Friday, 29 August 2014

Ill-conceived twaddle

You find weird stuff in the letters pages of newspapers. Sometimes the assertions they contain are, well, total bollocks. You wonder why on earth they ever got printed.

This is a good example of that category.
"Sir.—I read in your issue of the 23rd inst. a letter from Mr. J. Simpson, of the Yorkshire Brewers' Association, and have some idea that all has not been stated. Recently I read in your columns the speeches of the brewers on the occasion of their meeting in Leeds. Financially it was inferred that things were in a bad way, but remarkably enough. I read in the same paper that Messrs. Whitbreads had paid a dividend of 25 per cent, and added considerably to their reserve funds. This led me to consult the share market column, and it is perhaps truthful to say that, judging front the price of brewery shares, there is no industry in this country which pays so well and regularly as breweries. They are making money "hand over fist" as the saying goes.

Day by day the prices of shares rise, and if anyone is a bit sceptical on the point, let him look at the share market and find the price of a £1 share. If a "free house" is for sale, most extravagant prices are offered by breweries for its purchase. To restore dilapidated public-houses large sums can readily be found. Corner sites in new building areas are secured and permitted to lie dormant for years awaiting the time when a licence is possible.

Some breweries advertise that their beer is brewed from pure malt and bops: others do not commit themselves. No brewer, however, advertises that his beer brewed from British malt and hops. Truth tell. South American barley and Continental hops find their way into the brewery vat. The distillers recently sent a protest to the Chancellor and promised that if he would reduce taxation on whisky they would use 30 per cent. British malt. The position appears to be that there is nothing British in our stimulants except the water.

The cost of brewing a gallon of beer is under 1.5d., and the price at which this gallon is unloaded on the tied landlord ensures that whatever comes or goes, the brewery will reap its tremendous and customary profit. This is why there are no poor brewers in this country. The "tied" landlord demands our help, not the brewer. Heavily rented and rated, with a large sum to provide for a licence, it is remarkable how he survives.—Yours, etc., P.E.H."
Yorkshire Post and Leeds Intelligencer - Tuesday 26 April 1932, page 6.

He makes three points: that breweries were making huge profits; that British beer was brewed almost exclusively from foreign ingredients; that beer cost 1.5d per gallon to brew.

I'll concede that breweries some breweries were making reasonable profits. But the number of takeovers of long-established firms in the 1930's reveals that others were struggling. The claim that Whitbread declared a 25% dividend in 1932 just isn't true. The dividend on the Ordinary Shares was 14%. A pretty decent return, but nowhere near 25%.

British beer hadn't been brewed from 100% British ingredients for getting on for hundred years, WW I excepted. There was a simple reason: British agriculture couldn't produce the quantity of malt and hops required by the brewing industry. That said, the majority of ingrendients were still home grown. The proportion of malt made from foreign barley was rarely more than 20% of the grist.

The last claim is particularly crazy. And demonstrates how little the author knew of the industry. Luckily I've plenty of material to back me up. Because some brewing records include costs. Let's take a look at one, shall we?

This is from a Courage brew of 1st January 1932. It's a parti-gyle of Burton and Mild Ales.

Costs of a Courage brew of 1st January 1932
beer OG cost per gallon cost per barrel (pence) barrels gravity points shiilngs pence
KKK 1072.8 55.3056 1991 98.5 2580.7 165 11
XXX 1047.8 39.0833 1407 161.25 2773.5 117 3
MC 1041.7 30.6944 1105 231 3465 92 1
XXX 1032.0 23.1944 835 1026 11799 69 7
Average 1037.8

1,516.8 20,618.2
Courage brewing record held at the London Metropolitan Archives, document number ACC/2305/08/259.

All the beers of the parti-gyle averaged a gravity of 1037.8 and there were 1,516 barrels in total. As well as the price per barrel of each beer, the costs are also broken down by ingredients and tax:

Costs of a Courage brew of 1st January 1932

total pence pounds shillings pence
malt 115,368 480 14 0
sugar 51,354 213 19 6
hops 4,134 17 3 18
sundries 954 3 19 6
total ingredients 171,810 713 55 30
duty 1,712,609 7,135 17 5
total ingredients + duty 1,884,419 7,848 72 35
ingredients price per barrel 113.28
ingredients price per gallon 3.15
duty price per barrel 1129.13
duty price per gallon 31.36
ingredients + duty price per barrel 1242.41
ingredients + duty price per gallon 34.51
Courage brewing record held at the London Metropolitan Archives, document number ACC/2305/08/259.

The ingredients alone came to more than 3d per gallon. If you include the duty, which is surely part of the cost of brewing, the price jumps up to more than 34d per gallon. So the letter-writer was wrong by more than a factor of twenty. And that's for a beer several points below the average gravity of 1042.5*.

I can also see whence the ingredients used in this batch came from. The only identifiably foreign material are 18 quarters of malt from Californian barley. That's from a total 178 quarters, so just about 10%.

So pretty much all bollocks, that letter.

1 comment:

The Beer Nut said...

Let's hope he never lived to see the rapacious breweries replaced by the more rapacious pubcos. That would surely have done the poor geezer in.