Payola

I got put onto this story from the US yesterday. Basically it touches on what seems to be a recurring scandal in the brewing industry there - that brewers or distributors will make illegal payments to get bars to put their beers on.

If one assumes that their anti-inducement rules generally work, in spite of all the issues people like Flying Dog have, then they must play a part in the explosive growth of independent brewing there.

As much as we like how well the New Zealand brewing industry is doing, it has never had the gold-rush feel of the US industry. Surely it's the hospitality industry (i.e. bars) who are the obstacle. Because what's illegal in the US is a cornerstone of the hospitality industry here.

Every now and then there's an appeal for some kind of tax-break or special treatment for craft brewers. (Because, you know... defining who is a craft brewer is dead easy and a large industrial brewer would never have their lawyers find a way for the tax-break to apply to them.)

But surely the single best way to get beer that we like (trying to avoid saying "craft") into New Zealand bars is to outlaw the ways that DB and Lion tie the bars down? We have government and private institutions dedicated to making sure New Zealand's economy is competitive but they won't even look at a practice that is all about using inducements to eliminate competition. And if competition law doesn't get them, surely contractual penalties for not selling a minimum volume of beer breach the Sale of Liquor act.

Seriously - why do Lion and DB get away with what they do without a whisper?

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Reflections On The Event We Could Not Name

The rugby tournament whose very name may only be used by companies with a commercial relationship with it is over. During the years leading up to the event there had been a presumption that hospitality businesses in New Zealand, and in particular those in cities hosting games, must thrive with the influx of thirsty supporters. Fortunately being in business during two Wellington Sevens tournaments made us wary of such presumptions. We have learned that a number of effects take place during a big event, particularly a sports event:

1. big televised sports events play havoc with our trade. Generally we suffer a net loss.
2. a really big event in Wellington like the Sevens or an All Blacks test might give us a modest boost in takings, although we have to put up with uncertainty, ebbs and flows in trade and, typically, a number of irregular customers who don't understand what sort of a bar they're in.
3. televising overseas sports events, particularly North American ones, has worked better for us than local ones, and we seem to do better from soccer supporters than rugby.

We told ourselves and hoped that international supporters of national rugby sides would be different from the typical Sevens reveller, for whom the quality of the beverages they consume (and perhaps even events on the field) are of low significance. Nevertheless we went into the rugby with some trepidation. We spent a little on some very targeted advertising, had a security guard on a couple of extra nights and rostered extra staff a couple of times.

Seven weeks later our most modest expectations were pretty much correct. But not without some pretty dramatic peaks and troughs. We had some great afternoons when good natured spectators waiting for an evening game in Wellington came in to watch an earlier game on TV. And the quarter finals weekend was hard work but very busy.

When the All Blacks played we lost business except when they played Japan and we were inundated by Japanese supporters.

By the semi-finals weekend it really felt as if the circus had left town. The games were only on TV and people seemed to be watching them at home or at the "fanzone". It seemed as though everyone's apprehension over the All Blacks' fortunes was drawing them into their shells. Our trade collapsed.

Then came the final. In stark contrast to the semi-finals tens of thousands descended on central Wellington - the fanzone filled up, every other bar filled up and by kick off we were swamped by spectators, a high proportion of whom were strays looking for a screen but who barely purchased a thing off us. Later we would find bottle caps for drinks that we definitely don't sell in the bar. When the final whistle blew the strays exited and were replaced by a steady flow of other customers, a high proportion of whom seemed to be drifting from bar to bar as well and struggled to comprehend our product list.

The net result was a record for Sunday trading that I doubt we'll ever break. But it was hard, funless work.

So after seven weeks of raised hopes, targeted advertising, apprehension, tension, hard work, no-shows and occasional packed houses we probably had a boost in takings that just exceeded what we spent chasing it.

It's tempting to have a good old whinge at the people who insinuated that the tournament would make us all rich. Even now the media seem conflicted between reporting the horror stories of suburban restaurants whose business has dried up and the claims of the payments clearing houses saying that tens of millions of extra money has gone through their systems. The fact is that simple logic suggested that a bonanza was on its way. And for a booze barn in the right location in Auckland or Wellington flogging beer in green bottles it probably has been a bonanza. But we almost all overlooked the alternative but suddenly obvious facts, that corporate travel and conventional tourism would dry up and people's angst over the All Blacks' fortunes would inhibit their socialising for weeks.

