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Morning Briefing for pub, restaurant and food wervice operators

Fri 18th Oct 2013 - Friday Opinion
Subjects: Defining craft beer, JD Wetherspoon’s coffee offer, digital strategy and personal licence confusion
Authors: Martyn Cornell, Paul Charity, Barrie Poulter and Paul Chase

Defining craft beer by Martyn Cornell

I won’t yield to anybody in my admiration for James Watt’s abilities as a guerrilla marketeer. He and Martin Dickie, co-founders of Brewdog, have skillfully turned a small independent brewery in – with the greatest respect to the people of North Aberdeenshire – the rear end of nowhere into one of the leaders of the small independent brewery sector in the UK. They now have a reputation among many beer drinkers as perhaps the most iconoclastic, “edgy” brewers in the country, a growing empire of their own bars around the UK, and a presence on the shelves of leading supermarkets and in any “craft beer” bar worthy of that name. From last month the pair even have their own TV show, Brew Dogs, on the Esquire cable TV network in the United States, where they travel across America, visiting bars and breweries and creating “locally inspired” beers. Fantastic. And yet, Watt’s latest campaign, to try to get an “official”, “industry recognised” definition of “craft beer”, to “protect the fledgling craft beer movement in the UK and in Europe” and also to “protect and inform the customer”, suggests to me he doesn’t actually understand the business environment he is working in as well as he thinks he does. What is more, his arguments for the need for an “official” definition of craft beer are entirely nonsensical and totally evidence-free.

Watt says the reason a proper definition of “craft beer”, “to be recognised by both CAMRA and SIBA and also at a European level by the Brewers of Europe Association” is required is because of “three words – Blue F------g Moon”. Like many small brewers in the US, he is clearly annoyed that Molson Coors’ Belgian-style wheat beer comes in packaging that could pass as a product from a much smaller operator, and does not declare itself in huge type to be made by one of the giants of the American beer market. He quotes approvingly Greg Koch of Stone Brewing in California, who also wants to define “craft beer” as something in opposition to “the industrialised notion of beer” that has been “preying on the populace for decades”. Unfortunately it’s not clear if Koch, or Watt, are really interested in “saving” the drinking public from “industrialised” beer, or protecting their own sales from a much bigger rival.

Watt insists that the British craft beer movement is being held back because of the lack of an official definition of craft beer, and “the US craft beer movement has only been able to grow as it has because of the US Brewers’ Association’s official and accepted definition of craft beer.” Naturally, Watt fails to give any evidence for these assertions, because there isn’t any. They’re total nonsense. Good grief, the definition Watt points to only came into existence eight years ago, in 2005, when the Brewers’ Association was formed of a merger between two other industry organisations and the combined membership decided to rig the rules so that the “big guys” would be excluded from their club. Nobody ever said before 2005: “I’m thinking of trying Stone Brewing’s Arrogant Bastard Ale, but without an official and accepted definition of craft beer, I’m really not able to.” The boom in the US craft beer scene over the past 30 years has not been because anybody came up with a definition of “craft beer” and suddenly “craft beer” was able to take off: but because a wave of new producers dedicated to making small-batch, artisanal, flavourful beers met a wave of consumers happy to drink those sorts of beer.

This mistaken idea that consumer movements can only prosper when they have “official” guidelines to channel their enthusiasm leads Watt to assert that while “we want retail stores, bars, restaurants and hotels all to have a craft beer section in their offering,” it is “almost impossible to get them to commit to this without being able to offer them an official definition of what craft beer is.” More evidence-free nonsense. I don’t believe that any supermarket, any bar owner, any restaurant ever said to any small brewer: “I’d like to stock your beers, but without a definition of craft beer I’m just not able to do so.” Watt also declares: “What we don’t want, is for them to a create a craft beer section in their shop or menu only for this to be carpet-bombed by beers that are not craft.” What’s the matter, James – afraid that if a bar is selling Blue Moon alongside 5am Saint your beer will do badly?

The truth is not just that trying to define craft beer is impossible anyway. Watt suggests that the definition should be a completely circular one, that “craft beer is a beer brewed by a craft brewer at a craft brewery”, with the argument then devolving onto what a “craft brewer” and a “craft brewery” are – but his idea that the Campaign for Real Ale, an organisation Brewdog regularly chooses to battle with, would back any definition of “craft beer” Brewdog and SIBA might come up with is another nonsense.

