Misunderstandings and Myths : HSBD

High Strength Beer Duty has got the beer-blogs alight with indignation, with almost every blogger you can think of pitching in to cry "Down with this sort of thing".

I'd like to point out straight away that I agree with them -- HSBD is misconceived and does more to hobble the burgeoning brewing culture in the UK than it can ever hope to do with problem drinking.

However, I do think that in order to argue effectively against HSBD, we need to be careful to get our facts straight. The things I'm about to point out may seem trivial (and in the ongoing fight against increasing taxation and the anti-alcohol health lobby, they are), but every factual error that is perpetuated by proponents of beer is a sticking point the "other side" can spend precious time pointing at, claiming that the public are being misled, and generally discrediting those who repeat them.

Myth #1: Beers of 7.5% are subject to HSBD
This one's the most prevalent, and it's understandable that it's become the commonly accepted as until a few weeks ago there was no information available on whether 7.5% would be in the higher or lower bracket; it's standard practice for upper limits to be described as "not exceeding X%" and lower limits to be delineated as "exceeding X%", though, so those in the know should have been able to better predict the starting point.

To be absolutely clear : HSBD applies to beers of 7.6% and above.

Myth #2: Beers of 9% pay as much duty as wine at 15%
This simply isn't true. I'm not sure where it started, but I've seen it repeated far and wide.

Wine exceeding 5.5% and not exceeding 15% pays duty at £241.23 per hectolitre of product.
Beer exceeding 7.5% pays duty at £23.21 per hectolitre per cent of alcohol.

What's immediately obvious is that duty on wine and beer works quite differently : wine pays a flat rate based on volume, with categories defined by strength, while beer pays a rate directionally proportional to strength. (Spirits pay duty in the same way as beer, but expressed in a different way. Such are the mysterious ways of HMRC).

Now, to find the point at which beer pays more duty than wine, we need to do a little maths. The equation to determine how much duty is payable on a volume of beer is:

 Duty Payable = Volume x ABV x Rate

Now, if we plug in the numbers for 1 hectolitre of wine and rearrange the equation, through the magic of algebra we find that beer does not overtake wine of 15% until the beer exceeds 10.3% ABV (ie beers of 10.4% and above are more expensive duty-wise than wines of 15%).

However, breweries eligible for small brewers relief only pay half the basic rate, and so while they pay the full amount of HSBD (for a total rate of £13.93 per hectolitre per cent of alcohol), they don't pay more duty than 15% wine except on beer of 17.4% or greater, and 17.4% wine pays a higher rate again.

What renders this argument even more open to criticism is that it focusses on one end of the scale -- while a brewer pays about the same duty on his 10.3% triple imperial stout as a vintner does on his 15% Merlot, the vintner pays the same rate on his 5.6% made wine.

A handy graph

As can be seen from the graph, small brewers pay less than vintners (for the same volume of product) all the way up to 22%*

The reason I think it's important that we (ie those who oppose HSBD) stop using this argument is that it's terribly weak. It could just as easily be turned on its head and be used as an argument for lower duty for wine at 5.6% (or even higher duty for beer at that level). There is no worse enemy than an ally who makes bad arguments.

Rearranged for direct comparison

This graph shows that Wine generally pays much more duty per unit of alcohol than beer. Once we get to super-strengths, of course, beer from non-small brewers pays much more but talking about 15% wine ignores the other end of the spectrum.

What next?
We're all on the same side; none of us like the High Strength Beer Duty, but it doesn't serve any of us to get the facts wrong. I disagree with CAMRGB on a fundamental and daily basis, but one thing they've got right is the e-petition against the "October beer tax" as he terms it.

If you haven't already, go and sign it. It'll take two minutes and it might just make a difference.

*The graph stops there as wine pays spirit duty above 22%, and the HMRC website is contradictory on the subject of beers of that strength. Some pages say it too pays spirit duty, while the main page on beer duty is silent on the matter.

