In your own way

OK, so here’s what I think about the Cloudwater announcement.

It seems to me that a lot of the reaction to the announcement was based on a – mostly unstated – train of thought that goes something like this.

1. Cloudwater are getting out of cask.
2. This is a very bad thing.
3. The reason Cloudwater are getting out of cask is that they can’t make it pay.
4. This just goes to show that cask is too cheap.
5. People need to start paying more for cask.
6. One thing that will help is going on social media to tell people that they need to pay more for cask.
7. Another thing would be for CAMRA to recognise the importance of beer quality…
8. …stop agitating for cheap beer…
9. …and start agitating for expensive beer instead.

I’m sorry to see Cloudwater getting out of cask, but apart from that I disagree with almost all of these statements.

2. This is a very bad thing.

Yeah… no. I’m sorry to see them go, but Cloudwater have never looked like a cask brewer. You know what a successful cask brewer looks like? They’ve got at least one year-round regular beer within hailing distance of session strength (Ringmaster, Hophead, Lumford, Seamless); they’ve probably also got one that looks a bit like a best bitter, which is still what a lot of people go to a pub expecting to find (Hat Trick, Partridge, Lord Marples, Feckless). They put seasonal stuff, experimental stuff and downright silly stuff on cask as well, but they’ve got a core range and they keep turning it out. Cloudwater actually make a feature of not having the same beers on all the time. Their nearest thing to a regular cask beer was a double IPA – and that was only regular in the sense that it was re-brewed every year. I’m not saying this puts me off – I’ll try a Cloudwater beer whenever I see it – but then, I’m serious about beer (God help me). For a non-expert – punter or publican – they’ve never looked like a good regular proposition. “If you liked our India Pale Lager you’re going to love our grisette”? Yeah… no.

3. The reason Cloudwater are getting out of cask is that they can’t make it pay.

I think it’s fair to say that’s an over-simplification. Looking at it another way, the reason Cloudwater are getting out of cask is that they project that they won’t be able to make brewing for cask in the way they’ve chosen to do it pay as much as they currently need it to. And this needs to be understood alongside the alternative projection that they will be able to secure the profits they need by brewing in the way they’ve chosen to do it for keg, bottle and can. Cloudwater have made a huge upfront investment in kit and substantial continuing investments in materials and people; they need to do that if they’re going to maintain the high quality and consistency that they’re celebrated for, not to mention that ever-changing list of beers. That’s what launching a business is like; you start with money (your own or a loan), you spend like a drunken sailor and you wait for the money coming in to match outgoings. It’s a bit like launching a plane by pushing it off a mountain, and hoping that you can pull out of the down curve before you hit the ground. I would imagine that the capital Cloudwater were sitting on at the outset was probably more substantial than is the case for many newly-launched breweries, and I suspect it’s dwindled more rapidly as well. Whatever the facts of the matter are – and their statement was commendably open about their current position – the size of Cloudwater’s launch mountain and the shape of their down curve aren’t the same as those of any other brewer. Because of that, their experiences don’t necessarily generalise.

4. This just goes to show that cask is too cheap.

The idea here seems to be that keg is dear where cask is cheap, and if only cask were dear too we wouldn’t be having these problems. I have trouble with this argument straight off; within 15 minutes’ walk of my house I could pay £5.50, £4.50 or £3.50 for a pint of cask beer, and half an hour’s bus ride away I could pay £2.50. (And the £5.50 stuff is bloody good, let me tell you. Mind you, the £2.50 was rather nice.) Is £4.50 too cheap? If you’re visiting from the land of viaducts you might think it’s a sight too dear. The market’s segmented all over the shop. Also, from the figures Steve posted recently it looks as if the margin on a keg is just as poor as on a cask, despite the higher price – but nobody ever seems to say that keg is too cheap.

But let’s say, for the sake of argument, that if publicans were willing to pay (say) half as much again for a cask of Cloudwater Session IPA, Cloudwater would have carried on casking it – and that if punters were willing to pay half as much again for a pint, ditto, then publicans would also have been willing to pay the extra. The trouble is, this tells us nothing about the price of cask, except that it would be possible to manipulate it to a level that would keep Cloudwater interested – if only we had a mind-control ray.

But there are no mind-control rays, and the market is brutal. Once a price-range is established – even if it’s only established in Stockport, or in Chorlton – then it’s properly established; it’s hammered home in people’s minds with every purchase that they make. The price for a commodity may not be a rational reflection of the labour and materials that have gone into it, but (in the immortal words of Keynes) “markets can remain irrational a lot longer than you and I can remain solvent.” Try selling against the market – for instance, by insisting that your cask beer simply has to go at £6 a pint (£4 in Stockport) – and you’ll find out how true that is.

The only way to peg prices permanently, short of government control, is by establishing a cartel; unfortunately this is illegal. Where there’s a relatively small number of suppliers and nobody has an overriding interest in undercutting the others, something cartel-like can develop informally – and if nobody is letting their keg IPA go out below £5 a pint, it doesn’t matter (to the drinker) whether this is being managed formally or not. Perhaps brewers have managed to hold the line on a higher price range for craft keg, in part by appealing to novelty and the ‘reassuringly expensive’ snob factor; I suspect we’re still in the phoney war on that front. But even if craft keg prices are permanently pegged in the £5+ range (£3+ in Stockport), that says nothing about what can be done with cask prices, or how it can be done – not least because there are so many more players in the cask field.

