On the 14th April Cloudwater announced a new core range of four beers was being exclusively brewed for Tesco. This is at prices below what any retailer has been able to sell comparable Cloudwater beers for before: £3 for the Pale Ale and Session IPA, £3.50 for the DDH Pale and IPA. These are being contract brewed by BrewDog. At the same time Cloudwater are ending the production of their current core beer range in Manchester and will be brewing one off beers only.
On the 15th of April Vault City brewing, a sour focussed brewery based in Edinburgh, announced a release of two exclusive fruit sour beers for Tesco, selling at £3 a each. The majority of their releases for independent retailers sell at around £7-9 a bottle.
Cloudwater’s justification for denying independent beer shops a core range is based on their assumption that their current market do not want core beers. They cite that their own webshop customers are rarely drawn to their core range and that the highest untappd ratings are for their more recent one off released.
I had a bit of twitter rant about this, about how negatively this was going to affect sales for independent beer retailers and was met with the argument that this would in fact find new customers who would then come into my shop to find the one off beers not available in Tesco. Or as one responder put it ‘…they’ll still have to come for their daft triple whatnots anyway.’
This for me is rather insulting to Cloudwater customers and craft beer customers generally. It is an absolute minority of the customers that come into the craft beer shop where I work that use untappd, it is a minority that come in and buy triple IPAs versus Pales and IPAs. There are significant number of my customers that want a core range, that want to be able to come back to beers they love. Some of our best sellers are local core range beers, such as Wylam’s Jakehead and Hickey the Rake, Almasty’s Believe, Green and Simple Pleasures and Full Ciricle’s Looper.
We still have cans of Cloudwater’s recent TIPA and White Stout releases whereas the DDH and Pale evolution series have sold out, and we bought them in larger numbers.
Put simply I believe Cloudwater have stereotyped their own customers based on limited data. There are a lot of customers not on twitter, not on untappd, not going to direct to brewery who are buying and enjoying their core range and its hard to see how some of the revenue we’re currently earning isn’t going to spill over to Tesco.
Vault City’s justification for selling two exclusive beers in Tesco is a lot more grounded. They’ve been hit hard by the pandemic, have expanded quickly and have found themselves at a level of financial risk they are uncomfortable with, the Tesco release is a financial safety net for them. However, if they believe this Tesco range will be on top of their current indie retail sales they are deluded. They are massively devaluing their brands with this move.
As I said most of Vault City’s releases in my shop retail at around £7-9 a bottle. I pitch them to customers as ‘expensive but really nice, a luxury treat’. Their beers are in fact mind blowingly good and a personal favourite of mine. But it takes a bit of leap of faith for customers to spend that kind of money on a single bottle when there are much cheaper sour alternatives. Now there are much cheaper sour alternatives from Vault City, and you can pick them up with you weekly shop! When you can buy three of their new Tesco beers for the same price as one of their one off releases it’s laughable to argue that some of their current fans won’t migrate to buying their Tesco core range and those that find the brewery through the core range will absolutely balk when they see the prices of the one offs. They do have more affordable session sours retailing at £4-5 a bottle in our store but these will be hit even harder as they are more comparable to the new £3 Tesco range.
This means Vault City is going to be more and more reliant on those Tesco sales as indie sales slow. And you know when it comes to contract renewal Tesco will push for a cheaper price point. ‘We’d like £2.50 a bottle.’ might be the line and then because you’re so reliant on their sales you have to compromise on quality. This is then bad for the consumer who ends up with a compromised product.
But even away form his this affects the consumer and brewery lets for a minute talk about the ethics of getting into bed with Tesco. We’ve still in a pandemic, pubs can only serve outdoors and non essential retail has just reopened. Bottle shops, as off-licences, were classed as essential retail and could open, but many of these shops are located in town and city centres which were largely deserted during the various lockdowns we’ve had, so although they could open sales will not have been what they were pre pandemic.
Tesco’s sales were up by £3.5 billion pounds in the UK in 20/21 versus 19/20. Supermarkets have been some of the few business that have actually proffited from the pandemic. With pubs closed people moved to supermarkets to purchase their alcohol, with restaurants closed people were eating at home more. Tesco absolutely do not need more business right now. They even acknowledged this on Monday by putting an ad out saying they weren’t going to tell us about their great deals but encourage us to go to the pub. So have coordinated releases of some of the UKs best craft breweries in the following days make me both laugh and cry.
We don’t need to do things that support Tesco.
The idea that Tesco have done these new releases with an idea of transferring sales from beer they already sell to these beers is a joke, the idea that they’re not doing this to take money away from other businesses is a joke.
Because of monopoly regulations Tesco can’t really open more supermarkets, they’re constrained in their development, so they’re looking for other sectors that they can take money away from. They’re looking at independent beer retailers and deciding they want a piece of that pie, make no mistake that in their ideal world we’d be out of business and the craft beer would be a whole lot greyer as they want homogenised shelves across their stores. In their ideal world small local breweries go out of business and there is a core of medium to large breweries that everyone buys from.
Don’t believe me that Tesco aren’t just interested in their own profit and couldn’t give a shit about the craft beer, let’s look at their business ethics track record:
Buying and retailing Tyrell’s crisps through third parties in 2006, against the express wishes of the founder Will Chase after big supermarket purchasing power nearly
Tesco has consistently tried to avoid paying it’s fair share of tax including its online CD and DVD sales being done through Jersey to avoid VAT, depositing £1bn in a swiss bank which was then given out as loans to its own stores. deeming 2.5% of a sale to be card transaction fee even though it was the same price as a cash sale, again to avoid VAT. All these schemes has since been shut down by HMRC.
In 2007 Tesco formed a cartel to fix prices on milk, butter and cheese with four other supermarkets, making sure essential shopping for customer was more expensive. They were fined £116 million.
Tesco were investigated in 2013 by the Serious Fraud Office for overstating their profits, something they ultimately paid a £129 million pound for.
In a separate incident in 2013 Tesco had to pay a fine of £300,000 for falsely advertising strawberries as half price.
In November las year one of their stores in a blatant racist move put up posters written in Romanian telling thieves they were being watched. Tesco took four days to apologise for this.
I don’t hide the fact that I’m a Socialist from anyone. I am naturally opposed to big businesses like Tesco, they exploit staff, they expoit customers, they exploit smaller businesses. Generally I dislike big companies, they’re not good and in my ideal world they just wouldn’t exist. Billionaires shoudn’t exist. But Tesco specifically just has a litany of shitty behaviour and I just can’t imagine aligning a business I’d built myself with a company like that. And looking at all this history you simply can’t make the argument Tesco have benign intentions here. To the breweries working with them, I say they are not your friends.
Will this alone destroy independent beer retail? No, of course that’s not what I’m saying. Is it yet another move from supermarkets, another little chink in the frail armour of independent beer retail? Yes, it absolutely is.
And this isn’t the end of things, this is the beginning of a war from Tesco on independent beer retailers, but unluckily for them it’s a fight I’m up for.
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