India Beer Buyers Have It Good, Finally

http://www.business-standard.com/common/news_article.php?leftnm=lmnu7&subLeft=2&autono=315919&tab=r

So the Indian beer market was swamped with the cheap stuff from InBev and AB, and now the good breweries are wondering if they will have a chance to move in on the growing market before the drinkers begin to cling to their water beer.  I think the Indians between the ages of 25-35 will have the sense to try the new beer. Since Indian food as a wide range of flavors I would think microbrews would be great with the food. This comes just months after the Brewer’s Association pushed a line of American Microbrews into China. The US microbrews should be looking to their great association for the same support to move into the Indian market. India has far more profit potential than China since it is a capitalist society and the money may leave its shores. Come on guys.

Another thing is maybe we could get some of the Indians to realize the great selling potential of hops and barley and start cultivating and understanding those products and markets maybe then we could keep the price of these key ingredients from rising so fast, now that our new beer nuts across the sea have found the light.

Philly, really? The beer capital?

http://gridskipper.com/364423/philly-americas-beer-capital

So the reasons they point to for this title are the beer pubs and breweries around the area. Personally I have never had a Pennsylvania beer, not once. So if they are the beer capital of the US they sure do keep it to themselves. Personally I would have to say Denver or Portland would be closer to the top for me. Seeing as how they have more breweries and beer pubs. But whatever, its not like Philly has much else going for it.

Money to market beer is scarce.

Why America’s Brewers and Distributors are Butting Heads…

Recently I had the great opportunity to meet with the president of a large California craft brew, import beer, and beverage distribution company. I had a wonderful conversation about the difficulties for small microbrewers trying to get in a distributor catalog. The president informed me that the greatest difficulty is getting the brewer to come up with a marketing investment.

You see, in order for him to pick them up for a trial the brewer has to be willing to take on some promotion costs for initial distribution to the distributor’s existing customers. The brewer can’t expect the retailers to pick up the product when it has a higher price than products that are known to sell. The brewer must make the opportunity attractive to the retailer.

Now it seems reasonable enough but the President informed me that most microbrews just aren’t willing to take the risk and invest in themselves. Now this seems unreasonable considering the growth that many brewers would like to achieve.

What I decided to do then was discuss the different ways that would make the cost less considerable for the brewers or less risky. He and I both came to the conclusion that a Co Op of smaller brewers from a similar distribution area or with close distribution centers would be able to work together. Selling six packs of six brewer’s beer would require 1/6 of the investment cost for product. Also, the consumers would be more likely to buy a selection of microbrews. The goal is that the consumer would back asking for particular brews and the retailer would then make normal orders on individual brands. Of course, this would require a marketing investment by the brewers.

That’s the best situation the brewers are going to get though. They cannot expect to be picked up without a marketing cost. There are costs involved with any new beverage; there either must be demos or promotions to stimulate a trial, obviously. Thus, the brewers either need to make a commitment to growth or remain happy with their limited sales and slow growth of fame.

The only other way brewers make a name for their brand is through competition or media coverage from the many beer forums and blogs. The problem is that doesn’t help them reach the wide audience they would like, the ones who buy frequently but don’t personage the bevy of beer communities. So brewers need to either work more closely, give up larger investments or encourage a business to focus on the craft brew industry either on the distributor or retail level.

Brock Wagner Interview Saint Arnold

Now that I have moved to Houston I have begun to develop my knowledge of the local brewers. After a short series of phone tag, Brock Wagner, owner, and I were able to hammer out a meeting at the Saint Arnold Brewery in Northwest Houston.

Interview with Saint Arnold Owner Brock Wagner:

OH: How long has the brewery been operating?
BW: Texas was a tough nut to crack but we have been in operation for 14 years. That includes 6 years of rapid, 20 percent a year growth.

OH: How did you start the brewery financially and logistically?
BW: After working as an investment banker my partner and I put in around 900k 300 of that going to the initial equipment necessary and the rest mainly spent on space. But the equipment was cheaper then. Now to do the same thing would cost closer to two million.

