut reminded me) in flint glass. The commitment by Marston’s to beer quality ahead of spurious marketing arguments about how consumers are supposedly encouraged to buy beers that they can see the colour of makes me more confident that Wells’s brand are in relatively safe hands under the boys from Wolverhampton.
Ironically, or at least I think it’s ironic, one of the brands Marston’s is acquiring distribution rights to via the Wells purchase, the Spanish lager Estrella, has just been running an ad campaign un the UK under the slogan “Darker bottle, better beer”, explaining to consumers that “research has shown that exposure to light damages beer and affects its flavour”, and for that reason it was darkening its bottles by 30 per cent.
I’m slightly puzzled that Charles Wells has said that, while it will now be concentrating on its pub estate, it will also be building a new small brewery in Bedford to brew the Charlie Wells “craft beers” and John Bull range, which it is not selling to Marston’s. Is this continued toehold in the brewing world a way of appeasing the family shareholders (many of them formidable elderly females who, Paul Wells once told me, all had his phone number and would ring him up when they felt the company’s figures weren’t good enough) who might try to vote down the sale of the main brewing operation if they felt the company was cutting off its roots after 141 years of supplying beer to the people of Bedford?
Charles Wells currently brews several beers I’m very fond of, including Courage Imperial Russian Stout, Young’s Winter Warmer and McEwan’s Champion, that will now be brewed under Marston’s control. For probably the only time ever, I’m going to let Tim Page, chief executive of Camra, speak for me: giving a cautious one thumb up to the takeover, he said yesterday: “Marston’s has a positive track record of keeping the breweries it acquires open, in situ, and in many cases investing in the sites to increase capacity, and we urge them to continue that policy. We’d also encourage them to protect the brands that they have acquired and increase the range available to beer drinkers, by continuing to supply them alongside the existing beers produced by Marston’s owned breweries.”
The real story behind the news that BrewDog is copping more than £200 million from the private equity firm that also part-owns Pabst Blue Ribbon, is not, despite the howls of “hypocrisy!”, that nobody can resist a big juicy cheque, no matter how punk they claim to be. It is, rather more sadly, that crowdfunding will only get you so far, and if you have really big ambitions, you’re going to have to get in bed eventually with The Man.
The deal with TSG Consumer Partners, the $5bn 30-year-old San Francisco-based private equity firm, sees TSG acquire “approximately” 22 per cent of BrewDog for what the Sunday Times says is £213 million, split between a £100 million investment in the firm and £113 million paid to existing shareholders.
Of the two founders, James Watt is seeing his stake in the firm drop from 35 per cent to 25 per cent and Martin Dickie’s slice goes down from 30 per cent to 22. It’s not clear (to me, anyway) if that dilution is because the pair are selling 18 per cent of the firm between them to TSG, or some of the fall in their percentage ownership comes from new shares being issued: the Sunday Times says one of the motions passed at last month’s BrewDog AGMEGM in Aberdeen saw the creation of a new class of preferred shares, which would guarantee TSG a minimum compound annual return of 18 per cent if the company is bought or floated. There’s a fair bit of dilution, I reckon, or the figures for how much existing shareholders are getting out of the deal don’t add up. But even so, I’d say James is receiving north of £50 million and Martin more than £40 million. Not bad for ten years of being rude about the rest of the UK brewing industry and winding up the Portman Group. Looks like Dr Johnson’s comment more than 230 years ago about selling a brewery being the way to become rich beyond the dreams of avarice is still true. According to Watt, the sums in the deal mean BrewDog now has an enterprise value of £1bn (I make it £968 million, but hey, £32 million is mere loose change), thus making it the first new British brewery “unicorn”.
