In our most recent poll, we asked our readers what they thought would result from the merger between SABMiller and Molson Coors. Nearly half thought it would lead to further consolidation, perhaps even a Anheuser-Busch merger with InBev. The remaining half of respondents thought it either would lead to better marketing for brands such as Blue Moon and Miller Chill, or that it would result in the cannibalization of flagship brands such as Miller Lite or Coors Light.
Nobody thought it would bring about a better pricing environment.
To take part in our latest poll, visit BevInfoGroup.com.
Thanks to Paul Verbruggen of the Belgian brewery Het Anker, brewers of the recently and attractively relabeled Gouden Carolus line of ales, I just learned of a wonderful new association in that country called “Belgian Family Brewers.” For beer drinkers, beverage managers and bar and restaurant owners seeking to sort out the miasma of Belgian beers, Belgian-esque beers and Belgian-style beers, this is a definite step in the right direction.
Thus far numbering only 12, or a scant percentage of all the breweries operating in Belgium, the Belgian Family
Brewers between them represent over 1,500 years of brewing experience, according to information on the website. When a beer’s label is adorned with the association’s logo, you can be assured of three things:
• is a genuine Belgian beer brewed in Belgium
• comes from an independent family brewery that has been making beer for at least 50 years, and is thus a traditional brewery
• is an original beer, no copies of which are sold under any other name or label.
Given the number of multinational brands on the market today which seek to evoke the Belgian ethos, and the penchant some Belgian brewers have for releasing beers under two or three different labels, the BFB is definitely a step in the right direction. While it won’t guarantee that you’ll like a specific brand, or even that said brand is a stellar example of the Belgian brewing arts, it at least will guarantee authenticity.
Since its opening, San Francisco’s True Saké has stood alone as the sole saké specialist retailer in the United States. As of this past weekend, however, Beau Timken and company will have to move over to make some room for a new, east coast entrant – Sakaya, New York City.
Opened December 8 by Rick and Hiroko Smith, the East Village Sakaya is the fulfillment of a long-standing dream for the pair. While I have not yet personally darkened the doors of the new shop, the photos the Smiths have posted on their blog certainly indicates a calm and beautiful oasis in the urban jungle that is New York. (And, conveniently, it is located just a few blocks away from the landmark NYC beer bar, d.b.a.)
The Smiths promise more than 85 varieties of saké ranging in price from $18 to close to $200, and for those with a taste for the stuff but poor recollection of which ones they prefer, will be conducting sampling on site. They will also be building a website for the store at sakayanyc.com, presumably once they recover from the no doubt chaotic first few opening weeks.
Sakaya is located at 324 East 9th Street between 1st & 2nd Avenues. There is no phone number yet available, but the duo can be emailed here.
Last week in this space, my good friend the Beverage Goddess cast a gaze into her crystal ball and foretold crazy times approaching, citing such diverse contributing factors as fuel costs, the coming hops and barley malt shortage, and upward pressures on the minimum wage. She’s a savvy soul, the Goddess, and none of what she speaks should be discounted or ignored.
But it ain’t all bad, folks.
Over the weekend, I cracked the spine of a new book by Noah Rothbaum entitled The Business of Spirits, and while reading the Introduction, I was struck by how much of what Rothbaum was noting in the spirits market could be broadened to also cover the wine and beer businesses. Especially when he wrote of the ever-increasing interest in high-end brands.
Between 2002 and 2005, Rothbaum reports, DISCUS recorded growth in the sales of premium spirits of nearly 19%, while the growth during that same period for value brands was a mere 2%! Further, turning his attention to specific segments, he notes that the value of Scottish whisky imported to the United States increased by 10% from 2004 to 2005, while the actual number of bottles imported grew by only 2%.
It doesn’t take much thought to translate these same trends to beer and wine. Just pick up any wine or beer magazine like Wine Enthusiast or All About Beer and you can see the interest in the high end growing, while little or nothing is said about the mainstream and economy brands. In bars and restaurants, where people tend to splurge more than they do at home, this trend is even more obvious.
To summarize, people may be drinking less, but they’re also drinking better. This could change if that recession many economists keep talking about rears its ugly head, but for the time being, the course to continued profitability is clearly marked with a large red arrow that reads: “PREMIUM.”