The real point is that, despite Watt’s fantasy, any “official” definition of craft beer, will have little to no impact on the marketplace. Those operators who might be defined as “craft beer brewers” and “craft beer retailers” seem to be doing very well in the UK without any official definition of what they are making and selling – and in any case the UK’s small brewery movement seems to me to be well beyond the “fledgling” status Watt is trying to claim for it. If Brewdog is trying to trip up the likes of Sharp’s – now owned by Coors and thus, under the definition that Watt would like to see made “official”, not a maker of “craft beer” any more – Watt really needs to realise that getting craft beer “properly” defined will make no difference at all to the amount of Doom Bar being sold across British bar tops. Overwhelmingly the beer-drinking public, in Britain, in the US and elsewhere around the world, care nothing for “official” definitions of what they are drinking: that goes for the minority who are “craft beer” drinkers, and, of course, the vast majority who prefer those beers Watt and Koch define as “the industrialised notion of beer”, and wouldn’t drink a craft beer if you gave it do them free, no matter what category you said it was in.
Martyn Cornell is managing editor of Propel Info and published author on the history of beer and brewing 

JD Wetherspoon and coffee by Paul Charity

For me, the most significant piece of news this month has been the revelation that JD Wetherspoon is to offer limitless coffee refills between 8am and 2pm. It’s a direct thrust at the high street coffee operators who grab so many customers during breakfast, morning and lunchtime day-parts. The glaring price gap that already exists between Wetherspoon and the average high street coffee purveyor is being emphasised in proverbial bold. Coffee is a high-margin item but Wetherspoon clearly believes that it can sacrifice the margin on repeat cups to win extra footfall and spend across other menu items. As so often with Wetherspoon, there is little concern about the impact on margin in the short term, with the focus on driving sales. The same thinking applies to the decision to extend foodservice from 10pm to 11pm. It may well cost the company money in the short term – and the short term may be several years – but Wetherspoon has decided this is another area where it must set its stall out with an eye to the future.

Wetherspoon is looking to break and recreate consumer habits and become, over time, a more regular default choice. Breakfast itself is the best recent example of Wetherspoon taking short-term margin pain to create a long-term income stream. The last time I attended Wetherspoon’s results, at its Crosse Keys site in the City of London, in September, I counted around 50 people eating breakfast – and it may well be that this meal occasion is now profitable. But the company spent many years losing money at this stage of the day and even, uncharacteristically, lost its nerve on at least one occasion and recast estate-wide opening hours after a variable response.

Coffee itself has been a hit-and-miss journey. Coffee and tea is now the best-selling line within the JD Wetherspoon estate. But it has struggled over the years, as so many pub operators have, to settle upon a definitive offer. (I remember Dowe Egberts plastic filters sitting on top of cups at one stage.) A former board director once told me a few years ago that the company struggled to match the coffee quality of the high street coffee shop operators because it was unable to apply the same laser beam focus. In recent years, it has obtained a more consistent quality in partnership with Lavazza, and the coffee, although not as good as Fuller’s, for example, is of a very decent standard. I understand six managers a week get refresher training to maintain standards. Wetherspoon’s founder, Tim Martin, told me this week: “The essence of the comment about focus is right, but it is not a good enough excuse to not serve good quality coffee. I think our coffee quality now is the best we’ve sold, but coffee is like real ale – you’re only as good as your last cup.”

Offering free refills, albeit on a time-limited basis, opens up a hot beverage battleground. Free coffee refills have been the norm in many US restaurants for decades but have been rarely seen in the UK market. How long will it be before other operators feel compelled to follow suite? And the generosity behind free top-ups may well become a broader battleground. Harvester introduced self-serve soft drinks, alongside its unlimited salad bar, a few years ago. It cannot be long before many more operators add free items or unlimited items to their armoury in the battle to win value-conscious customers.
Paul Charity is managing director of Propel Info

Digital marketing strategy evolution by Barrie Poulter

The introduction of the 4G network to the UK in the last month or so should have resulted in many businesses reviewing their digital marketing strategy. The mobile trend over the past few years has been to focus on apps, with large numbers being launched in the hospitality sector by everyone from single operators to multiple operators, companies like my own, Inapub, media organisations, and even industry bodies.

Many would argue the effectiveness of these apps. As an industry, we regularly see download stats quoted; but what about usage statistics? Now people are rightly starting to focus on the notable scarcity of these. At Inapub we track usage versus downloads, and we see regular use from our app users. However, the industry average shows that a mere third of apps are used after the first download. Given this, I think mobile strategy needs to be broader than just apps, and now is the time to re-focus on the website – I’m not suggesting apps can’t serve a purpose and I’ll have an opinion on this in the coming weeks.

At Inapub we have seen an average 340% growth in mobile traffic hitting our website in the past 12 months (280% iOS versus 400% Android) across well over a million unique consumers. This leads me to believe that consumers are turning to websites for information rather than apps. If so, why? Clearly they don’t need to look for an app or remember to use it to search the web – people are lazy. Why would I download an app when I can Google it on my phone – it’s quicker.

Google answers questions. I would argue that consumers are focused on quality and depth of content, and this is also what Google focuses on, answering the question with as much relevant information as possible. The integration of search engine technology into smart phone and tablet browsers and the continued development in that search technology has also clearly played a big part in mobile traffic. As has the wide adoption of smart phones amongst the public – 61.2% UK penetration in Q1 of 2013 alone. For example there is now an expectation that you can search online to find pubs with skittle alleys and get the right results! Certainly as Inapub, and others, supply Google with this data it increasingly helps answer the question.