The most important figure, however, is the £100 million BrewDog now has to play with. That’s four times the amount the company has raised so far through its Equity for Punks crowdfunding schemes, which have given it more than 50,000 shareholders, but taken six years. The company is currently attempting to get $50 million through Equity for Punks USA, though this does not appear to be going anything like as well as its British crowdfunding efforts: the latest figures seem to suggest only $3.5 million or so has been gathered in. That size of sum doesn’t go very far: the hotel and sour beer plant BrewDog is building next to its new brewery in Columbus, Ohio, which finally opened in March, several months late, is costing $6 million. Earlier this month the company announced that it was looking to open breweries in Asia and Australia: based on how much it spent on the Ellon brewery in Aberdeen, that’s £40 million to £50 million that will be needed, in addition to the money required for the planned expansions in Ellon and Columbus. Crowdfunding simply won’t cover expansion of that magnitude.
Tying up with someone like TSG was pretty inevitable, then, if Watt and Dickie wanted to maintain the momentum they have built up with BrewDog. And why should they not? Is it somehow not “punk” to want to be as successful as you can be? Are they meant to say: “No, that’s it for us, really, we’re just going to sit on our arrises from now on”? If you believe in your product, surely you should want to reach as many people with it as possible, however that possibility has to come about? As Watt said in the note that went out to shareholders announcing the TSG deal, it represents “a launch pad for us to turbocharge our mission to make the world as passionate about craft beer as we are.”
Some have declared the TSG deal a betrayal of all the people who bought shares in BrewDog apparently believing that Watt and Dickie would never “sell out”; but this “betrayal” involves a pretty enormous return on those Equity for Punk backers’ investments. As Watt said: “Shares purchased in Equity for Punks I, which closed in February 2010, are now worth 2,800 per cent of their original value. Even craft beer fans who invested in Equity for Punks IV last year have seen the value of their shareholding increase by 177 per cent in just one year.” You don’t get that sort of return putting your money in Nationwide.
Mind, it was perhaps a little naughty of BrewDog to describe TSG as “one of the world’s leading growth funds with successful investments in global brands like Pop Chips and Vitamin Water” without adding that it also has a substantial minority holding in Pabst, purveyor of just the sort of industrial brews Watt and Dickie swore they would never sell out to. I am sure Alastair Hook and the guys at Meantime, whose beers BrewDog withdrew from its bars after the Greenwich brewer was bought by SAB Miller, are smiling sardonically.
It’s deja bu time again in the world of Big Beer, with the return of excited prognostications for the no alcohol/low alcohol sector. All the marketing “experts” involved in the last round of predictions about how fast sales of no alcohol/low alcohol beers were going to expand have now retired or died, apparently – to be fair, it was 25 years ago – and a new generation is again falling for the fallacy of unwarranted extrapolation.
The Dutch giant Heineken is leading the charge, with the launch in the UK of Heineken 0.0. Currently no-alcohol beer has a tiny one per cent slice of the UK beer market, but David Lette, head of premium brands at Heineken, is popping up in the trade press declaring that he expects to see the alcohol-free beer category double in the next three to four years, and announcing that to make sure Heineken gets its share of this, it is putting £2.5m behind the launch of 0.0, with a £1.5m consumer advertising campaign breaking in July.
If they had given me a tiny one per cent slice of that marketing spend – just £25,000, chaps, very reasonable against what other consulting companies will charge you – I could have saved them all the rest of their money by assuring them that it ain’t going to happen: there will be no doubling of no-alcohol beer sales. And I hate to pour icy water all over young entrepreneurs, but the message is the same for the team behind Nirvana Brewery, East London’s latest, which started at the beginning of this year as the country’s first dedicated no/low alcohol brewery. The no alcohol/low alcohol beer market didn’t take off back in the early 1990s, for a variety of reasons, and for just those same reasons it’s not going to take off now.
In 1987 beer marketeers were even more optimistic about the future of alcohol-free beer, after it had apparently doubled sales in a year, to be worth £45 million, with predictions that it would grow tenfold by 1999. Barbican, the market leader, made by Bass, which had been launched in 1979, was spending £2.5m on an advertising campaign to fight off new entrants such as Kaliber, from Guinness, and Swan Light, from Allied, the first draught low-alcohol beer. Barbican’s first television ad campaign had featured Lawrie McMenemy, then the highly successful manager of Southampton, declaring: “It’s great, man.” McMenemy was later prosecuted for drink-driving, suggesting he perhaps didn’t think Barbican was quite as great as he had been paid to claim. Kaliber had signed up comedians Lenny Henry and Billy Connolly, and the actor Michael Elphick, to act as spokesdrinkers: another example of the dangers of celebrity endorsers, since Elphick was to die in 2002 of a heart attack not helped by his drinking up to two litres of spirits a day.