Brock went on to tell me that they had self-distributed for a year and a half before having the volume and relationships necessary to work with a distributor. All of their initial buyers were called on by them, without the use of any brokers. They began by serving liquor stores and smaller bars, when they moved into grocery is when they needed the distributor. Brock and Saint Arnold also do all their own bottling.

OH: What was difficult about the beginning?
BW: Well, if you don’t have the cash it is almost impossible to raise. The shipping microbrewery market is a for-passion industry, very few players are large enough to gain margins of larger proportion. Sam Adams being one of the most successful. New Belgium, Sierra Nevada, and all those trying to sell to AB have the next closest bet.

OH: What are your growth plans?
BW: We want to stay inside Texas. 6 million projected in sales to get economies of scale to have better margins. To get there we need to expand production. I have been looking at brew houses in Germany and will be visiting on soon to see if a cask and be brought back here. TX if a difficult market for beer, most consumers are loyal to the mainstream American Lagers, but we have had growing support.

OH: Why not try to move into neighboring states?
BW: Well, we want to have the best beer possible when it reaches our customers and that means freshness to us. So we want to be as close as possible.

OH: You began brewing as a home brewer, have you had any affiliation with the Brewers Association?
BW: I actually recently finished a term on their board. I believe I was asked mainly because of my financial experience. They have just recently completed an initiative to take a group of microbrews to China, that is really exciting.

OH: How would you recommend someone interested in the business participate and develop knowledge?
BW: Seek out a position in a larger microbrew, learn the business side. Definitely home brew to learn more about the process. Get some hard business experience with a salary especially if you have the interest in later starting your own business. Keep an eye on the industry and where the niches are. Right now the costs are rising from equipment and the raw materials, both hops and malt. Basically there is no magic secret work hard and have a passion for what you do.

I would like to thank Brock for spending the time to speak with us. He has definitely given back through the Brewers Association and continues to brew great Saint Arnold Beer.

Brits face tea, beer price hikes

Brits face tea, beer price hikes
NEWS.com.au, Australia – Feb 20, 2008
THE price of Britain’s favourite drinks – beer and tea – are set to soar as producers struggle to cope with rising costs. Industry experts believe the …

This is the reality of a growing population and depletion of natural resources including water and farmable land. The raw materials of beer have been increasing drastically. There has been some media attention to the 40 percent increases in hop prices. What is really hitting the brewers however, is the malt and barley prices. These raw materials, which make up a larger percent of your average brewers total expenditure have increased by 80 percent.

Now even though barley was ranked as the 4th most cultivated substance on the planet in 2005 most of it is used for animal feed. In fact every year a larger percentage is used for animal feed. I guess when it comes down to it it is more important to get your meet than your beer.

What makes matters worse is the difficulty of farming the stuff. It is more fragile during the growing period and more difficult to thrash than wheat. The soft grains allow for easy damage by heavy rain and wind. Basically severe weather made worse by global warming will not make it any easier to grow barley and in turn enjoy a tasty brew. Not only the weather but the soil has to be rich. Who would have thought one of beers major ingredients would be so irritable.

The most unreasonable thing I noticed was where the stuff is grown. In order of volume lowest to highest, it goes Russia, Canada, Germany, France, Ukraine, Turkey, Australia, The U.K., The U.S., and finally Spain. Now it turns out it grows well in light sharp soil basically meaning damp rich soil so why haven’t we planted this stuff all over Asia and Latin America, they are wet right? Maybe we should spend sometime researching barley growing. That would make AB more worthwhile throw your money at that problem instead of perfecting the already perfectly crap beer you brew. Then instead of growing cocaine we could have Columbian growing beer food, all propagated by AB. Then again allowing AB even more control of the beer industry might be far worse.

In any case maybe China will start turning their hordes of land to barley once they realize it is going to be more expensive than wheat, corn, or rice before time wears on.

God save the barley.