St. John's Wort Beery Musings And Amusing Beers

Category Archives: Accounting For Taste

German Beer and Food Part 2: Terrines, Terpenes and Terroir

Last week (just scroll down a little), we ended up by talking about Oktoberfest and how it’s a sort of benchmark for the modernization of the Bavarian agrarian system. The impressive thing about Oktoberfest is not that it has been going on for 204 years. The impressive thing is how quickly it was adopted in other parts of the country. While Bavaria may have been out in front, Wurttemberg eventually launched a festival in Stuttgart.

The Canstatter Volksfest started in 1818. This is because the winter was so bad in 1816 that it negated any attempt at growing crops that year. The people of Wurttemberg were starving because there had been snow on the ground until May. The King was basically dependent on grain deliveries from his brother in law in Russia to prevent starvation, riots and uprising. In 1817, they decided that there should be a harvest festival. There should also be a new Agricultural University. These were Monarchs prolonging their reign by making concessions to science and rationality. An educated populous is notoriously bad for a Monarchy, however, one makes concessions when faced with an unruly mob with pitchforks and torches.

This period of privation, incidentally, was one of the reasons for German settlement in Kitchener and Waterloo in the 1820’s. It’s one of the reasons Ontario looks the way it does. In fact, it’s why the second largest Oktoberfest in the world takes place there.

Agricultural science takes a long time to propagate, or at least it did in the early 19th century. Gregor Mendel would not actually establish genetic heredity for another forty years. For the time being German Brewing was like German Cuisine: Taking advantage of scientific modernization, improved technique and vastly improved production to make strides ahead. Another similarity is that for the time being they were largely stuck with “landrace” ingredients.

In an age like we are in with GMO products basically everywhere and Monsanto issuing patents on their designs for plants, it’s a good idea to explain the concept of landrace. Landrace more or less means that the plant or animal variety that you’re using has been there since time immemorial; since before records were kept. There was a time when it wasn’t so easy to transplant crops around and grow them in greenhouse polytubes and glasshouse nurseries. There was a time when you were more or less stuck with what there was on the land when you got there.

Germany had landrace hops. They were actually spoiled for choice on the landrace hops. There are four basic varieties that we’re going to look at: Spalt, Tettnang, Hallertau and Saaz.

(I know what you’re going to say! Isn’t Saaz a Czech hop? It is named after a Czech town called Zatec, but Saaz is the German name for that town. Plzen, which is where you find a lot of all Saaz beers is less than 300 kilometers from Munich. One of the developments they enjoyed was trains. Let it go.)

Hop Variety % Humulene % Myrcene % Caryophyllene % Farnese % Alpha Acids
Spalt 21.5 20.0 12.5 12.5 3-5.5
Tettnang 22.5 22.5 8.0 14.0 3-5
Hallertau 40.0 32.0 11.0 0 2.5-5.0
Saaz 42.5 22.5 11.0 13.0 2.5-4.5

 

Don’t worry. You’re not going to be forced to do math.

In terms of the hops that were landraces in Germany, there are a few things we can tell from this information. The Alpha Acids are pretty low. These days, if you want a bitter beer, you put hops with high alpha acids in at the start of the boil. The Germans would have had difficulty making really bitter beer (by modern standards, anyway) without using a ton of whole leaf hops. The historical hopping rate for Pilsner Urquell was apparently 400-460 grams per hectoliter. That is before hop pellets. That’s a lot of trub at the bottom of the kettle. The beer in the region didn’t really get more bitter than 40 IBU, 45 tops.

If bitterness comes from Alpha Acids, then aroma comes from the oils in the hops. Those are the four columns in the middle. Now, typically aroma doesn’t survive when you add hops early in the boil. The byproducts of Myrcene in particular tend to disappear in a flash when added to the boil. When you dry hop or add hops at flame-out, you get a better result. Think of it like making a stew. If you add fresh herbs at the beginning, they’re going to get overpowered and cooked down. If you add fresh herbs at the end, you can actually taste the freshness of the herbs.

Myrcene’s byproducts are things like menthol, citral, citronellol, geraniol and linalool. More importantly, they are responsible for all of the aromas in your favorite American dry hopped beers. Modern hop varieties have been brew to extract specific byproducts from Myrcene. Take Citra, for example: Grapefruit, Lemon, Lime, Passion Fruit, Lychee. 65% Myrcene!

You’ll notice that the hops in the chart don’t have a lot of Myrcene. Every single one of the German landrace hops are higher in Humulene than Myrcene. The things that you tend to get out of Humulene’s byproducts are earthy, woody, or spicy. Humulene occurs in things like Bay Leaves and Tobacco and other kinds of herbs. Knee level forest floor stuff.

It’s also good to mention Caryophyllene. It mostly comes across as dry wood, spice and pepper. Some new varieties that you will have tried have bred it out completely. Galaxy and Nelson Sauvin are good examples of hops that don’t have Caryophyllene in any reasonable quantity.

What all this means is that the hops that German brewers had access to at the beginning of the 19th century were herbal, spicy, woody, peppery and potentially a little bit floral. It would have been more or less impossible to make a beer that tasted like an orange without adding some oranges. Landrace hops meant that they were stuck with these four varieties of hops.

That is a good thing because all of the other ingredients in Bavaria were also landrace ingredients. Everything that the peasants were using in their food and everything that would be adopted into the idealized festhallen fare we recognize as German food today was suited to the same terroir as the hops.

Let’s think about the herbs that German cuisine used for flavouring at the beginning of the 19th century:  parsley, thyme, bay leaves, juniper and caraway seeds. They also had salt and pepper.

Herb Aromatic and Flavour Components
Parsley Phellandrene, Myristicin, Myrcene, Menthatriene
Thyme Pinene, Cymene, Linalool, Myrcene, Thymol
Bay Leaves Cineole, Pinene, Linalool, Methyl Eugenol, Humulene
Juniper Pinene, Sabinene, Myrcene,
Caraway Seeds Limonene, Pinene, Caryophyllene
Black Pepper Sabinene, Pinene, Limonene, Caryophyllene, Piperene

 

From a beer and food pairing point of view, this explains just a huge amount about how German beer and food culture develops. For the most part, the beer that they’re making is going to be a complement to the food because the hops contain all of the same flavor components as the food from the region.

The brewers and beer drinkers did not know about hydrocarbons and terpenoids and aromatic compounds. At least, they didn’t have those words for them. They knew that what they liked and which things tasted good and that certain things went together. Most of these people would never have travelled much more than 100 miles from their homes. They would not have had context for other cuisines. What they would do over the course of the next century is refine the beer being made based on technological innovation to make the beer and food work better together.

We’ll talk about the refinement and development next time.

Wibbly-Wobbly Timey-Wimey Stuff

One of the things I don’t see people taking into account frequently when they talk about beer is time.

I don’t mean that you should drink a hoppy beer when it is fresh (you absolutely should) or that a 2008 Thomas Hardy is probably still too young to drink (it is apparently still tasting sort of young) or even that you should probably take a while to linger over a beer (you get more sensory information that way, plus this stuff is getting expensive).

If you’re a craft beer nerd, you’re constantly re-ordering your mental model of what beer is whether you know it or not. Breweries like to refer to the creation of new beers and new styles as innovation. The innovation is not really theirs to claim. The number of ingredients that exist is constantly expanding. Different strains of hops and different kiln treatments of barley and the inclusion of other ingredients like fruits and spices and (yes) pumpkin create a larger number of permutative possibilities. You can think of a brewer like a mathematical function that develops probability.

