And so it goes on.
A quick recap. A little over a week ago, the public relations consultancy working for Carlton & United Breweries, Australia’s second largest brewer, issued a media release paid for by CUB announcing the release of a beer that has been brewed by CUB and will be distributed nationally by CUB. Nowhere in that release or on the labels that CUB printed will you find the letters CUB.
All caught up?
Ok, since then CUB have seemed very reluctant to talk about it. They are very reluctant to answer questions about their media release.
Finally, last Friday, I received a response to some questions I had asked. Actually it was a response to the fact that I had asked the questions rather than the questions themselves. It said:
You should review Barry’s comment on his Facebook site – http://www.facebook.com/TheByronBayBrewery – which hopefully addresses some of your issues.
Now. I will get to Barry’s Facebook page soon. While CUB seems to desperately want to make this simply about Barry and not them, this issue is like an onion. It has layers.
Layer One: CUB.
Over at Crafty Pint, James managed to get a more fulsome response than I have. I won’t poach his traffic, so head on over there to read it in its full four paragraphs. It included the following paragraph:
“CUB has a licencing agreement to produce and distribute its [Byron Bay’s] Pale Lager in pack form. This provides Byron Bay with a national platform, something that they would not be able to achieve by themselves and from which they benefit.”
Like a little angel investor, CUB is just helping the caterpillar turn into a butterfly. CUB is just helping out a mate, that’s the sort of company it is. There’s no benefit to CUB in the arrangement.
CUB is a publicly listed company. Invariably, when publically listed companies are accused of rapaciousness, they throw their hands up and say, “it’s not our fault, we have a duty to our shareholders. We have to do it, we have no choice over whether we screw you”.
But here, when they suggest all they are doing is helping out a little brewery, exactly the reverse is true. CUB would not – could not – enter into this licensing agreement to develop a competitor’s business unless there was a benefit to them and to their shareholders. The benefit they seek is to generate profit from a beer brand that does not have the taint of being owned and operated by a multinational brewery.
Its own Executive Chairman describes the strategy here and CUB have followed this and ‘cozied up’ to another business to play off the anti-big, anti-international trend in beer.
Hold that thought. Back to Barry.
Layer Two: Barry
Last Thursday night Barry Schadel posted on the Byron Bay Brewing Company Facebook page. Amongst other things he said:
We have a small but fantastic brewery hear in Byron but unfortunatly its not something that you can take to the bank .
I approached CUB to get my Gold medal Pale Lager brewed and bottled under license which means even more people get to taste our award winning beer.
We are very proud and fortunate to have this opportunity for our great beer to be available to all aussies on a national level.
Our customers in the brewery ask one common question ” where can I buy your Beer when i go home”.
It is hard not to be moved by his comments. Funnily enough, as I have said through all of this, Byron Bay Brewing Co is a great place to have a beer and brewer Stuart Ritchie is both a tremendous brewer and great bloke. None of this debate in any way takes away from the brewery, the beer or the chance that they have been given courtesy of CUB.
This is not an issue of whether Barry should be able to get his beer out to a wider audience, as much as CUB desperately wants us to discuss that. It’s not even whether CUB should be taking this beer to the world. This is a question of whether CUB should be telling us about their involvement.
Layer Three: The Beer
Barry knows that many people love the Byron Bay element of his beer as much as they love the Pale Lager part. When his brewery won medals at the AIBA last year, his local paper featured him, saying:
One of the key ingredients for flavour in beer was the quality of water used in the brewing process, Mr Schadel said.
“We use water from the Byron Bay main which is filtered and purified a dozen times before it goes into the beer making process.
“It’s as clean and as crisp as any water that’s available,” Mr Schadel said.
For Barry, and no doubt many of his drinkers, what mattered was not that good water was used, what mattered was that good Byron Bay water was used.
Does it matter to the beer when it is no longer made in Byron Bay? No, of course not. It is still a good beer, just not brewed at or by Byron Bay Brewing Company. That beer just become a recipe. But CUB don’t just want Barry’s recipe, they have a squillion of them already, they want something else besides from Barry. But what?
Layer Four: The Brand
Barry hasn’t just lent CUB the recipe to use, he has lent them the right to put his Byron Bay name on their bottle filled with the beer CUB is making. CUB is producing the beer, but they are marketing the label.