The truth is an adjunct sadly omitted

Channel 4 News ran a piece the other day with the subtitle "Small craft brewers claim they are being discriminated against by the Campaign for Real Ale".

The piece opens by airing it's prejudice and/or lack of knowledge, describing the lack of growth in the drinks industry as a whole as "as flat as a pint of ale". Anyone who actually knows anything about well-served ale will tell you about "good condition" and a flat pint doesn't have it, as "condition" in this context refers to the CO2 dissolved in the beer. By definition an ale in good condition is not flat.

Moving on from failed similes, we discover that unfortunately the article started as it meant to proceed. We're told that the pale ale on screen isn't recognised by CAMRA as being real, "because Camden will sell it in kegs, rather than the casks CAMRA insists on". Oh dear. This sentence alone renders the name  of the Channel 4 News' Teams Twitter account ironic.

CAMRA's policy on real ale is not defined by container, and deliberately so. Camden should feel free to sell its beer in kegs, and that beer may well be real ale; if it isn't, then it isn't the keg that's the problem, it's the lack of secondary fermentation in that keg, or the CO2 and/or nitrogen applied at the point of dispense.

We're then introduced to Jasper Cuppaidge, who opens with, "If their campaign is for real ale, then surely it should be a lot more broader [sic]". I'll leave finding the flaw with this assertion as an exercise for the reader.

Jasper goes on to ask why brewers can't make a "decent lager, keg or bottled beer". The cheap shot would be to echo the question. "I don't know Jasper, why can't you make a decent lager, keg, or bottled beer?" But I'm above that. Just.

The more mature answer is that CAMRA aren't stopping anyone, and all of the above can be "real ale"*. Harviestoun make a wonderful "real" lager, Schiehallion. The organisers of GBBF were willing to have Brewdog beers in kegs. CAMRA actively promote real ale in a bottle. Heck, even Cobra produce a beer that as far as I can tell ticks both the "lager" and "bottled" boxes, and would be considered real ale.

It's deeply frustrating and upsetting to see people working in the industry display such an ignorance** of the matters at hand, and especially for them to hone that ignorance into a weapon with which to attack the largest consumer body in the industry, a body without which there's a strong chance the industry they work in would be a mere shadow of its current self.

It would have been nice to get through another blog entry without BrewDog, but the next interviewee is James Watt, who obfuscates in trademark style. I urge you to watch the clip to get the full soap-box experience, transcribing the quote to text robs it of its preachy tone.

"they're imposing distinctions which no longer apply. They can get real ale in a keg which they refuse to embrace but the production method is exactly the same as the cask ale, it's just the method of dispense is different."

Once again, there's misrepresentation of CAMRA's position. If the beer in the keg is real ale, then CAMRA do embrace it. BrewDog's appearance at GBBF would have depended on it being so (had the problem of container size been resolved, and had the brewery paid their fees).

The "difference" in method of dispense alluded to is the application of extraneous CO2 and/or nitrogen, which is intrinsic to the definition of real ale; if these gases are applied then the product is no longer real ale, even if it's from a cask.
Whether applying CO2 is a good or a bad thing is the subject of long debate, but James' dismissal of it is telling. One of the things CAMRA and BrewDog do actually agree on is that method of dispense makes a difference, they just happen to be on opposite sides of the fence (or bar) on the issue -- dismissing it as an afterthought in his well-rehearsed attack shows that James isn't interested in serious debate, only in pushing his own agenda.

Jamie Goode then tells us that the production methods aren't the same, so I suppose nobody knows.

Mike Benner, Chief Executive of CAMRA, is given a few short seconds as right to reply, and tells us that CAMRA have no problem with breweries producing beers other than real ale, but that they shouldn't rely on CAMRA to promote it. While I agree that it is odd to attack the Campaign for Real Ale for not supporting beer that isn't real ale (this is where you collect your prize for finding the flaw in Jasper's opening comment earlier), I don't think repeating the mantra is particularly helpful.
While CAMRA is first and foremost about real ale and should continue to be so, I think it needs to recognise that as a consumer organisation of its size its opinions and actions have significant implications for the whole industry. Simply ignoring "craft" isn't going to make it go away, and news articles like this are own-goals in terms of PR.