5. People need to start paying more for cask.

I object to this on a number of levels. Firstly, it makes no sense: starting to pay more for cask – more than the price it’s currently on sale at – isn’t something I can choose to do. I’ll certainly pay more for cask when I start being charged higher prices across the board – as I have done many times before – but that’s not really a choice either. Secondly, it implies that spending more money is an easy and neutral choice, which for most people is far from being the case. My current income makes the choice between a £3 and £4 pint painless, but I’m in the top 20% of the national income distribution. I know what it’s like to budget for a couple of pints at the weekend – and, I’d suggest, a lot more people have that experience than don’t. Thirdly, it’s economically irrational: how often do you make a purchase – of any kind – and think “I wish I was paying a bit more“? Unless you’re making a charitable donation or paying a “solidarity price”, the point of paying money for goods is to pay as little as possible. (Some high-end goods manage to peg their prices high, associating price with quality, but even in that context nobody wants to pay more than they have to. You may pay £700 for an iPhone instead of £50 for an HTC, but you won’t pay the Apple Store £705 if John Lewis have got them for £695. And you may pay £2.50 for a third of Un-Human Cannonball, but you won’t be happy to pay £3 if the bar down the road has it on for £2.40.)

So if you’re saying “people need to start paying more for cask”, you’re asking people in general to do something impossible, which might cause them hardship if it were possible, and which in any case goes against everyday economic rationality. But there’s an even bigger question, which is: why? Suppose I launch It’s Wicca, Man!, a line of refreshingly frothy pagan-friendly ales, with the unique selling point that every cask that leaves my garagepremises has been individually blessed by a qualified Wiccan. (We’ll handwave the question of what makes a qualified Wiccan. That’s probably what they do anyway.) Then suppose that, shortly before the launch, I have a falling-out with the Wiccan down the road, and it turns out that the nearest alternative qualified Wiccan lives in Holyhead and has a sickly rabbit which she refuses to leave for longer than a day. Now I’ve got worries – and they’re money worries. I’m starting small, so I’m only shipping out one cask at a time – and every one carries the additional overhead of paying my Wiccan friend’s travel costs from Holyhead to Manchester and back. I’m going to go broke in short order, unless I can persuade stockists to pay quite a bit more for each cask – either that or just lie about the Wiccan thing, but the Goddess really wouldn’t like that.

The point here is that nobody, in this rather far-fetched story, is stopping me making cask beer – not even the Goddess. What I can’t do is make cask beer in precisely the way I want to. Not, that is, unless I can persuade a substantial number of punters that I should be able to make cask beer in precisely the way I want to, and that this is important enough to make it worth paying more for my beer. But that’s a really hard sell; mostly punters (and publicans) are liable to take the view that beer is beer, and that the world doesn’t owe anybody a living. Not because they’re evil or selfish or brainwashed, but because that’s how selling stuff in a free market, and the rationality the market is based on, work. (Approaching a smaller number of punters directly – through crowdfunding or some kind of share issue – could work; I wish Dave all the luck in the world and look forward to his announcement. But that’s by the way; the point here is that there isn’t a viable route through “voluntarily pay more for cask”.)

I’ll speed up for the last few points.

6. One thing that will help is going on social media to tell people that they need to pay more for cask.

Given that telling people that they need to pay more for cask is pointless and worse – as we’ve just established – telling them on social media really can’t help. But telling people anything on social media is highly unlikely to help. It’s a tiny, self-selecting coterie; we only disagree so bitterly about trivial things because we share the same outlook about so much.

7. Another thing would be for CAMRA to recognise the importance of beer quality…

CAMRA does recognise the importance of beer quality; the days when all the organisation cared about was getting one more handpump in one more pub are gone, if they ever existed.

8. …stop agitating for cheap beer…

CAMRA doesn’t agitate for cheap beer. The idea that CAMRA has somehow driven down the price of cask beer is really widespread – at least in the CAMRA Critics’ Corner of my own social media coterie – but I don’t know where it came from. I can only assume it’s a kind of reverse association – CAMRA = real ale = not keg = not expensive. By the same logic you could accuse CAMRA of promoting the spread of nonic glasses.

9. …and start agitating for expensive beer instead.

Won’t happen. CAMRA represents drinkers, not producers; if push comes to shove, it represents the interests of drinkers, not producers. And it’s not in the interest of drinkers to have less money in their pocket. CAMRA can – and does – advocate on behalf of good, interesting, well-produced cask beer, and very little of that beer will be available at bargain-basement prices. But explicitly pushing higher prices just isn’t going to happen.

In conclusion, I wouldn’t want to overstate point 3; I don’t think this is a complete non-problem. Clearly, Cloudwater aren’t the only brewery finding it hard to make cask pay. But I do want to stress point 5: if the price peg has been hammered in too low for some (or many) brewers, moving it upwards will take a lot more than exhorting punters to pay more (or exhorting CAMRA to exhort them). Market forces put it where it is, and it’ll be market forces that move it. Ultimately, I’m afraid that what’s going on now is simply that there are too many breweries, and we’re seeing the downward pressure on prices that predictably follows a glut in supply. (As a result we’ve already said goodbye to Waen and Quantum – although thankfully both the brewers involved are going to carry on brewing.) Here’s hoping that, across the industry, the innovators can survive – with a tactical retreat from cask if necessary – and it’s the corner-cutters and back-of-a-lorry merchants who go under.