I mean, don’t walk up to a brewer and tell him he’s an abstract system into which you put ingredients and beer comes out. Most brewers put beer into their systems and hate doing math much beyond brewhouse calculations. Accountants become brewers so they don’t have to do math.

My point is that if you think of beer as a kind of mathematical function in which a brewer’s individual taste acts on a kind factorial permutation, you would not be terribly far off of understanding what innovation looks like. Oh, sure, people would look at you funny when you try to explain that at parties, but deep down in your soul, you’d know you were right.

My point is that ingredients increase over time. Before 1855, we didn’t have Fuggles; Only Goldings. In 1855, English beer got twice as exciting. Before 1971, we didn’t have Cascade. Actually, if you take Wikipedia at face value, no one used Cascade commercially until 1976. The number of distinct hop varieties that have sprung into being in the last thirty years certainly outstrips all hop developments in world history up to that point.

More ingredients means more complexity and that is a function that increases over time.

The shorthand that we have developed for this is the concept of beer styles. Michael Jackson wandered around cataloguing things like some entomologist with a butterfly net, pinning down the different beers that he encountered into different boxes, displaying their colorful labels for the world to see. It’s a useful mode of thought and he did a lot of useful work, probably while having a really nice time.

To borrow from Bill Cosby, “I told you that story so I could tell you this one.”

Sometimes, the function of an entomologist is to discover a butterfly encased in amber. You will sometimes run into beers that were designed at a specific point in time for a specific purpose. There were only so many ingredients available at that time, so the beer is markedly of that time.

On Friday night I drank about a third of a bottle of Foothills Seeing Double IPA. Foothills is in Winston-Salem, North Carolina. The family vacation caravan was passing through Asheville, North Carolina and offered to bring be beer if I’d provide a list. I hopped on Ratebeer and came up with the kind of kid at Christmas list you come up with in that situation.

Foothills Seeing Double IPA is a 9.4% Double IPA that clocks in at 126 IBU’s. Foothills is a well-respected brewery that makes some pretty highly thought of stuff. It wasn’t that it was a bad beer, exactly. It was overly hoppy, sure, but I remembered drinking big hoppy beers around the time when I got into beer around 2006 and liking them just fine. Avery’s Maharajah made an early impression. I remember having Moylan’s Hopsickle at Volo. I couldn’t figure out why I didn’t like Seeing Double.

Then it dawned on me: I’m old!

I researched Foothills Seeing Double the next day and found out that it was designed in 2005. It’s like a time capsule from a period when people were seeing how many IBUs they could jam directly into your sinus cavity. The criteria in 2005 was “does this beer make your tonsils recoil in horror? does your jaw tingle like Peter Parker’s senses at a villain convention?” 126 IBUs is full quarter above the human taste threshold. It means that no matter how long they keep making that beer at Foothills, it’s going to be 2005 at Foothills. I don’t mean them any ill will. It happens other places too.

I left an unfinished pint of New Belgium’s Fat Tire at the Belgian Beer Lounge at Edmonton Airport. There was nothing wrong with the beer. There was nothing wrong with the taps. There was absolutely nothing wrong with the service. Actually, the ability to order a Rochefort 10 before your flight is sort of delightful. Well done, Edmonton!

Fat Tire was first brewed commercially in 1991, but I feel like the thought process that went into it stretches back before that. Apparently the brewer first thought about it in 1989. The Edmonton Airport was the first time I’d tried it, so it was new to me. To say that it was something of a chore is an understatement. This was a beer from before Stone Temple Pilots roamed the earth. It is an Amber Ale, so it was probably never going to curl my toes and make my hair stand up; however, when you consider that it carried New Belgium and is responsible for much of the success over there, it’s just underwhelming to experience. “Is that it?” was my thinking.

The number of ingredients and the amount of thought about them has expanded exponentially since 1991. It must really be the sign of a great beer to survive as an exemplar; as the sort of evolutionary offshoot that worked. As time goes by new styles are probably inevitable, but feel free to wait on them. The strong will survive as exemplars. The weak will display their age. In ten years you’ll be drinking a 4.1% session IPA with flavours of mango and passionfruit and making pop cultural jokes about One Direction and Skrillex.

Speaking of age, one sure sign of it is when you realize you don’t have to drink the entire beer.

Stone’s Indiegogo Campaign is Cynical and Exploitative

One of the things that I find frustrating in writing about beer is the insistence by people that brewing is not first and foremost a business. I have written two histories now and I can claim to understand from its outset the development of brewing in North America. At no point before 2008 was anyone under the misapprehension that brewing was not a business to be embarked on as a money making venture.

I suspect that the reason for this is that craft brewing in North America is a rebellion against globalization. We don’t have a whole lot of production capacity on this continent anymore for manufacture and it has become a service economy. People like brewing because it provides the ability to create something special and unique. Each brewer has a different fist and while there is a certain amount of sameness between products and always will be, you can make the case that compared to something like Budweiser or Heineken, craft beer is art. It’s small batch analog production.

But, and this is really really important, it is and has always been and will always be a business first.

The modern development of craft beer mirrors almost exactly the development of brewing in the 19th century in North America. Small companies starting up to service local areas. Craft beer has filled in the vacuum left behind by mergers and acquisitions. It has taken advantage of market opportunities presented by Global brands that are too large to care about the vacuum they created. The thought process for the global brands is not “we could open a brewery in Brooklyn.” The thought process is “let’s take over the entire Peruvian beer market.”

The problem is that the concept of craft beer as art comes with baggage because of the way art is perceived in North America; that the important thing about craft beer is that it is a community or that it is a culture or that it should be supported by viewers like you in the manner of a PBS pledge drive. The difficulty is that it is already supported by you. The business model is as follows: You like the beer, you buy more of that beer.

There is no additional business model. That has been the business model since Alewives put out boards and since bread was soaked in pots in Egypt. If the product is good, the product sells. If the brewery sells enough beer, the brewery expands. (There is a corollary here that suggests that upon sufficient expansion the brewery will become beholden to its shareholders and start cutting corners to increase profit. Happens damned near every time. You see it in action in the current market daily.)

To switch gears for a moment, let me tell you how much I hate Kickstarter and Indiegogo.

Kickstarter and Indiegogo exist for the purpose of crowdsourcing funds to start a project. Famously, one wag has recently used it to acquire funds to make some potato salad. Some aspiring brewers have been attempting to make use of the site to fund their start-up projects.

Let’s say that you’ve got a hankering to open a brewery and you don’t have enough money to do it on your own. You don’t have your own capital and you can’t get a loan from the bank. You have decided that you must start your brewery now and that the best way to do that is micro-donations. Personally, I feel that the decision to do that marks you as impatient, narcissistic and entitled. I will judge you negatively for doing it. It is not a business plan, by the way. If you don’t get to the goal, you don’t get the money and your alternative is what, “oh, I didn’t want to do it anyway?”

The thing about brewing is that it if you enter into it on a whim, you’re more or less screwed before you start. If you want to own your own brewery and be successful, you’re doing it for life. You want to make enough to retire. Kickstarter and Indiegogo reek like hell of the trend bandwagon to me. Having said that, there are cases where it might be the only way forward and if you truly believe you want to brew as a career and it’s the only path to that, it’s probably excusable. You will almost certainly deal with not being taken seriously for a lengthy period of time, but you can overcome that.

When a really large brewery creates a Kickstarter it’s absolutely inexcusable. Stone’s current Indiegogo campaign is shockingly exploitative and cynical. Worse than that, it is actively evil.