What Barry has licensed to CUB – and, in turn, what is valuable to CUB – includes how people feel about the whole package. It is here that some people will care that the bottle of Byron Bay Pale Lager is made by CUB in Newcastle rather than by Stuart Ritchie at 1 Skinners Shoot Road, Byron Bay from pure Byron Bay tap water.
Layer Five: Ownership
In getting his beer to a wider audience, Barry hasn’t just contracted for his recipe to be brewed at another brewery. Instead he has loaned a big bundle of his rights to CUB. What the full extent of these rights is only Barry and CUB know. They will never tell. But at the very least we know the license includes the right to produce and distribute the beer in packaged form. CUB no doubt have to pay Barry a few bob for every bottle in return for that right (and all power to Barry for that score!) and Barry continues to ‘own’ the recipe and the brand but, at least temporarily, this is CUB’s beer to make and exploit in packaged form.
Notice how over at CraftyPint CUB says definitively: “The Byron Bay Brewery owns the brand, the formula and the product which it brews in draught beer at its Byron Bay brewhouse” (emphasis mine). Then notice how, when they refer to the bottled product, they aren’t quite as definitive. They don’t say “this is Barry’s product”. They start with the caveat “we believe” and follow that up with a little more water in the form of “fundamentally” before they finally get to Barry’s product. The bottled product is theirs, for now.
If this was a Quentin Tarantino movie and not Australian Brews News, Samuel L Jackson would be explaining it like this:
If I hire you my car. I am giving you a license to drive my car.
Fundamentally, it is still my car.
But, you go all Blues Brothers through a shopping mall? That shit’s on you.
Layer Six: Care factor?
Where was I? Oh, yes. Barry has lent CUB the right to make the beer for CUB to market and distribute. This is instead of, for example, Barry choosing to contract someone to make it for him and then market it himself.
So, does anyone care?
Yes. At least to some people do, as SABMiller (who own CUB) has explicitly acknowledged.
Of course, as the supportive comments on the Facebook page show, some people don’t care as well. But at least Barry has given them the chance to make that decision by telling them it is made by CUB. Why not everybody?
The people buying it in bottleshops in Sydney or Melbourne or Perth are not being given that choice. Absent the name CUB, a Warnervale address, or anything else to hint at CUB’s involvement, they are not being given that choice.
If buying a beer that hasn’t been brewed by a large multinational brewery matters to a consumer – and CUB knows that it will for many – they aren’t getting what they paid for. Unless, of course, it’s CUB’s contention that they have to stand in a bottleshop and Google every beer they intend to purchase before they buy it.
Layer Seven: Why It Matters – The Economic Cost of Growth
As high school economics students know, every business decision comes at the cost of the alternatives you might have made instead. If you grow your business into the size to benefit from the scale that comes with being CUB, the cost is that you are no longer small in the eyes of the consumer.
If you are a small brewery and lend your beer and label to a big brewery, this comes at the cost of not being seen as authentic by many consumers.
Conversely, if you are a small brewery that decides to keep all of your production in-house to maintain your authenticity, this comes at cost as well. Speed of growth, flexibility and short term working capital.
By entering into this licensing agreement and claiming the right to hide the fact, CUB and Barry are both trying to achieve all of the benefits of this arrangement while avoiding the opportunity cost of having made those decisions.
Instead the cost is paid by the small breweries who choose to keep their production in-house but still have to compete in all other respects against the big brewery, even against the appearance this brewery is small.
Layer Eight: The Core
Barry and CUB can repeat their ‘Barry’s beer’ mantra as much as they like. We are not talking who owns the beer, we are talking about who the consumer thinks brews the beer. They both know that on bottleshop shelves lined with dozens of pale lagers, people aren’t buying Barry’s recipe. They know that people are buying a bottle that says:
And that if they’re curious and look closely, they’ll see this:
And that by the time they get to this – if they ever do –
the impression that has been created by the totality of the packaging means that the legal technicalities of these words will be completely lost on them.
To say “There is no intention to mislead anyone” is a very different thing than saying “no one is being mislead”.
To avoid any potential for deception, any criticism and to plain shut me up, all it takes is 3 letters.