Thirty years on, that £45 million the alcohol-free beer market was valued at in 1987 pounds is equal to around £180 million in 2017 pounds – which is more or less what today’s alcohol-free beer market in the UK is worth. In other words, in three decades the sector hasn’t grown at all, in real terms. But 30 years ago, David Lette, today head of premium brands at Heineken UK, was studying for his International Baccalaureate at college in Singapore, according to his LinkedIn biography, and he didn’t join Heineken until 2002, thus missing out on the first great failure of non-alcoholic beer to live up to the extrapolations, and probably explaining why he is so optimistic today that the extrapolations for the no/low alcohol beer market are going to come true.
If you think the major problem facing the Campaign for Real Ale today is whether or not to embrace “craft keg”, or how to prevent more pub closures, then like the campaign itself you’re failing to acknowledge the elephant not just dominating the room but loudly trumpeting in your ear – the latest trumpeting being the news that Cloudwater, the highly regarded Manchester brewer barely two years old, is to give up making cask beer. That elephant is the one marked in big letters down both flanks “poor beer quality”, and despite Camra being founded 46 years ago to fight that exact battle, and – originally – that battle alone, it’s still a war far, far from won.
When Cloudwater started in 2015, the plurality of its output was in cask – 45 per cent, against 25 per cent in keg and the rest in bottle. Last year that was down to 23 per cent in cask, and the rest split almost evenly between bottle and keg. Now, with a new canning line starting up, co-founder Paul Jones says cask production is being halted, and the expected output for 2017 will be 60 per cent keg, 40 per cent bottle and can – with the aim to more than double annual turnover from £1.15million to £2.7 million and 13,000hl/8,000 barrels. Paul lists several reasons for dropping cask: the price the market will accept, which is less than the price it will accept for keg beer, despite all the expense of racking, handling and collection casks on insufficient margin; the fact that, tbh, Cloudwater finds the beers it can sell in keg and bottle more exciting than those it can sell in cask; and finally, and most pertinently to this debate, “another often encountered set of issues”, the quality problem. In his end-of-year blog round-up, Paul complained that slightly hazy casks of keg were being “flatly refused” without being tasted, while casks tasting of diacetyl, either through brewing faults or because they were being served too young, are “all too often good to go”.
Cask beer, Paul said, “should take pride of place in every bar and pub”, but it “requires not just the same skill and discipline as keg beer to brew but also requires excellent stewardship to be pulled in to a glass in a way that best represents the establishment, the brewer and the rich and varied heritage of cask beer in the UK.” He doesn’t say so directly, but the implication is clear: Cloudwater doesn’t believe that the “excellent stewardship” is there at the point of sale in enough bars to present any cask beer it produces in the way that would give the best possible result for the customer.
It is not alone. I interviewed a number of leading names in the UK brewing world on the subject of beer quality recently, and they all agreed there is still a huge, huge problem. Rob Lovatt, head brewer and production director at Thornbridge in Derbyshire, another of the half dozen or so most admired new breweries in the UK, said: “Despite being extremely proud of the craft beer revolution in the UK, I often shy away from ordering a new craft beer unless I’m damn sure it’s going to be a good pint. Often craft beer can be not just hazy but actively soupy, flat and/or oxidised, and people are expected to pay a premium for these beers.” Alastair Hook, founder of Meantime Brewing in Greenwich, London, the most successful new brewery start-up in the past 45 years, and now owned by the Japanese brewer Asahi, has consistently refused to involve Meantime in the “cask ale” segment, believing that whatever bonuses cask-conditioned ale might bring in terms of flavour, the downsides of lack of stability and openness to infection inevitable with cask beer mean the customer is much better off with the consistency provided by “craft keg”.