Let me explain: Stone Brewing is, according to their website, one of the 5000 fastest growing private companies for the last seven years in a row. They are averaging 43% year to year growth over the last 15 years. They are the tenth largest brewery in the United States with a 2013 production of 213, 277 barrels. Greg Koch was named Ernst & Young’s Entrepreneur of the Year in 2011. He is a millionaire many times over. Stone’s annual revenue in 2012 was just over a hundred million dollars. The figure that I have seen for last year is $137 million although I cannot substantiate that number.

Stone has been rumoured for years to start up a brewery in Berlin. I first heard the rumour about three years ago. It is not a new plan. They have been thinking about it for quite some time. They have had years to acquire the funding for this project through traditional sources. It is my belief that they have the money on hand or that they could easily acquire it. Their Indiegogo is asking for you to help pay for their facility in Berlin because it’s “a fun way to do it.”

This is a project that will make Stone a brewing multinational. It will be a Global business. I cannot tell you how advantageous from a production standpoint having an established craft brewery located in the heart of Europe would be to Stone, but I can state with some degree of confidence that it is a license to print money. It might eventually double their production globally. I should imagine that properly managed the Stone Berlin plant will recoup investment in fairly short order. It is slated to cost something like $25 million dollars. The Indiegogo campaign is asking for a paltry million dollars.

Stone does not need to crowd source a million dollars. They have already funded the Berlin plant and one in the Eastern United States. They just want your money so they can do it faster. In order to get your money they are saying “Stone Brewing Co. was founded with the mission of joining the fight to return the art of brewing to the noble stature it enjoyed before industrialization and subsequent commoditization diminished its luster.”

Firstly, Stone is attempting to become a global industrial company and secondly beer has always been a commodity. If you don’t think it is a commodity, why is it that you think we pay for it? They are fundamentally misrepresenting themselves and I begin to wonder whether they even see the hypocrisy in their position. The Indiegogo campaign is a perversion in this case of the basic business model which I mentioned earlier. They want you to pay money now so that you can have beer later so that they can build a plant that will make them tens of millions of dollars over the next decade. They are essentially panhandling as part of their marketing strategy. Say what you will about MolsonCoors or Anheuser-Busch or SAB Miller, but they don’t expect you to pay them to advertise to you.

Stone’s Indiegogo campaign is actively evil because they are exploiting secondary ideas around the brewery business model like art and community in order to get you to pay them money to do something they are going to do anyway. My suggestion to you is that there are 3000 other breweries in the United States and maybe 400 in Canada and many of them will gladly accept your money without exploiting your sense of belonging to a culture.

On Mediocrity

In undergrad, a friend of mine adopted a principle that allowed him to spend more time playing cards than doing coursework. While he was very interested in doing his best when it came to the courses pertaining to his major, he viewed elective courses as something of an intrusion into his spare time. As a result he would aim for a balance between the highest mark that he could possibly get and the lowest amount of effort that would allow him a respectable grade. He called it “The Gentleman’s C.”

I am not sure that it served him well subsequently, but we always had a fourth for euchre.

I’ve been thinking a lot about The Gentleman’s C in recent months because I’ve noticed something interesting: Given enough time, everything, regardless of its quality will end up with a mark somewhere between 3.25 and 3.75 on Untappd. For those of you who don’t know, Untappd is an application that lets you check in the beers that you are drinking and give them a score out of five. It’s generally fairly pointless and ultimately gameifies the consumption of alcohol by giving you badges. That’s very probably a bad thing in the long term.

I think that this has to do with the sheer quantity of beer being made across North America at the moment and the amount of enthusiasm that the market is seized with. In terms of criticism it’s difficult because there’s only so much meaningful output that any one person can create. In Ontario at the moment there are so many new breweries that I think it unlikely that anyone has eyes on all of them.

Understand this: As little as thirty years ago, it would certainly have been possible for a single critic to have tried every beer in production in North America. It would not even have taken all that long to do it. Possibly less than a year. It was not as though there were fourteen new kinds of session IPA hitting the market each week.

My numbers are bogus here, but follow me on the concept. There are something like 3000 breweries in Canada and the USA. I think we can safely give those breweries an average of five brands a piece, although in practice I suspect it to be higher than that. This means that there are something like 15,000 brands of beer being brewed in North America (excluding Mexico because I don’t know enough about that to wrap my head around it.)

At one beer a night that would take you 41 years. Even were you to dedicate your entire life the process and call it 8 three ounce samples a night, you’re never going to catch up with the growth forecasted and you’re going to zeno’s paradox yourself right into oblivion.

(edit: kudos to astute reader David Horatio Ort, who kindly pointed out that my bogus math was three times as bogus as it ought to have been.)

For that reason, there’s a significant tendency in criticism to focus on the absolute best of the best. It’s impossible to have context for everything, so why wouldn’t you focus on the things that you know you’re going to like and be able to review positively? If you try something you don’t like why would you waste your time reviewing it? Many people I’ve talked to are pleased to simply not write about things that they don’t like or things that are poorly made. I do it myself. I’ve got books to write and I’d prefer to recommend good things in the column than excoriate bad things.

With that huge and ever expanding number of beers out there, I think that we’re probably doing a disservice to people who read about beer by accentuating the positive when we should really be eliminating the negative with extreme prejudice. If a beer is simply not very good, then we should probably be telling the public that.

Untappd is a poor substitute for reality. Not everything is worth 3.5 stars out of 5. There’s some rough work being pulled at the fermenter and I’m seeing that increase rather than decrease. There are beers being launched into the world that are uninspired and really serve no purpose other than being something to market. There are some woeful mediocrities out there that deserve nothing but scorn. I don’t mean mass market brands from the big guys. I mean small craft beer producers who are more interested in a marketing strategy than a quality product. Brewers whose grasp has exceeded their reach.

The directory over at Mom n’ Hops is telling me that there are 184 breweries and brewing companies open or in planning in Ontario. When I started writing about beer in 2010, I think we had something like 35 in Ontario. For that reason, you wanted to be a bit gingerly. It was a big deal when someone got a new product on a shelf. You wanted to be a bit supportive even if the product was mediocre because at least it meant there was choice.

Choice is no longer a problem, but mediocrity is becoming one. Average is going to get you lost in the shuffle. Aim for something a little higher than a Gentleman’s C, folks. Just existing is for plankton.

Understanding The Beer Store

Since it is December, we are in that phase of the year when people talk idly about abolishing The Beer Store. You’ve got Martin Regg Cohn over at The Star doing a reprise of last year’s column. It’s a good party piece, but it’s unlikely to accomplish anything. Even Anindya Sen who released a number of studies and who is probably a very good economist seems not to have made an impact, although this might be due to the ease of dismissing a commissioned study.

I’ve taken a slightly different tack on the issue this year: I’ve actually talked to The Beer Store in an attempt to understand the problem. If you want to effect change, you’ve got to understand the motivations of all of the parties involved. It does you no good to vilify The Beer Store out of hand. It is not run by Darth Vader. If it were, the stores would feature more unsafe catwalks over giant pits.

Let’s put aside for a moment the shopping experience which has been famously awful. Let’s put aside the rhetoric that it is an outmoded eastern bloc style of organization.

Let’s instead have a look at the functions it actually performs.

The shopping experience tends to blind people to the fact that The Beer Store is actually a retail and distribution organization. Despite the insistence of studies to the contrary, it operates at a cost recovery basis. That is to say that it does not turn a profit. It makes enough money to pay for itself.

