Beer isn’t just made up of four ingredients – a lot of love goes into making every drop of our beer too. Oh, and the cleaning. And gas, electricity. We pay rent and rates of course. Then there’s packaging, transport, labour, repairs, stationary, travel, marketing and events. Plus a bit more cleaning. The elephant in the room that is the 3rd highest duty rate in the world.
The cost of doing business.
Wouldn’t it be great if everything was a fixed price and so we could price everything easily and consistently? Or if there were changes, wouldn’t it be great if everything we paid rose by the same amount, so we could pass on the same rise, and our customers could do the same to the drinker? Of course before any beer gets to a drinker, a publican has to pay thier rent and rates, their serviecs, their labour. It really does all add up.
2019 was a good year for Ilkley Brewery – we added more capacity, invested in our team and brewed more beer than ever before. But we also noticed changes, from the type of customer who takes our beer, the product split and popularity of styles, the frequency people order (or don’t) and of course desire from the market to keep prices down. This was coupled with ever more breweries in the UK, and not least here in Yorkshire, which overtook London in 2019 for the most new brewery openings! Exciting times, as ever, but increasingly a challenging environment; this lovely beer sector of ours.
This blog post is a little explanation of at least our part of the journey each pint goes on, and the costs involved. Hopefully you’ll see that we’re not putting profits before people, bucks before the beer. The increases in cost we face, for the most part aren’t passed on, they are absorbed. In fact for 2020 we are trying to balance any rises with discounts based on volume, so that if we are to make less profit from each cask, keg or bottle, we’ll be making more of less profit. If that makes sense? Only by helping our customers maintain good value, can we ensure a continued supply of beer, and continued jobs for our team, continued progression and general goodness for all. We’ll never engage in a race to the bottom, ensuring that our products are continued to be recognised for their quality, and valued accordingly. Beer is a luxury item, not a comodity, and should be treated with the respect, nay even reverence that a “National Drink” deserves. We pride ourselves on our process, quality control, skill and passion that goes into every pint, and hope that this consistency, attention to detail and drinkability comes through and the landlords find ours are the beers that fly out, that don’t waste, that hold their condition.
But here’s where the fun starts for the year ahead, and how what we put in is changing. Bearing in mind our commitment to working with the best suppliers, independent and green where possible, but always ensuring only the best makes the final cut, becuase we believe it really is in the tasting.
- Over the past year our bulk grain cost has gone up 3.5% (adjunct malt by 5.5%). So when you think that each brew uses around half a tonne of grain, the cost isn’t insignificant. That said, we do actually anticipate a levelling off in price during 2020.
- Hops – whilst some have remained stable, others have risen up to 36%. This has meant that our overall hop cost is rising by 4.8% this year. To put this in context, one of our more expensive hops, (expensive due primarily to the fact the license to grow it is controlled by a single farmer in America) is Amarillo. Amarillo is the primary hop in Mary Jane. Mary Jane is 46% of our total brewing.
- Our contract packaging costs are rising by 2% in 2020. Bearing in mind that drinking at home as opposed to in the pub now accounts for more than half of UK beer consumption, and is a trend that seems destined to continue, the proportion of our sales that are packaged has steadily risen over the years, and now accounts for over 35% of our beer.
- Transport costs are rising by 3.5% in 2020. They went up 10% last year.
- As a Living Wage employer, our staff pay rates are increasing by 3.3% in 2020. We are of course really pleased about this, as it ensures our team are well compensated for their hard work.
- Electricity and gas are rising by 14% and 12% respectively. Whilst they may form a smaller part of each pint, the amounts are significant.
So the upshot is that our prices are rising this year, broadly in line with inflation, as opposed to the rates of increase we face outlined above. But in order to reward our customers who support us, through regular listings, permanent taps and by looking to grow Ilkley volume this year, we’ve increased our discount offer. This will allow us to support our best customers better, in terms of our time, investment, marketing and of course price. If people want to stock our beers occasionally, that is of course fine – we understand that choice is important, and rotation and keeping things fresh is key to maintinaing interest. But in Mary Jane and her family of beers, we beleive we have a range of our own that will satisfy every taste, and quality running through everything we brew, that will ensure drinkers keep coming back for more.
So let’s do this together. We’re not only Powered By Beer, we’re Powered By You. There’s an awful lot that goes into making, distributing and serving this lovely amber nectar, let’s work together to ensure that it remains a must-have luxury.