However, he said, and this is a vital point regularly ignored, “all of the afflictions that cask ale suffers from apply to brewery-conditioned beers, and this is where there is a major threat to all beer regardless of type. Poor line cleaning, interchanging beers, many of which are infected because of poor practice at the brewery, warm storage, warm chain distribution, antiquated dispense systems that cannot be cleaned, all paint a worrying picture. The first wave of craft breweries in the US fell foul of quality issues in the 1990s. Hundreds didn’t make the next decade. If brewers in the UK are complacent, the same will happen here. Meantime invests hundreds of thousands of pounds annually to counter this threat. The threat is real – and as we say in industry, you are only as good as your last beer.”
Beer can take you to some strange and unexpected places. On Sunday I was in the sweaty backstreets of Baishizou, a faintly dodgy suburb in Shenzhen, southern China, visiting a cramped and not necessarily fully legal microbrewery on the ground floor of a somewhat scrubby apartment building. My mission: to help the brewery’s owner, a former US military man called Joe Finkenbinder, and another American brewer, Dave Byrn of the Pasteur Street brewery in Saigon, make the first ever Sino-Vietnamese collaboration beer, a black gose called Disputed Waters.
The trip to Shenzhen, a city that has exploded from almost nothing to 11 million people in only 30 years, happened because I had been invited out to its southern neighbour, Hong Kong, to be an “honorable judge” (that’s what it said on my name tag) in the first ever beer competition solely for commercial Hong Kong brewers. When I was working in Hong Kong in 2011 I helped get the city’s first beer festival some publicity, and the festival organiser, Jonathan So, became a mate. At that time there were just two microbreweries in the city, and one of those closed soon after, so that when I left Hong Kong in 2013 there was only one left.
Since then brewery numbers in the former British possession have taken off like the rockets the Chinese have been making for 800 years: ten by the end of 2015, and then doubling to 20 today. So when Jonathan emailed to ask if I would like to be a judge in the first Hong Kong beer championship, as part of the city’s fifth beer festival, I was straight onto Expedia looking up flight times, delighted to have the opportunity to finally try beer made by all the bastards who had cruelly waited until I left the city and gone back to London – where the new small brewery scene had also boomed in my absence – to start brewing commercially.
Then Joe Finkenbinder, who was also one of the judges, emailed to ask if I would like to cross the border into China, visit his brewing set-up, which is barely two years old itself, and take part in a collaboration brew with Dave Byrn. When you’ve already travelled 6,000 miles, a few extra don’t matter: and anyway, how many lifetimes have I got left to take the rare chance to visit a Chinese microbrewery? Continue reading How I helped brew a black gose in the backstreets of Shenzhen→
I was actually speaking to a senior London brewer about something else entirely on Monday when he asked me if I had heard that AB InBev had bought the Camden Town Brewery, and my instant response was: “That’s the least surprising news I’ve ever heard.”
Camden Town has always seemed to me the Brewery Most Likely to Sell Out to a Big Buyer – certainly since its beers started appearing on bartops all over London. It’s got a great brand name, picking up the associations of a part of the capital that is somehow, at least in its image, gritty, urban, young, trendy and authentic all at the same time (possibly relevant trivia: Camden is where Scrooge’s clerk Bob Cratchit and his family lived, which suggests the place has had a reputation for cheery grittiness since Dickens’s time).