Please understand this: It does not make a profit. Intentionally. Anyone who is telling you different is flat out wrong.

This is not to say that the ideas of those people who are telling you it makes a profit are wrong. They’re absolutely right. If it were a retailer in a purely capitalist system, The Beer Store would be raking it in hand over fist. Anindya Sen claims that there are approximately 700 million dollars worth of incremental profits unaccounted for in The Beer Store’s operation. Let us account for them.

The Beer Store has more than 440 locations operating all over Ontario. Sure, there are a whole bunch in Toronto, but there’s one in Espanola and Wawa and Azilda and Coboconk. They’re everywhere. This is the retail component, which is customer facing.

Consider all of the stuff involved that does not face the customer.

There are the licensee sales. When you see the Brewer’s Retail truck out and about delivering kegs, that’s also The Beer Store. They have an online ordering system for licensees and people to staff it. They’ve got people driving those trucks. They’ve got administrative staff supervising those sets of employees.

There are the logistics of distribution to contend with. You can’t sell beer in Wawa and Coboconk unless you get the beer there in the first place. The Beer Store has six separate distribution centres which service the province. This means that beer intended for stores or licensees need only be shipped as far as the nearest distribution centre and The Beer Store will take care of the rest. Think of the logistical support needed for this.

There’s the bottle recycling program. I recall reading somewhere that your typical ISB bottle can be re-used between 18 and 20 times. The Beer Store controls the recycling of these bottles within Ontario. I forget exactly what the current consensus is on recycling beer bottles. It seems to change depending on the cost of cartage or freight. Anyway, it employs a number of people and The Beer Store has a really significant hand in it.

There’s also the Draught Services division which handles installations for licensees and line cleaning equipment.

What The Beer Store actually does is outsource services for the three extremely large companies that own it. I suspect that the only reason Sapporo is allowed 4% ownership is to keep it from becoming a subsidiary company of either Molson Coors or AB InBev based on shifts in market share.

Because these companies have contrived over several decades to own The Beer Store, they are able to outsource all of the following: Customer facing sales, licensee facing sales, draught equipment sales, distribution of their product to all corners of the province of Ontario, the ownership and maintenance of the physical buildings, the ownership and maintenance of the fleet of trucks required, the recycling of beer bottles for re-use predominantly by the owners of The Beer Store, the staffing and administration of the entire concern, insurance liability for the entire concern and the pensions of the entire concern.

Jeff Newton, a spokesperson for The Beer Store (and a dashed accommodating fellow), pointed out to me that smaller breweries could also take advantage of these benefits. The scale of the thing is prohibitive if we’re all going to be honest. There’s an initial investment involved that requires a lot of capital.

To be fair, I should point out the other thing that I learned. The LCBO has a markup which makes them a profit. Selling beer in The Beer Store seems to (once you recoup the initial investment) provide a greater profit margin for breweries. Sure, it’s a long term strategy, but it might work out eventually.

What all of this means is that all of the service fees that go into selling beer at The Beer Store essentially go into a pool which funds all of the above listed activities. There is a sliding scale of fees to have your products listed if you’re a smaller brewer, which is something of a concession. However, you’re still paying into a system which disproportionately benefits the large brewers in a substantial way.

The Beer Store doesn’t need to make a profit, which is why it doesn’t. Making a profit would be gilding the lily. The real benefit here is that the large brewers don’t have to perform many of the tasks I listed above. The Beer Store handles those for them. It also brings a certain amount of stability to the cold war like détente between AB InBev and Molson Coors in Ontario since they both benefit massively from their ownership and the status quo seems to be working.

This is what you’re contending with when you talk about privatization, incidentally. You’ve got a massively organized logistics and distribution company whose parent companies have some incredibly deep pockets and have contrived to create an oligopoly out of something intended to be a public service over the course of several decades. If you want privatization, you need a governmental figure willing to think further ahead than the next election.

Whether you like it or not the current structure of The Beer Store is absolutely brilliant. It’s actually genius. Just because it tends not benefit the consumer doesn’t change that.

The OCSA vs. The Status Quo

The second of the studies that the Ontario Convenience Store Association released in August is a good deal more broad in scope than the first. It is entitled An Economic Analysis of Increasing Competition In Retail Liquor Sales in Ontario. It is also written by Dr. Anindya Sen from the University of Waterloo. If you really like reading economic papers, you can download it by clicking the title.

I am going to attempt to explain the gist of the paper as best I can given my limited understanding of the economic model employed between pages 18 and 24. I think I get most of it, but if there are any economists out there, you might want to lean in on this one.

This paper is intended as a study to provide information on the possible effects of partial privatization of alcohol sales within the province of Ontario. It is an attempt to provide substantive academic research into the problem. This is something of which I am generally in favour. Too often we argue on internet forums about the likely effects of privatization without any real research to point to.

The initial findings which guide the study are as follows:

1)      The vast majority of the money the LCBO makes is on markup, which is generated in their capacity as a wholesaler. (This is usually true with specific amounts based on product type. Here is a link to the current pricing structure.)

2)      Comparatively speaking, federal excise and federal and provincial ad valorem taxes typically make up a smaller percentage than the markup,

3)      Based on empirical evidence, increased market competition is significantly correlated with an increase in per capita gross income, net income and government revenue generated by the provincial liquor authority.

The arguments that follow are largely based on the concept of consumer and producer surpluses and it basically goes like this:

Say you’re standing in the LCBO at Summerhill, checking out all the groovy new craft beers and thinking about what to drink this weekend. For the purposes of this argument, you’re all about buying a bottle of Panil Enhanced because it looks interesting and you liked the Bariquee that came in last year. You check the price tag and it is $15.00. The absolute most that you’re willing to pay for a single bottle of beer at retail is $16.50. That measure of $1.50 difference counts as your welfare based on consumer surplus.

Now, on the other end of the scale, Panil is trying to sell their beer for as much money as they reasonably can. It’s good beer and they feel they deserve to be paid a premium for it. I don’t know exactly what price the LCBO is buying Panil Enhanced from the importer at, but let’s assume for the sake of argument that it’s about $6.50 a bottle. That’s more than the $5.00 the importer would have taken at a minimum. Their producer surplus is $1.50.

All this means is that the system works tolerably well towards an equilibrium between consumer surplus and producer surplus at $15.00. Also, you go home with a bottle of Panil Enhanced and everyone’s happy.

If you could remove some of the markup that the LCBO adds as a wholesaler from the equation and keep the producer surplus the same, your consumer might suddenly be paying $13.50 for that bottle of Panil, creating additional consumer surplus.

Without competition, there’s no compelling reason for the LCBO to change the equilibrium point in the model. They would make less money in markup, and, because the product is cheaper, the province would take less PST. “Everything is worth what its purchaser will pay for it,” said Publilius Syrus. You’ll pay $15.00 for Panil Enhanced because it’s worth that to you.

There is also a concept here that you should understand that is called Deadweight Loss that’s associated with a monopoly on various products. Since a monopoly allows the retailer to charge the most beneficial price for themselves, some consumers are not able to afford Panil Enhanced at all, resulting in a loss of market utility. They have frowny faces.

Dr. Sen is essentially arguing that the LCBO voluntarily enter into a position in which they are creating their own retail competition.

Theorize that some kinds of alcoholic beverages are available for sale at convenience stores. The study assumes that convenience stores would be allowed to accept a lower markup, resulting in decreased cost to the consumer. For this the convenience store would pay some of the markup as licensing fees. As a result of that move, the majority of rational consumers would shop at the convenience store. This would in turn result in lower sales at the LCBO, which would force them to lower their prices.