Fortunately Christmas comes every year and the trading patterns ahead of us should be more predictable. And before Christmas we've got a succession of events of our own design that we think will excite our regular customers.

Speaking personally, my main complaint isn't with the misconception that the tournament would bring a windfall - it's with the absurd legal and commercial protection bestowed on the event's sponsors. The capitalist system is supposed to use competition to drive efficiency. But at events like the Cricket and Rugby World Cups competition only takes place when would-be sponsors bid. Thereafter competition is outlawed and the actual ticket-buying consumers and their cash are directed toward the sponsors' products. And when the sponsor's product is as mediocre as HEINEKEN consumers are being treated with contempt.

In the last few years I've witnessed:
  • English supporters wearing actual replica shirts at the Cricket World Cup in the Caribbean told to wear them inside out because the shirts carried the logo of a rival to a tournament sponsor.
  • Children arriving at a Bledisloe Cup game in Hong Kong given toys by an "ambush marketer" on the way to the ground only to have them confiscated at the ground.
  • Hashigo Zake "inspected" to check that we didn't mention the name of the tournament that we were showing on a TV channel that we pay a commercial subscription for.
Clearly the rights of common or garden spectators, who generally paid a fortune to go to these events, are not being considered. New Zealand's Major Events Management Act is the local manifestation of a bizarre worldwide convention that says that rich corporate sponsors need protection from the random acts of individuals and small businesses.

I think it's time for a bill of rights for spectators at major events and fellow businesses in countries hosting them:
  • No monopolies at match venues.
  • Free drinking water
  • Adequate toilets
  • Freedom of choice in attire (subject to decency)
  • Maximum volume for stadium PAs
  • The right to use the name of any event important enough to have streets closed.

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Pacific Beer Expo

The near-final list of beers for the Inaugural Pacific Beer Expo is up here.

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Endorsement comes from an unlikely source

Hashigo Zake's reputation is important to us and so I regularly do google searches for recent mentions of our name. On the morning of Friday August 26, 2011, I hit the jackpot. On the pages at http://forums.punkas.com/ a conversation amongst some regular and valued customers the night before led a third party (calling himself “No Way Out Records”) to post:

fuck hashingo and fuck dominic and fuck you wellington idiots, I hate that fucking bar and it's idiot (self appointed elitist) fucking owner...

rant over...

check out Bruhaus and Taphaus over the next few months for some pleasant surprises!!!

First of all I was delighted that the poster used the term “elitist”. From day one we’ve aspired to be elitist – but at the same time unpretentious - about the products we serve and the way we serve them. But I don’t think elitist is a boast you can make about yourself – it has to be bestowed (or alleged) by a third party. So thanks mate.

Now I found this highly amusing and posted a screenshot on the Hashigo Zake facebook page. I was immediately contacted by one of the aforementioned regular customers and punkas posters who made two points: (1) he and a number of others on the forum were satisfied and regular customers of Hashigo Zake and (2) the poster was “Sean from beerstore”.

Everything suddenly made sense. This Sean turned out to be the same person (posting as STiG) who tried to mock our importing programme through comments on this blog back in January. (See here.)

For those who don’t know, the website called “the beer store” has been selling imported beer since before we opened. Unlike us they use what’s known as “the grey market” – they buy beer from overseas distributors rather than breweries, often against the express wishes of the breweries. The convoluted route that grey market products take to New Zealand often means that they are over-priced and in poor condition by the time they arrive.

We opened two years ago and have been sourcing our products using the most direct possible channels. As I tried to explain to Sean back in January, we use strategic alliances with importers in other countries to get introductions to the breweries we buy from. This has been an outstanding success for us.

Obviously I’m biased when I say this, but it must be galling when your business model is to do something (importing) badly and then face a competitor whose business model is to do it well. So perhaps I should be sympathetic towards the hysterical poster. And to be fair, I believe he followed his post with another showing a little regret. But the fact is that rather than accept the arrival of a competitor and adjust their business model accordingly – by, for instance, stopping the importing of brands that we import cheaper, fresher and with the approval of their producers – the beer store seem to have sought out beer from breweries that we bring in, such as Japan’s Baird and San Diego’s Coronado, presumably to spite us. As a result, and as hinted by his mention of the Tap Haus, you can go along to the Tap Haus and buy a 355ml bottle of Coronado Orange Avenue Witbier for $14 – yesterday it was on tap at Hashigo Zake for $11 per US pint.

