Friday, 7 September 2012

Beer as a Commodity

As more and more people switch from drinking in the pub to drinking at home,  beer is increasingly being regarded as a commodity rather than something to be enjoyed on a night out. A slab or two of canned lager now forms part of many people's weekly grocery spend, and the underlying thought process behind which band to choose is almost invariably that of price. Whatever brand of international lager happens to be on offer that particular week will usually dictate what ends up in the shopping trolley, especially when it is the lady of the house that is making the purchase. I don't mean to sound sexist about this, but I speak from personal experience when stating that is is usually women who are in charge of the weekly shopping budget, so it is inevitable they get to choose what the money is spent on.

We are all aware of the devastating effect this switch in drinking habits is having on pubs, but despite the large price differentials between the price of a pint in the local pub and that of a can from the nearest supermarket, there are other factors, apart from those of cost, that are keeping drinkers in their droves. away from pubs.  For the moment though, rather than elaborate on what these factors are, I want to address the effect this is having on consumer choice, and the availability, and indeed survival of local breweries.

Selling beer to supermarkets must be a mug's game, even for the major brewers. The former will inevitably demand substantial discounts, holding the threat of de-listing of particular brands from their shelves if the brewer(s) concerned don't play ball. Often the only way that brewers can maintain their margins is to cut costs and this is normally achieved by cuts in the brewing process. For example, lagering or maturation times might be reduced. There might be a small reduction in the alcoholic strength of the beer, meaning the brewer has to pay less duty to the Exchequer. Stella Artois is probably the best known example of a beer that has been reduced in strength in recent years, but there are also many examples of well-known ale brands having received this treatment as well (Bombardier, Old Speckled Hen to name but two).  Money saved by such reductions is rarely, if ever, passed on to the consumer. Even worse than the aforementioned, is the temptation to use cheaper and, by implication, inferior ingredients. Increasing the use of cheaper adjuncts, such as maize, rice or various sugars, rather than more expensive malted barley, is one example, as is the use of hop extracts rather than whole or pelleted hops. It is because of such practices that the commoditisation of beer has become such a cause for concern in recent years.  

This is the case in the UK at least, but what about countries like Germany, where beer is seen as part of the national psyche, as well as a matter of national pride, and where drinkers are protected by the world's oldest consumer protection law; the Reinheitsgebot? Whilst the latter undoubtedly  protects the consumer from the use of adjuncts and other inferior ingredients, the fact that it stipulates what beer can  be brewed from (malted barley, hops, yeast and water), does not prevent brewers from using either cheaper varieties of these key ingredients, or alternatively, less of them. Like in  the UK, beer in Germany is increasingly viewed as a commodity, much to the detriment of consumer choice and product variety, and is leading to beer as a drink becoming de-based and de-valued.

Fellow beer blogger Barm, I Might Have a Glass of Beer posted an article back in June about this situation using as his illustration a programme shown recently on German TV.  The programme highlighted all that is wrong with the German beer industry today, claiming that because the market is currently marked by consolidation and price wars, small breweries are closing. Cut price beer means German drinkers will not support their local breweries and buy the discounted big brands instead. Consumers in Germany take very cheap beer for granted, but although German brewing tradition is superb, German brewers have not paid enough attention to what has been happening in the rest of the world and have fallen behind. They all brew the same beer and have not kept up with the development of new hop varieties or techniques. The development is towards a monoculture such as previously existed in the USA, less hop, less aroma, less malt, less distinctive beers. 

I have seen  this discounting for myself, both recently, and also on previous trips to Germany. In supermarkets, beer is literally dirt cheap. So cheap in fact that even given the large disparities between beer duty/tax between Britain and the Federal Republic, much of what is stocked in supermarkets is sold at almost give-away prices. I have of course taken advantage of this situation, and have struggled back on several occasions with a  suitcase stuffed full of interesting bottles.  I say interesting because I have been quite discerning in my selections. For example when in Bamberg I restricted my purchases to beers from the city's 9 breweries and on a subsequent trip went so far as to buy a selection of beers directly from some of the breweries themselves. The choice of beers we noticed in shops on our recent trip to Munich though, was rather less inspired, and consisted in the main of the products of the city's Big-Six breweries, coupled with nationally available brands such as the aforementioned Becks, Bitburger and Warsteiner. Having said that it was good to be able to purchase bottles some of the stronger beer styles, such as Bock and Doppelbock, that are only available on draught at certain times of the year.