This would lead to a significant reduction in government revenue due to the loss of markup and ad valorem taxation. The good news is this: The lowered costs to the consumer mean that the people who counted as Deadweight Loss and could not afford Panil Enhanced at all can now do so and that the people who were experiencing mild consumer surplus on their $15.00 bottle are now paying $13.50 and those suckers are doing backflips of joy in the streets, let me tell you. “Whoopee hoo,” they yell “I’m gettin’ enhanced tonight.”

“The LCBO in the short run is worse off, because of lowered sales and profits generated by its own stores” says the study. “However, it is quite possible that overall LCBO net revenue and transfers to the province will actually increase. Recall that in this model, convenience stores must also transfer their markup revenue to the province. Since they charge a lower price (compared to the LCBO), the total amount of liquor sold is obviously more than the quantity sold by the LCBO as a monopoly retailer. Otherwise, the LCBO would have earned these higher profits as a monopoly retailer by setting a lower price.”

Got that? Convenience stores charge a lower price and the LCBO charges a lower price but ideally the increased volume of sales that results from the decreased prices bridging two sales channels might theoretically increase once you take the additional taxation revenue into account.

I agree completely with Dr. Sen’s finding. That’s exactly what would happen given those conditions.

Those conditions will be met on the day that hell freezes over.

The model depends on a simplified version of the system as it currently exists which thinks solely about the benefit in terms of consumer surplus. The issue is that since the LCBO’s profits and the general tax revenue from the LCBO and Beer Store make up approximately 1.5-2% of the annual provincial budget, the real world also has to take the consumer into account as a citizen who benefits from services derived from that revenue.

The ignored cost implications are staggering. The LCBO’s reduced profitability would probably result in a decreased operational budget and therefore a decrease in staffing. Think about the amount of work that would have to be done in order to figure out what the decreased price structure would look like.

Think about the fact that you as the OCSA are pitching this fanciful study whose empirical data analysis does not account for demographics or trends in the marketplace and a conclusion section which contains a woefully large number of conditional statements. If I’m the government, I’m shutting you down because the LCBO is a guaranteed cash cow in a time of economic uncertainty and you are offering a potential 5% – 9% theoretical increase at some point in the future if everything goes right and there are no unforeseen eventualities.

Peace, order and good government means that “if” and “maybe” and “should” don’t get a seat at the table.

On a final note, consider the main precept of the OCSA model: additional sales. Additional sales mean additional consumption. If the core tenet of your model hands your opponent a social responsibility argument to beat you about the head with, you can’t be surprised when you lose.

The OCSA vs. The Beer Store

One of the interesting things that happened in Ontario’s beer scene this year is that the market is becoming increasingly contentious. The increased interest in beer is making it so that the status quo is becoming somewhat untenable. There are 155 craft breweries open or in planning as of this writing. That means a very large number of brands for which the LCBO does not have shelf space and a number of craft breweries which are not large enough to afford The Beer Store’s listing fees.

When you add to this the increased interest in the craft and import segments, you get players in the market who are more serious about effecting change than they used to be. Take the Ontario Convenience Store Association, for instance. They hired economist Anindya Sen from the University of Waterloo to produce a two part study that makes the case for privatization of beer sales.

The first part of the study is about the difference in pricing between two-fours in Ontario and Quebec. You can download it here.

I do not have a Ph.D. in Economics, but I’m going to try and walk you through the basic arguments here.

The methodology here was to choose five brands sold over a 22 week period and record data based on pre-tax beer prices. The period in question was Dec 2012-May 2013. The brands in question were Molson Canadian, Molson Dry, Coors Light, Budweiser, and Bud Light. The format in question was 24 341ml bottles. In Ontario, data was culled from The Beer Store’s website. In Quebec, it was culled from online pricing for Metro and IGA supermarket chains.

Dr. Sen’s findings were (for those of you who don’t want to wade through the PDF)

Quebec IGA Quebec Metro The Beer Store % difference IGA % difference metro
$26.08 $25.95 $35.56 27% 27%

 

Essentially, in Ontario we pay 27% more for a 24 of beer than people do in Quebec. That is essentially the primary conclusion of the study and then there are subsequent conclusions based upon that data.

Can you spot the problem with this study? The Beer Store could. They released a comment paper on the study on November 18th through the Earnscliffe Strategy Group. It is available for download here.

To their credit (and lord knows I’m a fairly vocal critic of The Beer Store) The Beer Store only lists one format of pricing on their website or in store. It’s the total amount that you’re going to pay for a thing. It includes both tax and bottle deposit.

The claim here is that the IGA and Metro prices that are listed don’t include bottle deposit or sales tax (GST and QST in Quebec.) If you remove from the average price of $35.56 the bottle deposit and applicable sales taxes (GST and HST in Ontario) the price difference is not $9.50. It’s $3.33.

The Beer Store’s study goes on to mention commodity taxes. In Quebec, these total about 50 cents a litre while in Ontario they total 91.62 cents a litre. As it turns out, this is the main reason for the difference in beer prices between Quebec and Ontario. The provincial commodity tax we’re charged is about 1.8 times higher.

 

 

Table 3:

Re-Stated Net Price Removing All Relevant Taxes & Deposits

  QC Average Price ON Average Price
Price after Adjusting for HST

and refundable Deposit

 

$26.02

 

$29.35

Adjustment for Provincial

Commodity Taxes

 

-$ 4.09

 

-$ 7.43

QC and ON prices on Equal

Basis

 

$21.93

 

$21.92

Adjustment for Federal

Commodity Taxes

 

-$ 2.56

 

-$ 2.56

Net Price after removing all

Consumer Taxes and deposits

 

$19.37

 

$19.36

 

Of course, this means that the data collected for the OCSA study was at best improperly fact checked and that any conclusions drawn from subsequent steps of the study are bunkum. This is dumb. It does not matter if you employ an economist to release a study if the basic and easily verified facts are incorrect. You cannot use an appeal to authority to point to an expert opinion if that authority demonstrably does not understand the problem.

And you know what? The OCSA’s study was released in August. No one questioned the thing. It claimed that The Beer Store was making 700 million dollars in additional revenue based on faulty data. It may have been wrong, but it sure got a lot of re-tweets.

This is the problem with the debate about Ontario and The Beer Store. Every time the subject of The Beer Store comes up just about any self respecting beer drinker is going to have an opinion about it. The problem is that aside from The Beer Store, no one actually knows how much money The Beer Store makes on an annual basis. The information is not disclosed to the public. The ability of interested parties like the OCSA to release a study claiming a 700 million dollar windfall is enhanced by this. It renders substantive debate on the issue ludicrous.

The end result of this go around in the Ontario Privatization Hoedown is that The Beer Store has managed to basically discredit any further studies the OCSA might care to produce. They have done this by understanding their own pricing structure. Frankly, it was kind of a gimme, but I have to applaud their restraint in not smacking it down on the second day with a cry of “Boo-Ya.”

What this should do is highlight the fact that the Ontario beer market is large and profitable and that in the next few years, organizations are going to fight over it. It is not being fought over for the benefit of the consumer, no matter how much the consumer might feel that they should have a say in the matter. Frankly, what we want is immaterial.

As a side note, the average price of those five brands at the moment at The Beer Store is $34.55. That may have been an unintended consequence.

