Wednesday, November 7, 2012

Topic du Jour

Yesterday I issued a press release commenting on the sale of Emerson’s brewery to Kirin (Lion Nathan) and answering a question that was already being asked – whether we would continue to sell Emerson’s products.

The answer to that question was simple – we wouldn’t change our policy of excluding the products of the companies that spent most of the 20th century reducing the New Zealand brewing industry to a joke. (That’s Heineken-own DB and Kirin-owned Lion Nathan.)

This was pretty much non-news, but with the shock that the Emerson’s sale has caused, it has been seized upon in the media and generated some pretty bizarre responses in comments sections and social networking. Oddly about the only party that we had a constructive dialogue with yesterday regarding this was Emerson’s brewery itself.

So here is our rationale:

For nearly a century Lion Nathan and DB have employed business strategies that have set back the art and science of brewing in New Zealand and deprived consumers of choice. For example:
  • They ensure that they have access to the New Zealand market in the form of shelf space and taps in bars by giving incentives to outlets. The effects are the exclusion of newcomers (new, small breweries) and the reduction of the New Zealand hospitality industry to a kind of serfdom in the service of the two breweries.
  • They bought up and shut down every rival brewer in the country (except each other).
  • Before the re-emergence of small breweries like Emerson’s they eliminated almost all stylistic diversity in New Zealand brewing.
  • They misuse accepted terms for beer styles for marketing convenience and misuse intellectual property law.
  • They brazenly exploit loyalties of the public to their regions while relocating production for convenience.
Emersons meanwhile have arguably been the most significant single force in the revival of brewing culture in New Zealand. In that time their investors (and this is a guess) must have been asked to fund regular expansions and upgrades to equipment while profits have been modest or non-existent and the staff toil away trying to get access to outlets controlled by the big breweries. While they’ve had as much success as anyone the returns to investors have probably been negligible. Their only hope of a realistic financial return on their investment is to sell the business.

So it makes sense for the owners to sell. And the next time Richard Emerson’s chauffeur drops him off at Hashigo Zake and he descends the stairs in his crocodile shoes and fur coat and orders a plum wine, we’ll welcome him as warmly as ever.

Emerson’s beer will now have the access to market that they’ve been largely denied for twenty years. They will no longer rely on free houses to find customers for their beer. Or to put it another way, they don’t need the likes of Hashigo Zake any more. But fifty or sixty other breweries do.

And as soon as the proceeds of their sales go to a parent whose business practices I disapprove of, we’ll prefer to find other suppliers.

At the Emerson’s brewery production will probably have to expand as they find it much easier to sell beer. Their new owners will probably add millions of dollars of spending to an already eight-figure investment. But Lion Nathan have an obligation to maximise returns to their owners. So while everyone has said that it will be business as usual at the brewery, I don’t see how Lion Nathan’s obligation to make a profit and their track record suggest any outcome except meddling with the beer.

It’s not really that hard to see why we said what we did. But we’ve been accused of snobbery, possibly xenophobia (presumably because I insisted on referring to Lion Nathan as Kirin, to remind people where the profits go), being haters, being hipsters (!wtf?)… who knows what else.

But actually we were just being consistent. Excluding Lion & DB products has worked well for us and our customers and as much as we admire Richard and his company we aren’t about to change.


2 comments:

  1. But...Richard Emerson is the second Jesus, you hating haters!! If beer tastes good you must drink it regardless of who makes it! This back-to-the-future move is really the NZ craft beer scene coming of age!

    Seriously though, I hope the new owners see sense and drop Bookbinder - the single most over-rated beer in history.

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  2. I only mentioned the Xenophobia because I don't draw a distinction between being foreign owned and buying foreign products (therefore creating profits in another country, Japan, in fact), I find any distinction hypocritical. Ultimately I don't think it should even matter.

    I have no issue with a policy of not stocking Lion (or DB) products, it's a good point of difference from the desert of the duopoly. I did find the press-release (language) unnecessarily over the top.

    And I'll continue to enjoying visiting HZ to try something I probably haven't tried elsewhere, and probably couldn't.

    I remain cautiously optimistic.

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