It's sad that on one of the few occasions beer makes it into the national media it's to perpetuate myths and entrench ignorance about the state of brewing. There was virtually nothing of factual worth expressed in all three and a half minutes on a prominent news programme, and that's deeply disappointing.
It's clear that some brewers are genuinely hurt or bewildered by CAMRA's position, and the Campaign needs to get better at communicating its message.

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*with the caveat that "keg" refer to the container, and not filtration, pasteurisation, or other process resulting in a "dead" product or one with insufficient viable yeast and/or nutrients for secondary fermentation to occur in that keg.

**I'm assuming it is ignorance, because the alternative is too ugly to consider.

My homebrew wort chiller

My current method of chilling wort after boiling is to lower a smaller pan full of iced water into the boiler, changing the water once it warms up. Hardly ideal, and it takes quite some time to get the boiling sugar solution down to pitching temperature.

To improve matters, last weekend I finally got my act together to do something with the copper that's been sitting in a cardboard box on top of the wardrobe for about a month.

The components gathered

Dry assembly of cold feed and output arms

Cold feed arm soldered and positioned for size check.
The manifold is almost exactly over the centre of the boiler; result!

A close up of some rather untidy soldering

Forming the coil around a handy tool

The first coil - approx 3m of 8mm pipe in 12 turns

Two more completed

The finished article

Top right coil is a bit skew-whiff, but it'll do the job

Once it was all assembled, I boiled 25 litres of water. Cooling to 20°C took 20 minutes, which is pretty good, especially as the specific heat capacity of water is higher than that of wort. I can expect quicker results as the gravity goes up, especially for winter brews when the Edinburgh water supply comes into the flat barely above freezing.

Its first real-world run will probably be a premium bitter for the Thornbridge/Nicholsons homebrewing competition. More on that in due course.

Buy their beer, not their hype

When I started this blog a month or so ago it was supposed to be for me to write about something I'm passionate about, ie beer, as well as other subjects as they took my fancy. Unfortunately it appears my natural tendency to procrastination and a certain brewer's ability to get attention means it's turned into something of a single-issue publication.

I've made myself the promise that after this post the next two or three will have nothing to do with BrewDog. After this one...

Obfuscation
Yesterday, a post was made to the BrewDog Blog. The front page of the blog carries the emotive (and false) statement that "BrewDog [are] banned [from GBBF]". It's false because they aren't; GBBF organiser Marc Holmes has stated that BrewDog are welcome to reapply for 2012.

The blog proper goes on to say that an agreement had been made for BrewDog to supply "kegged" beer to GBBF. This isn't (wholly) true either, or rather it uses language that many perceive to mean one thing, when in fact it means another.
Let me explain. CAMRA does not specify the type of container necessary for the beer within to be "real ale" by their long-standing and clear definition. Provided the beer "undergoes secondary fermentation in the vessel from which it is served" and is served such that no extraneous CO2 comes into contact with the beer, it satisfies the definition. It's worded that way because it encompasses bottles, casks, and yes, even kegs. The "kegged" beer BrewDog were going to supply wasn't "kegged" in the sense that it was dead, pasteurised, or overly filtered, it was "kegged" because the vessel they wanted to supply it in was called a "keykeg".

In other words, the beer BrewDog agreed to supply would be identical in every way to "real ale" served in a cask, with the only exception being that the container is called a keg, not a cask.

The blog then goes on to say that it is "[i]ronic that if Scotland was independent, we would qualify as foreign and could serve anything we wanted there." This isn't true either. The external policy document that tells CAMRA beer festival organisers what they may or may not stock at the festivals allows beers that do not satisfy CAMRA's definition of real ale to be stocked if and only if the country of supply does not have a tradition of cask-conditioned products. Scotland's tradition would not change overnight if independence were to be gained.