Devil’s Advocate: Brewer’s Association

Periodically, the Brewer’s Association releases statements that I find a little bit suspect. This is mostly because they’re a lobbying group and their purpose is being optimistic about craft beer. I’m all for defending your own interest. After all, does it not say in the Talmud, “If I am not for myself, then who will be for me?” Good advice.

The thing is this: You should always be skeptical of an overwhelmingly positive statement released by a lobbying group’s staff economist. This should be self-evident, especially when it’s released as a PR move. I don’t mean to be an Agnew style nattering nabob of negativism, but I’d like to comb through some of the points that are being made in today’s BA press release, titled The Craft Beer (Non) Bubble.

The first thing that should be pointed out is that the graph representing the non-bubble argument is entirely misleading. For the obvious reason that it dwarfs the scale of the growth of craft breweries in the United States, the economist has chosen to compare the current situation of craft breweries in the United States with the NASDAQ dot com boom of the late 1990’s. This is nonsensical because the NASDAQ chart represents a monetary increment rather than a number of companies. Additionally, the Dotcom bubble may have subsequently depressed the NASDAQ, but it’s relatively clear from the graph that the market had stabilized by month 31 or so. Given that the chart runs from October 1998 to June 2004, and that the market seems to have stabilized from that bubble by approximately June of 2001, I think we have to attribute the subsequent drop in the market to an alternate cause. Probably it has something to do with the events of September 11, 2001. At any rate, the graph is bogus. If you listed the number of NASDAQ member companies, it would make more sense as a comparison but it wouldn’t prove anything.

So, the BA staff economist is representing the number of breweries in terms of monetary value on a non realistic timeline. The graph is irrelevant.

Secondly, “Everyone should stop talking and/or worrying about the number of breweries.” This is apparently because that number includes Brewpubs. This is a pointless obfuscation of the problem which conflicts data the BA has issued previously. According to the BA’s own stats, the number of brewpubs operating in 2011 was 1068. In 2012, 1132. By June, it was 1165. Those are increases of approximately 6%, year over year. That’s not really the massive expansion that he makes it out to be. Comparatively, 315 microbreweries opened between 2011 and 2012. As of June 2013, there were another 107, bringing the total to 1221. According to the BA itself, there are 1250 American breweries in planning. You’re realistically looking at an approximate 100% increase in breweries between 2011 and 2016. Isn’t that worrying? Think about how many additional brands that will create.

The answer provided to this issue? Don’t think about it. The numbers don’t matter. Until we know how much beer they’re making, it’s irrelevant. Never mind that this interpretation doesn’t jibe with the widely touted information on expansion that is frequently used to point out the segment’s expansion.

Thirdly, “It is much more relevant to talk about capacity and/or market share.” His points on capacity are essentially unassailable because they contain no concrete numerical information about volume being produced.  Market share on the other hand:

“That leads us to market share.  How long can craft keep gobbling up share points at the rate of 1 or 2 points a year?  The answer: as long as the consumer demand for full-flavored beer continues, and it shows no signs of slowing.  The craft revolution isn’t just built on innovative businesses, it stems primarily from a changing set of consumer preferences away from light adjunct lagers and toward full-flavored beers for more occasions.  Some of this demand is being met by new brands from large brewers, but market statistics continue to show that the vast majority is being met by local craft brewers.”

Essentially, everything will be fine as long as the consumer keeps wanting what they’re selling. They will continue to expand in market share as long as consumers want fuller flavoured beers. The fact that large brewers are now producing fuller flavored beers to compete seems rather less reassuring than it is intended to be. That seems like it could be a growth limiting factor and it is hand waved away.

What if, he goes on to say, everyone who drinks craft beer drank an extra craft beer a month? Well, that’d be a 2.7% market share bump right there. If they drank an extra beer a week, it’d be 11.7% market share to the good. Well, brother, that’s a whole lot of if in a country whose per capita consumption has been declining steadily for years.

All of this, he continues, is based on the quality of beers made by new breweries. If everything remains of high quality, everything will be fine. Define what the hell you mean by high quality, and maybe you’d have a cogent argument. As it stands, we get this:

Brewers that enter a more crowded market without high quality beers that differentiate them from the field will soon discover the harsh realities of the sector: increasingly crowded shelf-space, existing competitors with greater access to capital and/or technical knowledge, and global players that are increasingly carrying full-flavored, locally-targeted brands of their own.

Just for my own edification, would you please point out how brewers that enter a crowded market WITH high quality beers will not suffer from exactly the same problems of overcrowding and competition from all of the other companies in the market that are doing more or less the same thing? How is it any different, especially when you’re not defining what you mean by high quality? This is what you call developing a narrative structure. If you find in a few years that we are in a bubble and that things are not going well, we’re set up to blame the “low quality” of new entrants to the market. Suddenly, there’s a scapegoat, just in case. The staggeringly obvious thing is that there are 1250 new breweries in planning and they will begin to exist in short order. There is already in place a mechanism to blame them should things go bad.

He finishes by comparing breweries to restaurants. Again with the apples and oranges NASDAQ strategy.

Think again about restaurants, how many close every year – does that mean we are in a restaurant bubble?

Total logical fallacy. A moderately sized restaurant might do 300 covers a day. It feeds people in a local catchment area. A restaurant does not attempt to ship its steak au poivre to another state. Even in the case of chain restaurants like McDonald’s, they have to produce the food on site. That is in no way similar to a brewery.

Finally, it is worth noting that as craft develops further, a more mature market means that volume growth will inevitably slow and some entrants will fail.  But, slowing growth or a rising rate of closings doesn’t mean a bubble has burst.  At a certain point, a growing base means that 10 or 15% volume growth becomes more and more difficult, as the same percentage rate requires a greater growth in barrels produced every year.

This is not wrong, but notice how it expertly manages to cushion expectations. He acknowledges that a contraction is coming, but downplays the term bubble. This release is more or less an exercise in semantics. It’s an attempt to control the message by shrinking the expectation of growth that the Brewers Association’s numbers bear out. It is at best a caveat.

On Marston’s and Legacy

P1020722Arriving in Burton-On-Trent by train, you get a real sense of what William Blake must have meant by “dark satanic mills.” The landscape is one of rolling hills interspersed with small lakes and marshes until you’re suddenly confronted by the expansive brick warehouses and towering breweries that were the pride of the town’s industry in the 18th and 19th centuries. That they should spring suddenly upon you is surprising, as Burton-On-Trent is not as large as its reputation. At one time they would have expelled great quantities of smoke and steam into the sky, and on a cloudy day it would have seemed like they would choke the world.

Having spent several days in London, walking a great deal more than I am used to, I had developed a habit of taking in detail. The two story row houses that make up the side streets stretched into the distance on the way to Marston’s. This was a company town with housing designed for workers, with facilities to meet their needs. The breweries sometimes provided cottages for their workers’ physical needs and churches to provide for their spiritual redemption. Red brick pubs like the Wellington Arms seem to have been stood there forever, waiting for the factory whistle or for the church to let out.