Commodity type beers were taken to the extreme at a small branch, a short distance away from our hotel, of budget supermarket NORMA, Here plastic PET bottles of "own-brand" beer were on sale at a ludicrously low price, I don't remember quite how low, as I wasn't paying that much attention at the time, but they did seem quite popular with shoppers. What did interest me was the Lobkowicz Baron Czech dark lager, sold at just 44 cents (plus 8 cents deposit) a bottle. This was a real bargain, and an excellent beer to boot, but I suspect it was a "one-off" special purchase, along the same lines as what Lidl's do over here. 

The biggest commodity market, so far as beer (and pretty much everything else) is concerned, has to be the United States. Home of the six-pack, and virtual pioneers of  lumping beer in with the groceries. It is several years since I last crossed the Atlantic, but even on my last visit I was able to witness the massive shift in people's perception of beer, from something cold and wet you buy in cans, to stick in the fridge and enjoy whilst watching  TV, or after mowing the grass in the "back-yard",  to craft-brewed, speciality beers, packed full of character and flavour that rank amongst the finest in the world.

Interestingly enough, Barm's article cites several examples where American breweries scooped awards in German beer style categories. It seems that so far as these awards are concerned, the best German style pilsener is no longer brewed in Germany, but by Sierra Nevada, in the USA, the land with no purity law, no beer culture, no centuries of tradition, where almost nobody even knows the word pilsener. What is even more disturbing is that in blind tastings, consumers had great difficulty telling apart the five best-selling German beers, (those produced by: Krombacher, Oettinger, Beck’s, Warsteiner and Bitburger), and none were able to correctly identify all five. Analysis in the laboratory at the brewing school Doemens Institut confirmed the similarity: all five beers have a similar gravity and level of bitterness..

A spokesman for the German brewing industry was forced to admit that German brewers have not been concerned  enough with what makes their product stand out among the competition. He thinks they are turning a corner and will concentrate more on regional roots. Yes, they still make cheapie brands, because they do not want to lose the consumers.

Back in the UK, despite what the Daily Mail would have us believe about it being "cheaper than water", beer is not sold at anywhere near the low price it is in Germany. This means discerning  UK consumers are prepared to pay that little bit extra for premium bottled ales, and certain lagers, whereas in Germany they expect to pay the same low prices as they would for standard everyday Helles and Pilsners.

Hopefully though, things are starting to change. In the upmarket Galeria-Kaufhof, just off Marienplatz in central Munich, we noticed an interesting display of bottles beers from both Fullers and Sam Smiths, including such delights as India Pale Ale, Porter and Imperial Stout. Perhaps even in Germany, as in both the UK and the USA,  there is hope for the stay-at-home beer drinker after all?


Curmudgeon said...

I would say even when beers are on offer there are some that most buyers won't touch out of personal preference. Beers can probably be ranked in terms of:

1. Your preferred beers, which you would choose if all prices were roughly equal

2. Beers you might buy if on significant discount

3. Beers you really don't want at all

Even if the woman of the house does the shopping, her husband would probably say "don't buy any of this piss again" if she came home with something in Category 3.

There are also some beers that I wouldn't normally buy because I think they are too expensive at full price, such as Old Crafty Hen, but would get a bottle or two if they are on offer.

Paul Bailey said...

You are corect with your categories, Curmudgeon. There are definitely some beers I won't entertain, even when they're heavily discounted. Equally, there are others that I wouldn't normally buy because of their price, even though I like them, but when discounted I tend to stock up on them.

Basically, we all like a bargain.

Saveur Bière said...

Very design !