But it ought to be expected that the brewery is a great brand: founder Jasper Cuppaidge is married to the daughter of Sir John Hegarty, a partner in Bartle Bogle Hegarty, one of Britain’s most renowned advertising people, the man who gave us Vorsprung Durch Technik and Nick Kamen stripping to his boxers in a launderette to advertise Levi’s, and who is – or was – Camden Town’s chairman. If Hegarty and his ad world pals didn’t stump up the initial funding that allowed Cuppaidge to install all that shiny brewing kit from Germany’s Braukon in a Kentish Town railway arch in 2010, then I WOULD be surprised. And if there wasn’t always the possibility of a trade sale in the business plan, I’d be pretty surprised there too. (More trivia: Hegarty apparently designed Camden Town’s logo, with the horseshoe shape a nod to the Horseshoe in Hampstead where Cuppaidge started brewing)
Are you a mature but still lively Victorian brewery? Do you worry that younger breweries, with their weird American hop varieties, shiny stainless steel lauter tuns and one-off wacky recipes, are luring your customers away? Is your 150-barrel minimum brewlength too inflexible to make experimental brews on? Worry no more: install your own microbrewery on the premises, and you too can be hitting the bartops with mango-flavoured double IPAs and smoked malt saisons. Comes with clip-on manbun and removable extra-bushy beard for all brewhouse operatives …
That’s unfairly sarcastic: I have no problems at all with big brewers who respond to the craft micro-brewery challenge by bringing in their own tiny set-up: I had great fun playing with the 10-barrel mini-brewery Brains installed at its site in Cardiff. The Brains plant, like those installed at Shepherd Neame in Kent, Hook Norton in Oxfordshire and Adnams in Suffolk, is designed to brew short-run one-off beers for selling in the company’s pubs. The Caledonian brewery in Edinburgh, however, has gone for something craftily different: an on-site microbrewery that is solely for experimenting with, making brews that, should they prove to be successful, will then be scaled up for commercial production in the main brewery.
I last visited the Caledonian brewery more than a quarter of a century ago, in 1989, which was just two years after it had been the subject of a management buy-out to acquire it from Vaux, the Sunderland brewer, which had bought it in 1919. The brewery was founded by George Lorimer and Robert Clark in 1869, and Vaux took it over to supply the North East of England with Scotch Ale, a style of dark, fruity beer then very popular in the region. Edinburgh was once the third biggest brewing city in Britain, after Burton and London, and even in 1958 it has 18 surviving breweries. One upon one they closed: Vaux announced it wanted to shut the Caledonian in 1985. Fortunately for posterity, its then managing director, Dan Kane, an active Camra member, and his head brewer, Russell Sharp, felt there was enough demand for the traditional beer it made for the business to be viable on its own. In a regular irony, the lack of investment by Vaux over the years meant the Caledonian brewery still retained old-style equipment long replaced elsewhere, most notably open direct-fired coppers, which gave the brewery an excellent marketing story.
Despite a couple of fires at the brewery in the 1990s, those coppers are still there (though one is a replica, replacing a vessel lost in the fire of 1998, and they now appear to have suspended lids I don’t remember from before). Brewery manager Craig Steven says the now unique coppers give all the brewery’s beers a distinctive rotundity he always recognises in blind tastings. In 1991 the brewery launched a golden IPA using the name of another old Edinburgh operation, Deuchar’s, which had closed in 1961. That beer’s popularity was cemented with the award of the Champion Beer of Britain title by Camra in 2002, and it remains one of the UK’s best-selling cask ales. Then in 2004 the Caledonian Brewery lost its independence again, being bought by Scottish & Newcastle after S&N closed the old McEwan’s Fountainbridge brewery in Edinburgh. Just four years later the Dutch giant Heineken swooped on S&N, and Caledonian is now the second-smallest brewery (out of 165-plus) in what is currently the world’s third-largest brewing group.
Which is why, presumably, they can afford to fly me up to Edinburgh, stick me in a four-star hotel, take me out for a very fine dinner in one of the Scottish capital’s best eateries, and all so I can see the new “Wee George” microbrewery (named for George Lorimer) and try the first beer to be scaled up and rolled out after trials on Wee George, an American-style IPA called Coast to Coast. There are those beer writers who would turn down being filled full of roast venison at a brewer’s expense in the belief that it would compromise their independence: I like to claim I’m not that cheaply influenced. (That is to say, you CAN influence me, but it will cost you lots …)
Talking of independence, Caledonian’s MD, Andy Maddock, who joined the Scottish brewer in March last year after six years as a senior sales and marketing man at Heineken, says his operation has an “arm’s length” relationship with its Dutch parent, allowing it to be entrepreneurial and to follow its own path as a “modern craft brewer”. There seems to be considerable fondness for the Caledonian brewery at the top in Heineken: they like its hands-on old fashionedness, and Michel de Carvalho, husband of Charlene Heineken, who inherited the business from her father Freddie in 2002, has apparently said Deuchars is his favourite beer.