On the way down Shobnall Road from the train station, you cross over the Trent and Mersey canal. Now full of holidaymakers with damp socks, the canals would have once served as the main artery for distribution of beer throughout England. There was a period when Burton produced nearly a quarter of the country’s ale. In 1880, there were 30 breweries at work, although that number has since shrunk significantly.P1020724

Currently, Burton houses eight breweries. Of these, six are micros. Bass has been taken over by Molson Coors. This means that of all of the breweries that at one time made Burton On Trent the brewing capital of England, only one remains under its original name at its original facitilies: Marston’s. This is not to say that Marston’s survived independently since its advent in 1834. It became part of Wolverhampton and Dudley Breweries in 1999, losing its name in the shuffle. After an eight year period, that group became Marston’s PLC, possibly out of a sense that heritage of that length is not something you want to obscure.P1020729

Crossing the yard to the visitor’s centre, you’re struck by the cumulative effect that such long history visually creates. Buildings and equipment of various eras and vintages dot the brewery compound. There stand Victorian row houses. There waits a delivery truck from an era before container shipping, now rejuvenated for display at beer festivals. To one side of the towering brewery are sheds sided with corrugated metal that would not be out of place in any industrial park. The air outside the brewery is filled with the sweet cereal aroma that only a really large brewery can produce in sufficient quantity to be suffusive. It escapes from the roof in wisps of steam.P1020730

The sense of continuity that is on display is all of the legacy that can be expected, as Marston’s is not some museum showpiece. It would be folly to expect to see what it would have been like in the 1830’s. Over the years, the upgrades that have taken place to modernize the brewery and render it continually workable have stripped out much of what would have been there originally. It imparts the sense that a brewer’s day to day life as it was then might now be unknowable. However, if you pay attention, you can see how that routine must have changed as improvements were made.

It helps that the tour guide, Meryl, has been with the company for a considerable period. In a context like brewing, written documentation may well be less useful than institutional memory.

The tour progresses along catwalks and gangways, covering the topics that such tours always cover. Grain and hops, boilers and mash tuns. If you’re like I am and you have an understanding of how beer is made, that part of the tour is something that you would inevitably tune out. The building is the fascinating part; the scale of it is unlike a modern brewery. It’s a space on a human scale.P1020742 P1020743

Meryl mentioned in passing that the trapdoors in the floor and ceiling were the method by which, when she started at the brewery, a man named Morris worked to hoist grain to the top of the mills by a system of pulleys. At this point in history, we might use augurs in lengthy PVC tubes to do that work. We might automate it completely. Not so very long ago, this would have been work done by a man with a system of pulleys and a set of trapdoors. If James Watt suggested that a pony could lift 220 pounds a hundred feet per minute on his way to a definition of horsepower, you can only imagine how many thousands of units of horsepower Morris expended over the course of his career.

You get the sense that Morris was a big lad who would have brooked little nonsense. He would have been glad of his pint at the end of a shift.

I was interested, over the course of the tour, to learn that Marston’s now brews with Reverse Osmosis water. That is water from which all the minerals have been stripped. It’s something of an irony that the process of adding gypsum to water for brewing, eponymously Burtonization, should be practiced in Marston’s. This is necessary, though, as the Marston’s brewery now produces a number of other brands which would have had their genesis in other parts of the country. Marston’s PLC produces Hobgoblin, which is one of their most popular beers and which is made primarily at the Burton brewery. There is a very real chance that the batch of Hobgoblin I saw made could end up at my local pub in Toronto at some point in early October.P1020733

The original equipment was made of copper. Indeed, when Michael Jackson wrote about Marston’s in 1992, many of the fittings in use were still copper. The brewhouse is now gleaming stainless steel and glass. I took a moment away from the tour to speak with the brewer and asked what he thought about working in such a distinguished building. “It’s a listed building,” he said. “Can’t do a thing about insulation. It gets pretty cold in the winter.” It’s always pleasing to be reminded that brewers the world over are the same; getting on with a job that consumes both time and attention while still being niggled at by the limitations of their space.

If you had ever wondered what Isinglass looks like, this is it. Before it is powdered.

If you had ever wondered what Isinglass looks like, this is it. Before it is powdered.

Marston’s is now the only brewery left that produces beer on a large scale using the Burton Union system. The warehouses that hold their fermentation tanks are arranged around this endeavor, with large rectangular vessels taking up the outside walls that ring the Burton Union barrels on the production floor. The idea behind the Burton Union system is that fermentation takes place in a barrel and as the yeast vigorously propagates, the krausen (in this specific instance known as barm) pushes up through a pipe and into a long stainless steel trough that collects it. This is an idiosyncratic process and it’s easy to see why other breweries have shied away from it over the years. It would be time consuming. It would be difficult to maintain such a large amount of equipment. Anyone working the brewery would require time to adjust to the process and develop that specialized feel that comes with manipulating such a finicky set of variables. P1020759P1020764P1020765P1020766

As we made our way along the catwalks and observed the pipes disgorging their barm into the trough, I was pleased to see that there was one such employee hurriedly making adjustments to the barrels below us. He would rap upon the top of each barrel with a wrench in order to determine the rate at which they were emptying. The batch that was fermenting at the time was ready for the next part of the process and without a visual cue, this percussive method would demonstrate whether the barrels were emptying. Being nominally a brewer myself and used to stainless steel and standard methods of fermenting beer, this seemed like a hell of a lot of effort. When I was younger, I would have opined that there’s something characteristically British about accomplishing a simple thing through what seems like an intentionally overcomplicated system. That may well be the case, but I know that this is also a characteristic of brewers.

The result is Marston’s Pedigree, which doesn’t taste quite like anything else. There is that slight sulphurous note that I’m told is the Burton Snatch. It’s a little like that tang from a match that has just been struck. There’s also the dried apple body. There’s tannin and caramel and something not quite but almost entirely unlike tea. There’s something a little like the papery internal structure of a freshly cracked walnut.  You might be able to reach the same destination some other way, but some things shouldn’t be modernized.P1020772

As I returned to London, I realized that one of the things that a brewery like Marston’s represents is that good beer is always about the people that produced it. There are some jobs that should not, can not be automated. It may seem a triviality to replace Morris with an augur or to replace a wrench wielding cellarman with a volume gauge, but I’m almost certain that the results would be different. That they would be worse.

It was heartening, emerging at London Bridge Station, to observe that even in 2013 with glass and steel monstrosities popping up over the City, even in an era where architectural futurism is practically the norm, there are some jobs that cannot be satisfactorily automated. P1020852P1020850P1020851

London Craft Beer

Here’s an interesting thought:

Craft beer in North America went through a lot of growing pains on the way to being where they are at the moment. There were years of struggling to make English styles of beer as authentically as possible (hard to do in San Francisco) and the advent and proliferation of C-Hops. By the time you get to about 2010, the fruits of those labours have more or less paid off as the craft beer trend went global. Suddenly there are hops from New Zealand and the C-Hops have blossomed into widespread Double IPAs. You’ve got hop varieties that are great at not just citrus and pine, but all manner of tropical fruit and mineral elements.

The thing is that this kind of innovation, if perpetuated on a long enough timeline, brings old ideas with it as well as new tools and equipment. If you introduced your flagship pale ale in 1994 and it was considered to be pretty hoppy at that point, you’re unlikely to be able to change the recipe without compromising your market share or really pissing off your earliest customers. There’s such a thing as 90’s beer. It still exists in Toronto. If you have The Beer Academy’s IPA, it’s more or less exactly what I’m talking about. It’s quite good, mind you, but it is so old school that it wears a striped tie.

Nice glassware is key to a decent beer festival. Subtle branding is best.

Nice glassware is key to a decent beer festival. Subtle branding is best.

In London, there was no craft beer scene until about 2007. I’m not choosing that date arbitrarily. That was the year that The Rake in Borough Market opened for business. Before 2007 there were a couple of what might be considered small breweries dotted around the country. Dark Star is a good example of this. They opened in 1994 and you really get that sense from their Hophead on cask. Again, really a very good beer, but the Cascade hops are unmistakeable. It’s of an era.