But the point I really want to make is that as Hashigo Zake approaches its second birthday, seeing a competitor that we have little respect for vent like this is the best endorsement we could ask for.

For the record, beers that we imported from breweries such as Baird, Nøgne Ø, Rogue, Green Flash, Bear Republic, Coronado and Moylan’s are or have been at the following outlets:

Auckland:

  • Newmarket Liquorland

  • Forrest Hill Liquorland

  • Victoria Park New World

  • Wine Circle Kumeu

  • Galbraith’s

  • Hallertau

Palmerston North:


  • Albert St Liquorland

Wellington:


  • Little Beer Quarter

  • The Hop Garden

  • Bar Edward

  • Café Polo

  • Regional Wines and Spirits

  • Island Bay New World

  • Rumble’s


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Bonsai Brewing

I was lucky enough to be invited to observe a morning's brewing at Garage Project.

The beers needed for the brewery's launch (August 2nd) and Beervana (August 5th/6th) are nearly ready, so on Sunday it was the first of a pair of pale ales using two new, experimental hops. The hop we used this day was the romantically named 97-77-09. Yum.

To someone who last brewed using nothing but kitchen pots and pans and a plastic fermenter it's eye-opening to see brewing being done on a homebrew-like scale, but using electronically controlled kettles, a heat exchanger, pumps and the like. And going by the samples of the still conditioning first batches, the benefits of the slick equipment are apparent.

Not that Pete and Jos have it all that easy. In the cavernous, unsealed, uninsulated former garage in darkest Aro Valley the ambient temperature inside was colder than that outside. Lack of heating aside though, the garage is clearly an ideal space for a brewery. We can but hope that the remaining bureaucratic obstacles (zoning, planning etc) that might restrict the guys' plans will be systematically dismantled as all the past ones have.

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An Open Letter to Dominion Breweries.

A Pyrrhic victory is a victory with devastating cost to the victor; it carries the implication that another such victory will ultimately cause defeat. – Wikipedia.


About two months ago you sent one of your emissaries to my bar to ask what it would take to get DB or Monteiths products into our product range at Hashigo Zake. Clearly some people in your organisation cared that your product range and corporate image have alienated the market, particularly the portion of the market that patronise bars like mine. Or perhaps you’re alarmed at the rate that freehouses are opening up in Wellington. I was in a conciliatory mood at the time and suggested just two preconditions – the appearance of a “killer” product and the elimination of the Radler problem.


Now I have good reason to believe that after getting litigious with the Green Man Brewery you had internal advice to walk away from the Radler trademark, but for reasons no-one can fathom you chose to stick to it.


Perhaps you were still giddy from the good fortune of having been granted a trademark that even IPONZ staff concede off the record was a mistake.


Perhaps you have some kind of obligation to your corporate masters in Singapore and the Netherlands to give no ground in legal disputes.


So with overall sales of beer falling but the market for small independent breweries growing you have a victory that demonstrates you have nothing but contempt for New Zealand consumers and other brewers. Rest assured that the feeling is quickly becoming mutual.


So now that IPONZ have chosen not to eliminate the “Radler problem” I can be less equivocal about my response back in May. The chances of any product of your group of companies ever being made available for sale at Hashigo Zake just went from minute to nil. And this year if your company’s executives come to Hashigo Zake looking for good beer after the BrewNZ Awards they will not be served.

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Being part of the Hospitality Industry, supposedly

I just got a reminder that we should rush to nominate ourselves in the Hospitality Association's annual awards for excellence. There's a category called Best Bar. Here is the entry form.

Now one of the criteria is the quality of food on offer. Fair enough. A best restaurant contest might include the quality of the drinks list as a criterion. Although they'd probably call it the "wine list". (In fact I've checked and the best restaurant category does judge on the "wine list".)

Now if food is one criterion is it strange to expect that the quality of drinks on offer might make up a high proportion of the remaining criteria? Individual consideration for beer, wine, non-alcoholic drinks perhaps? Or at least one criterion?

Incredibly it seems you can be the best bar in New Zealand, according to the Hospitality Association, without the judging panel asking what drinks you serve.

Good on you HANZ. Keep lobbying for public holiday surcharges. At least our membership gets us a discount on our sky subscription.

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