Wow... I’ve been out of touch with you guys for over a month! OK, two. Whatever. I could regale you with numerous superlatives as to how stinkin’ busy I’ve been, but I’ll just throw this your way... I’m smack-dab in the middle of producing about 100..that’s right, 100, different Beverage menus.. one for each store, all festively unique, because God forbid anyone should compromise. Commence with the pity.
Much as this tries my very soul, it does allow me to momentarily stop the obsessing about what is to come in 2008 for our beloved industry. Being all goddessy and whatnot, I have intimate access to Oracles and what they’re saying keeps me awake at night.
Fuel prices are going through the roof, hops are becoming scarce and more expensive, no one grows barley anymore because corn is so lucrative, but all the corn is going to ethanol and feed, which is going up, up, up, so food costs more, breweries are panicking, no one knows what to do about the lack of hops crops, drought is hurting the Australian wine industry, keg theft has pushed cooperage to $30 a keg, brewers are foisting higher-cost 1/6th barrels on the market, with the requisite 20% increase in ounce cost, the minimum wage hikes are costing a bundle, oh and by the way, the Big R looms ahead no matter what the Fed says... customers are watching their wallets and staying home more or trading down and I don’t know about you, but I’m a little freaked!
In the words of someone or other, I think we are heading into a perfect storm. Lordy, I hope I’m wrong. But it doesn’t look good from where I sit and as an operator, the litany above presents a multitude of trickle-down problems.
To make sure I wasn’t just a Chicken Little Freak, I did a survey of about 30 operators, suppliers and distributors about two months ago, and it was a pretty gloomy task. Glad to know I’m not alone in my worry; terrified to have my worst fears confirmed from various aspects of the industry.
So we all agree that 2008 is gonna be a ‘witch’, but what to do about it?
Well, we can take price, and, most likely, everyone will, as least to some extent.. but I can’t mitigate a 10% increase in costs with a similar increase in prices...at some point, customers just say no.
We can focus on cost control.. always a winner, but not something ignored regularly, so unless one is not paying attention at all, the gains might be minimal.
We can re-engineer our menus...try to keep the flash with less costly ingredients...for example, pour Smirnoff Vanilla in a Signature drink instead of Stoly...but keep it sexy enough to maintain most of the retail price. We can put one ounce of croutons on a salad instead of two, cut the limes into 6ths instead of quarters...avoid those damned 1/6th barrels, build wine lists with less expensive wines from non-drought ravaged viticultural areas..
We could try to buy more locally to avoid shipping surcharges.. a lovely thought, but no one makes scotch in these here mountains. We could stand at our bars and hairy eyeball our bartenders for waste and over-pouring. We could browbeat our staff into upselling... we could, we could, we could...
We could do a lot of things, some of which will work; others will be an exercise in futility.
So I guess all we really can do is take a hard, seriously, business-focused look at the areas we can improve upon, like menu engineering, smarter purchasing and cost controls, and let go of the things we cannot influence, like the hop crops, the price of steel, shipping, minimum wage increases (which, BTW, I am completely in favor of as a human being...not so much as a restaurateur..). Forego some of the woo-hoo fun part of why we got into this gig and really think about how to weather this storm. Hunker down and accept the fact that we may have to realize slightly lower margins and profits to stay competitive...because if we’re hurting, so are our customers and slamming them with big pricing increases is a fast track to empty bars.
As I have been known to say while negotiating discounts with suppliers who are overly impressed with their own product and charging based on that elevated opinion, ‘You can sell a lot of product for less money or no product for more. Pick.’
We’ll get through this, certainly...people have to eat and drink, after all.. but we should be well prepared to pro-act to the storm that’s a-comin’.
Fortunately, the nature of our business ensures that, if we do, at times, give way to despair, there’s plenty of booze at arm’s reach.
In our most recent poll, we asked you what you thought the effects would be of the reduced spending of the big brewers on traditional advertising in favor of more local promotions and sponsorships. 43 percent of you thought this was what the beer business needs--new thinking. 27.5 percent, on the other hand, thought it was a smart move that still wouldn't help beer's image, while the remaining quarter felt better products and support is the real key to helping the industry, not different advertising techniques.
To take part in our latest poll, visit BevInfoGroup.com.