See? There's a DJ booth.It's a proper modern beer festival. Apparently Craig Charles was going to be DJing at some point. It's just as well I didn't meet him because I would have been forced to offer a hearty "boys from the dwarf" in greeting.

See? There’s a DJ booth.It’s a proper modern beer festival. Apparently Craig Charles was going to be DJing at some point. It’s just as well I didn’t meet him because I would have been forced to offer a hearty “boys from the dwarf” in greeting.

The number that I heard bandied about at the inaugural London Craft Beer Festival at the Oval Space in Hackney on Friday was 50. Over the last five years or so, there have been 50 brewery startups in London. They’ve all come into existence during the height of the international craft beer trend, many of them within the last six months. This means two things:

1)      They don’t have as much of the conceptual baggage that you might have in an older scene.

2)       Because of point one, they’re now doing really interesting cutting edge stuff.

A really neat thing about starting a brewery from scratch is that you get to come up with all new branding and a cohesive concept upon which to base your products. You have a template from which to work which seems completely contemporary. You also don’t have the baggage of existing brands that you have to continue making. Because of that, you can introduce a flagship brand or choose not to. Rather than being beholden to older hop varieties, you can choose to use the new stuff whenever possible. Beer styles? Out the window. Screw ‘em.

I’m at least putatively on vacation, so I’m going to hit the highlights of what I saw on Friday at the London Craft Beer Festival. Incidentally, I’m extraordinarily lucky to have been able to fit all of this into one week. You have to imagine that scheduling the London Craft Beer Festival during the Great British Beer Festival is not so much happenstance as a direct assault. This is a vastly different crowd and I think it can be summed up by the t-shirts from the Weird Beard Brewing Co. This is more representative of a younger demographic in London, brewing in rail arches and warehouses.

A very nice contrast to the GBBF policy of mandatory sandals.

A very nice contrast to the GBBF policy of mandatory sandals.

One of the points that cropped up repeatedly is that you can’t have a scene emerge this quickly out of thin air. I had never really understood, prior to Friday, the sort of influence that Gypsy brewers were having. For one thing, they’ve only made it to Toronto in the last couple of years. We’ve got Anders Kissmeyer working with Beau’s and Evil Twin popping up at Bellwoods periodically. In the case of the London scene I feel like the gypsy brewers have been instrumental in making progress happen this quickly. Mikkeller had a booth as did To Ol.

Clever conceptual branding here from Siren, working the mythology to advantage. I'd eventually like to see a beer called Odyssey.

Clever conceptual branding here from Siren, working the mythology to advantage. I’d eventually like to see a beer called Odyssey, or possibly Screaming Argonaut.

One of the most impressive breweries on site was Siren Craft Brew. I’m given to understand that their head brewer, Ryan, did a lot of brewing for Evil Twin and Mikkeller prior to his current gig at Siren. This shows through in a number of ways. First of all, there’s the willingness to experiment. Broken Dream is a 6.5% Breakfast Stout with coffee and lactose and I’d have been happy to get that anywhere in the world. Second of all, there’s the obvious potential for collaborative effort with contacts you’d make as a gypsy brewer. Not only was there a very interesting beer called Limoncello (lemon zest, lemon juice, sour mash, lactose) that was brewed in collaboration with Hill Farmstead and Mikkeller, but apparently there’s a version of Broken Dream out there aged in Pappy Van Winkle barrels. You don’t get your hands on those if you’re just some guy.

So, now I understand what gypsy brewers do: They are conceptual cross-pollinators. They have a top down view and manage to get bits of information (and sometimes rare bourbon barrels) from over here to over there. Groovy.

No Hops. No Herbs. Just a lactic sourness that'll make you beg for mercy.

No Hops. No Herbs. Just a lactic sourness that’ll make you beg for mercy.

Another significant strength of the craft beer scene here is that they don’t seem overmuch worried by stylistic definitions. Buxton, for instance, had come up with something that I haven’t seen before for the festival. Called Wolfescoate, it’s a 3.3% beer, black as night with a whole lot of lactic sourness. I believe the rep told me that it had been soured in copper for four days. In order to highlight the sourness, they’ve decided to omit any hops. “So it’s a gruit?” I can hear you say. No. They haven’t replaced the hops with herbs. Instead of using bitterness to balance their beer, they’ve chosen to balance it with the roast from the malt. The result is pretty amazing.

Thornbridge employees alternately mugging for and ignoring the camera.

Thornbridge employees alternately mugging for and ignoring the camera.

Additionally, there seems to be a trend toward something like a very small version of an India Pale Ale. Magic Rock (from Huddersfield in Yorkshire) and The Kernel (from near Bermondsey Tube Station) have both gone in the direction of brewing very small beer indeed. Magic Rock’s is called Simpleton and sat at around 2.5% alcohol. The significant Citra hop nose is something you wouldn’t see at that strength very frequently. Somehow it retains a full body. There’s not much room for error here and Magic Rock manages it very nicely. The Kernel has a Table Beer (which, to be fair, I had at The Rake) which claimed 2.7% alcohol and was packed full of Nelson Sauvin.

Some of the London brewers have really done extraordinarily well in terms of branding. Partizan is at the forefront with their whimsical lettering.

Some of the London brewers have really done extraordinarily well in terms of branding. Partizan is at the forefront with their whimsical lettering.

This is a really pleasant range. You get all the hop character without malt or alcohol getting in the way. The bitterness is quite mild because it has to be. It would overwhelm very quickly beyond a certain point. It is pronounced in terms of balance within the beer, but not in terms of comparison to a 5% Pale Ale. I suspect you could spend the entire afternoon drinking beer of this style, appreciate them as a connoisseur and walk away from the experience stone cold sober. I like the idea so much I’m going to thieve it.

Among the other highlights here were Redemption’s Rock The Kazbek (lemon, lime, slight hint of drying paint), Weird Beard’s Mariana Trench (it’s a solid, tropical fruity pale ale), Partizan’s Saison (Quite dry, very refreshing) and Brodie’s Hoxton. Thornbridge’s Kolsch TZARA is pretty excellent, especially since my context for that brewery is Kipling and Jaipur.  Also worth mentioning is Crate, who have produced a stout that inexplicably uses a hefeweizen yeast. Neat idea. It results in Chocolate/Banana. The brewer was quite forthright about having come to it by accident, but I’m still going to give him credit for sticking with the thing.

Redemption were one of the few booths offering cask. Nice to see tradition alongside innovation.

Redemption were one of the few booths offering cask. Nice to see tradition alongside innovation.

The only difficulty I foresee for the London scene is that because so many of them are using the same hop varieties in the same types of beers (there are a lot of galaxy/citra/nelson sauvin pale ale type beers) that there will eventually be a lot of overlap between different breweries on some styles. If I were them I’d be planning accordingly to differentiate myself a little.

As with any relaxed craft beer festival, you get the opportunity to talk to the brewers at some length.

As with any relaxed craft beer festival, you get the opportunity to talk to the brewers at some length.

The good news is that London’s scene is going to be coming to Canada in relatively short order. This year Cask Days is having a number of English brewers over for a special part of the annual Cask Days event. I suppose it had been announced, but it was interesting to talk to Andy from Redemption and hear that he was sending cask to Canada. The brewers who mentioned it all seemed a little confused that their beer should be in such demand, especially from Toronto. If what I saw this week is any indication, Ralph and the boys should probably double the order.