The blog then expresses surprise that CAMRA care if the beer contains a minimum amount of live yeast. I say "expresses surprise", what I really mean is "tests credulity by claiming to be surprised". CAMRA have made no secret of what they consider to be "real ale", and that is beer that undergoes secondary fermentation in the cask/keg/bottle/dustbin/prosthetic limb from which it is served. Live yeast is necessary for this process, as every schoolboy knows.

Size Matters
The next point of contention (and closer to the apparent truth of the dispute) is the size of the containers used. GBBF is a massive event, with a huge number of attendees. This means that it needs a lot of beer, and small containers mean that they have to be changed more often.

Last year, as the blog rightly points out, Thornbridge supplied 9g firkins. This was a trial to see if it worked, as ordinarily 18g kilderkins are used. It didn't work, and this year everyone has been asked to supply 18g containers.

It seems that originally the agreement was that BrewDog would supply 50l containers. These are approximately 11 gallons, a standard size for kegs. Unfortunately, keykegs are only available in 20 or 30l sizes (4.4 and 6.6 gallons respectively). The idea that a festival that has rejected 9 gallon containers due to the impracticalities involved could instead use a container 33% smaller was apparently rejected by the festival organiser.

This dispute over container size resulted in an extension of the payment terms; brewers with bars were to have all monies paid to GBBF by 27th May, but due to the difficulties in agreeing an order BrewDog were granted extra time. During this extension, James (according to Marc) offered to supply some beer in 18g casks if the rest of the order was accepted in 30l keykegs. James says that this isn't the case.

By the time 13th July came around, some two weeks before delivery was expected, I'm told by Marc Holmes that he

"emailed James on Wednesday 13th at 1pm asking him to accept the beer order, giving him a deadline of Thursday 12pm to accept, and Friday 12pm to make the outstanding payment. He responded within hours, not to accept but to continue to argue. He finally emailed to accept on Friday morning at 11am, by which time he had already received the official cancellation letter (which had been posted after 12pm on Thursday)."

This is in stark contrast to the claim made by James in the blog comments that their contract was cancelled before the deadline. Whether James had in fact received the cancellation letter is unconfirmed; whether it was sent recorded I don't know.

It should be noted also that a post to the same effect as the quotation above was made to the BrewDog blog comments shortly before those comments were closed, and that comment is one of a few that have been deleted., despite James' ultimate comment that "all views have had their fair chance".

The second comment here is no longer to be found on the blog

It should be noted that the top comment appears to be a fabrication, made possible by the lack of verification in place in the form used for blog comments.

Hazy

Two things seem clear:

1. The order has been cancelled due to a disagreement between CAMRA (or more properly the GBBF organiser) and BrewDog
2. The core of the dispute is about container size, and not ideological.

The rest is unclear, and never will be until one party or the other published the e-mail exchanges leading up to the deadline. James has posted on the blog comments that BrewDog "have nothing to hide", and so I can see no reason to obstruct such publication. It's the only way we'll ever get anywhere close to the truth, hidden as it is by grandstanding and the apparently deliberately misleading version of events presented.

It amused me somewhat to see a commenter on the blog say that it was unfair of GBBF to expect an agreement when BrewDog were so obviously busy with EFP2. I'd invite that particular poster to check the very first line of the blog, and ask himself how many people have seen it. That may point a finger towards the real reason for this furore.

Equity For Punks : I'm Out

Dragon's Den or Doghouse?
It's a staple of Dragon's Den that a wide-eyed and keen would-be entrepreneur brings himself in front of the business giants and asks for £250,000 for 10% of his company comprising himself and his prototype of three wooden spoons strapped together with elastic bands (or some other outlandish combination), only to be asked by the first Dragon to speak how they can justify a valuation of their company at £2.5million.

This is usually followed by a great deal of uhm-ing and aah-ing, or more entertainingly an explosion of accusations that the Dragons don't know what they're talking about, shortly succeeded by raised eyebrows and an early shower.