The advantages Caledonian has over most of its rivals, of course, are that as part of a huge conglomerate its financing is cheaper to arrange than a totally independent operator could manage, though it still has to have “all the rigour” in its budgets that any commercial operation has to have; and it can use its Heineken connections to get into other markets. Currently 95 per cent of sales are “domestic”, but in the next four to five years, Maddock says, he wants to see exports increasing, with Deuchars in particular and also Coast to Coast and the brewery’s new “craft lager”, Three Hop, being aimed at Western Europe. He also wants to see Caledonian’s beers making a bigger impact in the off-trade (“We haven’t punched our weight there yet,” Maddock says), and a greater awareness among drinkers that Deuchers is a Caledonian beer: it appears many Deuchars drinkers don’t actually know who makes it.
On the other hand, they know why they drink it, or at least Caledonian does: “drinkability”, that mysterious characteristic no brewer knows for certain how to achieve, but which is vital for a beer to win a substantial slice of the market. Strangely, Caledonian is one of the few breweries I’ve visited where “drinkability” has been emphatically placed in the heart of the business strategy. Maddock says that the future of Caledonian will be based on a “modern” range, with beers such as Coast to Coast, that emphasises “distinctiveness and accessibility”, and a “traditional” range, led by Deuchars, where “drinkability is really important”. The idea, clearly, is that if you fancy trying one of those new craft beers, you can be reassured by the Caledonian name that it won’t be a frightening experience you’ll never want to repeat; and if you’re looking for something comfortable and more familiar, Caledonian has that for you as well. “Comfortable and familiar” are, frankly, far too under-rated among beer raters: most people most of the time don’t want to be challenged by their beer. Indeed, probably, most people don’t want to be challenged by their beer any of the time. “Predictable but not boring” is a great position for your brand to take, if you can capture it. “Predictable” also has to mean “predictably good”, of course, and part of that means making sure your raw materials are top quality: Caledonian has insisted for a long time on using what it says is the best malting barley in the world, from the east coast of Britain, both Southern Scotland and East Anglia, it also only uses whole-leaf hops, and it has now altered the way it buys hops, eschewing the traditional hessian hopsack for vacuum-packing in foil, believing this to keep the hops fresh for longer.
So to Wee George: Caledonian’s answer to the fact that there are now 100 breweries in Scotland, very few of which can match it with the popularity of its “traditional” line-up, but at least some of which offer are going to have widespread appeal – “widespread appeal” being the market sector Andy Maddock and his crew would like to own most of, thank you. It’s a £100,000 collection of hand-assembled stainless-steel kit capable of producing just 400 litres at a time, around a thirtieth of the main brewery’s capacity, but it has its own filler that can be used to put the beer into bottle, cask or keg, and it even has a hopback, just like the “big” brewery. Hopbacks are an old-fashioned item of kit today, replaced almost everywhere by whirlpools, but brewers who have kept them have realised that a hopback can be a terrific tool for adding all sorts of flavour to your hot wort. The new kit went in on June 1, and since then it has been producing one beer a week – the first being a version of Deuchar’s IPA, presumably to see how different the recipe would turn out on the Wee George kit compared to the Big George kit. Scaleablity was a problem at first, but the Caley brewers are getting better, they told me, at working out what tweaks were likely to be needed to translate a brew from Wee George to the main brewery.
The first Wee George beer to make it from experiment to scaled-up bar-top brand, Coast to Coast, was pushed through in eight weeks, which shows that for a 146-year-old, the Caley can be nimble enough when it wants to be: most big breweries barely have a meetings cycle that short, never mind the NPD pipeline. The name comes from the combination of West Coast of American hops – Simcoe, apparently – with East Coast of Britain barley. It’s a perfectly fine craft-beer-with-training-wheels, I suspect there’s an as yet untapped market for such brews among people looking for a beer to have when you’re only popping in for one and you want something with more flavour that usual but not TOO much, and I’d give it a fair chance of doing very well. Though if I were any good at predictions, I’d be much richer than I am.
Many thanks to the Caley crew for taking me north to meet Wee George, and I look forward to tasting future roll-outs.