However, it is not just facilities that consumers are looking for – for example, as Robin Brattel, Inapub’s chairman, pointed out here http://www.inapubnews.co.uk/index.php/blog/robin-brattel/1049-robin-brattel-offers-offers-here-there-and-everywhere the subject range searched for is much wider yet also increasingly very specific to the consumers needs and wants. We track all searches at Inapub and consumers are looking for answers to the following sort of questions for venue information, beers sold, food types, opening hours and events. They are also searching for specific combinations, such as, let’s say, “pubs in Leicester with carvery”. What is clear is that consumers’ demand for venue information continues to grow with the available bandwidth. The main issue is that the data is not always correct – this is a lost opportunity for most businesses.

So the question is how, do you deal with this growing demand for accurate and up-to-date information? I suggest you start by thinking about what your customers would be searching for and how that matches with your venues’ offer. Next, I would look at your venue website(s) and the systems that power it. Do they enable you to provide the information that you know your customers want? Can you distribute that data efficiently to multiple consumer entry points, like Google, Inapub, apps, email and so on. It may sound simple, but if the consumer gets the answer to the question they ask, it will certainly aid in directing their footfall. We all know that “build it and they will come” doesn’t work. “Build it – and tell everyone – and then they’ll come” does.

Finally, stick with it. Time and money spent ensuring websites have accurate and up-to-date content available both web and mobile-friendly is a long-term investment that will build customer trust and loyalty. We’ve been taking our own medicine, and are building out our mobile friendly website right now.
Barrie Poulter is chief executive of Inapub magazine and website – www.inapub.co.uk

Personal licence confusion by Paul Chase

I have been privileged to read some of the responses that have been sent to the Home Office in relation to its consultation on the abolition of personal licences. Reading some of these responses has revealed some bizarre takes on the intentions behind the Licensing Act 2003.

For example, most of us understand that a personal licence empowers the holder to make sales of alcohol, or to authorise other members of staff who do not hold a personal licence to do so, in accordance with a premises licence. It is also the case that the only legal requirement is for a personal licence-holding DPS to be named on the premises licence. What follows from this is that most operators recognise that a personal licence will be held by the DPS, who, in the vast majority of cases, is the manager of just one premises, and that other personal licence holders working on the premises will be assistant managers or shift managers, or perhaps a head bar-person. It was never the intention of the Act that either all or most bar-staff or counter-staff would hold a personal licence. But you would never guess that from the Home Office consultation document or from some of the responses that I have read from council licensing officers.

One of the criticisms they make of the current personal licence system is that an individual can apply for a personal licence, fail the criminality check, be denied the licence and still be employed to sell alcohol. Therefore, the argument goes, the system fails to prevent those with relevant criminal offences from selling alcohol to the public! The Home Office consultation document itself intimates that because a personal licence holder does not have to be present at all times alcohol is being sold, there is no guarantee that the bar staff working on a shift without a personal licence holder present will (a) be well-informed about responsible alcohol retailing, or (b) not have a criminal record.

I am mystified! Firstly, the presence or absence of a personal licence holder on a particular shift has no effect either way with regard to the bar-staff’s state of knowledge, or whether they have a criminal record. And it was never the intention of the Act that ALL staff serving or selling alcohol must be free of any criminal past. Even in Scotland they don’t require that! To me, the intention of the Act was always clear: that personal licence holders would be persons in supervisory positions – either as the DPS or shift manager – and it was important that they should not have a criminal past that compromised their status as a “fit and proper person”, to borrow a phrase from the old licensing system.

What concerns me is that the government thinks that all persons selling alcohol should be vetted in the way that is currently reserved for personal licence applicants, but doesn’t want to legislate for it. It would rather open the door to this system locally by encouraging licensing authorities to heavily condition premises licences. This is the risk that is run if the current personal licence system is replaced by a pick-and-mix local option.

Whatever may the letter of the law, the licensed retail sector has spontaneously embraced a “best practice” convention whereby the DPS covers the busiest periods, but another personal licence holders cover quieter shifts or when the DPS is off or on holiday. Operators have gone beyond the minimum requirements of the law, and this is simply not recognised in the government’s proposals or its consultation document.

The paradox is that if the personal licence is abolished and only the DPS can authorise alcohol sales then that creates a perverse incentive not to train anyone else in licensing law working on the premises, unless it is a condition of your premises licence that you must. And if the DPS is the only person who can authorise alcohol sales, will he or she have to be present at all times alcohol is being sold? Or will the law have to be changed to require multiple DPSs? If so, why not keep the existing system but require a personal licence holder to be present at all times? We don’t know the answers to any of these questions because the government’s proposals are so ill-thought-out.

I urge you to respond to the government’s consultation – a banner on the right-hand-side of the Propel Newsletter enables you to do so. The last thing the trade needs now is another Licensing Bill, which is what would be required for the government’s proposals to go through. That would open up a Pandora’s box of change, and who knows where it would end-up?
Paul Chase is a director of CPL Training and a leading commentator on on-trade alcohol and health policy

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