So it's with surprise that, following a link supplied by James Watt on Twitter, I read Brewdog's Equity for Punks prospectus to find that they're issuing 90,000 shares at £23.75 a share, representing a total 8% interest in the company. Some quick sums (23.75 x 90,000 / 0.08) reveal this to be a rough valuation of the company at £26.7million.

Bear in mind that the company's turnover for 2010 was £3.3m and there's an enormous gap between that and the supposed value represented in the share issue. The projected turnover for this year is better, at £6.5m, but that still leaves a gulf of £20m that remains to be filled.

What Say You?
Armed with this quick arithmetic, I returned to the Brewdog blog and posted a comment which can be seen in the image below:

A plea for justification

Shortly afterwards I refreshed the page to discover that the comment had been deleted and further comments disabled. I can only take that to mean that somewhere in an office in Fraserburgh, someone is working very hard to produce the justification and it will be published forthwith.

Timely Endorsement
A while later, James tweets that the Times have recommended the investment. Great news, if in fact it is true.

A picture followed shortly thereafter showing Brewdog staff holding the Times open at the page of an article on the share issue (right).

That article (behind a paywall here) doesn't so much recommend the investment as point out that the "groundbreaking" nature of the share issue means it is unvetted by any financial authority and is high risk, further pointing out that the "prospectus" should more rightly be called a "financial promotion".

The actual "recommendation", if it could be called that, is found several pages earlier in the paper, and is a paragraph or so in Patrick Hosking's Business Commentary. Again, though, there is little found to "recommend" the investment. The furthest Patrick goes is to entitle the paragraph concerning Brewdog "Liquid Assets Worth a Flutter", which is hardly a ringing endorsement, especially given that in the text of his commentary he notes that there is in fact no liquid market for the shares (they can't yet be traded, and even when they can it will be only by matched bargain through the EquityPunks.com website).

Mr Hosking does say that investors might be persuaded by the phenomenal growth shown by the company and its distinctive marketing to have a punt of a hundred quid; this isn't so much a recommendation as an invitation to gamble if you have the spare cash.

Exit Strategy
"Investing" in Equity for Punks does bring with it some benefits -- 20% discount in their online shop* and 5% discount in their bars. If you can stomach the faux-punk nonsense then these meagre offerings might do something to offset the ~£18/share surcharge, which may in itself be considered an ideology tax by those who strongly believe in what Brewdog are trying to do, and want to see them go further.

Personally, I like some of their beers (the best pint I've had in recent memory was a pint of Punk IPA at the Steampacket Inn on the Isle of Whithorn) but their attitude doesn't sit well with me, so I'm afraid I'm out.

*Spending £500 in the shop would appear to be the quickest way to get a return on your investment.

Beerleaks : Don't buy it

A little while ago, those erstwhile courters of controversy, Brewdog posted a video on their blog with a web address displayed at the end leading to a site displaying a countdown clock.

When this clock ran down, nothing happened. A few hours later, perhaps when someone woke up from a CO2-induced coma having imbibed too much fizzy so-called craft beer the night before, the site went live. It proclaims itself, in true Brewdog style, to be the saviour of beer and calls upon the masses to throw off the shackles forced upon them by unfair and misleading advertising practices perpetrated by multinational breweries.

A noble cause, and I cannot fault anyone for educating people about the half-truths and outright fabrications employed to secure the average Joe's beer tokens. With that in mind, I feel it's only fair that someone (me) attempts to elucidate the half-truths and outright fabrications perpetrated on the very site claiming to be protecting the consumer from those practices.

What is Beerleaks?

The simple answer is that it's a cynical marketing strategy masquerading as consumer protection. That's a pretty bold claim and I'd rather not leave it there, though I'm sure there are many Brewdog-critics out there who are happy to accept the plain statement. I'd much rather the reasons for my holding that view were made clear, though. Reasoned argument is, after all, the best defence against criticism.

Beerleaks has 4 bullet points listing it's raisons d'etre; three of them are fairly vacuous rabble-rousing statements of revolution with no real content. The fourth (actually the second on the list) is 

No more will our perceptions of beer be skewed by marketing

The entire purpose of marketing is to skew perceptions of the product being marketed, James Watt  knows this, and Brewdog is a living, breathing example of successful marketing. Some would even argue that it's a victory of marketing over product. This is the first (obvious) clue that Beerleaks is a cynical ploy to subvert "consumer concern" over the provenance of their drinks and turn them away from mass-marketed beers and towards an alternative. Of course, the obvious alternative is Brewdog.

Smoke and Mirrors
The very front page of the website proclaims that we should "Keep Beer Real", and that the site exists to "dispel the smoke and mirrors that surrounds the UK beer industry". As I've already argued, the entire site is itself just another example (albeit a highly accomplished one) of that smoke and those mirrors, but I'll go a little further into some examples. The very nature of the half-truths employed in these exercises means that most of the points can appear tenuous; this isn't an excuse for what may appear weak or paranoid arguments, only an acknowledgement that they can and do appear weak and/or paranoid -- these campaigns are designed just so that the targets of criticism can dissemble and deflect. I'll make the arguments, you agree or disagree, it's up to you.


Those very first words ("Keep Beer Real") are at first glance a simple statement about the purpose of Beerleaks, but upon slightly closer inspection could be seen as an attempt to subvert the meaning of "real" in the context of beer. Brewdog are a "real ale" producer, but that constitutes a tiny fraction of their output, and their attitude towards the Campaign for Real Ale is no secret. "Real", in the beer world, has a very specific and technical definition so using it in another way and associating it with "craft" beer is advantageous to a brewer who want to produce keg and only serve keg in their bars.


Skunky Beer
The entire section on "skunking" of beer, while factually accurate, ignores a critical question: the amount of UV exposure required to produce the reaction. The answer is "more than you would reasonably expect a bottle to be exposed to".  The solution to skunking caused by the beer being in a green bottle is simple -- store them somewhere dark, or drink them. Since fridges are dark except when you open the door, there's little chance of any deleterious effect on your beer.


The Evil Amylase
The mention of this enzyme, employed in breaking down starch into maltose and dextrose sugars for fermentation, sticks out like a sore thumb in the first paragraph of a posting about isinglass. Why? Amylase is present in malt. It's the entire reason malt is useful! "Malting" activates the enzyme, and without it beer would be a thin, alcohol-free, biscuity-tasting watery soup with some starving yeast floating around in it.
Quite why it would be mentioned in a section on vegetarianism is a mystery, except perhaps as a scary jargon word intended to scare people into believing that big breweries are putting "chemicals" in their beer. Ask any brewer (regardless of which company they work for, or even if they just brew at home) if there is amylase in their beer and they'll cry, "Of course!". See, they not only admit it, but they don't think there's anything wrong with it! That is, of course, because there isn't.


Ignoring the attempt at making isinglass sound "icky", they also fail to mention that the beers in question don't claim to be vegetarian, that the amount of isinglass used is tiny, and that it probably doesn't end up in the finished product anyway.


What's it for?

Nowhere on the Beerleaks website are we told that it is funded, run, or in any way linked to a brewery, with the obvious conflict of interest that arises from a campaign to discredit the competition. Early indications are that all mentions of Beerleaks in comments on the Brewdog blog are being expunged, presumably to maintain the apparent separation between the two.

The argument could be made, then, that it cannot be an attempt to promote Brewdog, as no mention is made of it on the site. However, most people in the know know that it's a Brewdog affiliated site, and the layout, style, and graphics are all similar to the Brewdog brand. An unsuspecting consumer happening across the site won't know, but will soon be associating this apparently sincere campaign with mentions of Brewdog elsewhere. The entire thing is a viral campaign, not to improve the quality of mainstream beer, nor to bring judiciary pressure to bear on irresponsible advertising practices of big industry, but to get people thinking about Brewdog beer. It is exactly the thing it claims to be campaigning against.