All Beer is Renderred Luxury by Definition

We
don’t need it, but it certainly enriches our lives when used
in moderation. Be it a can of Budweiser while out fishing or
the reward of a well-aged barleywine to cap a family
celebration, beer lets us know that we are not simply
automatons seeking the barest wares of survival.

But the issue is
far more complicated than casting all beer as mere
indulgence. The buzz of business consultants in recent years
has been the concept of ‘trading-up’. On its surface, the
idea that increased personal wealth leads to people choosing
to purchase better quality goods seems entirely sensible.
When applied to the beer industry, however, the issue comes
into greater focus as we have seen larger than normal growth
in the higher end product segments. Two years ago, a
twenty-dollar bottle of beer seemed crazy; today that bottle
is fighting for top-shelf space with other similarly priced
items. In many markets, including Massachusetts, the price
of a six-pack has quickly risen. The ten-dollar six-pack was
once an aberration. Now, it’s a twelve-dollar six-pack whose
presence is threatened by similarly priced, up-and-coming
brands.

And the luxury
phenomenon has not been limited to crafts and imports.
Citing pressure from wholesalers seeking entry to this
expanding luxury market and higher margin pool, larger
brewers have released a slew of new products priced beyond
the traditional rates of Anheuser-Busch, SABMiller and
Molson-Coors. Beyond the Michelob series of faux-craft
offerings, A-B has released magnum-sized beers brewed with
chocolate and vanilla, Miller has produced a chocolate
lager, and Coors has expanded its popular Blue Moon line
with the release of a Winter Ale.

While the
concept of trading up is far too complicated for a single
article, this month I spoke with an importer whose business
focuses on high-quality products, full in flavor – and who
charges accordingly. Matthias Neidhart started B. United
International in 1994 and focused on importing specialty
beers to fill an unmet niche market. B. United’s portfolio
includes some of the world’s classic beers, including
offerings from George Gale, J.W. Lee’s, Brasserie
d’Achouffe, and Brauerei Heller Trum. Aside from offering
classic beers from Malta, Italy, Belgium, and beyond, B.
United also imports a range of meads, ciders and sakes. I
recently spoke with B. United’s founder about premium,
specialty beers, price ceilings for beer, and why he hates
the phrase ‘luxury beer’.

ANDY
CROUCH Thank you
for taking the time to speak with me today. I’m writing an
article on the concept of ‘luxury beers’. What is your
initial reaction to the phrase ‘luxury beer’?
MATTHIAS
NEIDHART I think
the term is absolutely awful because it implies that this
segment is targeted at the rich and famous, which is plainly
not the case. That’s not what we are trying to achieve with
our higher end products.

AC
Is the term ‘luxury beer’ an oxymoron when it comes to beer,
something that cuts against the very character of beer?
MN
Obviously I hate the term ‘luxury beers’ because I think
it’s inappropriate. Beer is unlike any other beverage as it
is absolutely not driven by any image factor. For us, it’s
about the complexity of flavor. If it was about the image
factor then I would say absolutely, this is a luxury
product. But this has nothing to do with that. It’s about
the liquid itself.

AC
Who are the individuals who are buying these products at the
higher price points?
MN
That is a great question and it’s one that we are hearing
all the time. We haven’t commissioned any kind of study to
answer it but we do have anecdotal evidence about this
target segment. In terms of who buys these products, I don’t
think you can pin down the buyers. To me, it’s very much
people who are interested in tasting complex things and who
are interested in experimenting and trying something new.
Those people are our customers.

AC
B.United has an extensive and wide-ranging portfolio of
different beers. How do you go about selecting those to
include?
MN
That’s the way we have built our company and the way we have
built our portfolio. We want to bring in outstanding
examples of as many different styles from around the world.
We want those that offer the highest complexity. That
usually doesn’t mean the market or segment leader in terms
of quantity of sales. Always, we want to have the most
complex beer available. There are people out there who are
so interested in learning about these things.

AC
When you started B. United International in 1994, what was
your approach to importing beers?
MN
Out approach hasn’t changed. We’ve always tried to bring the
best examples of as many different classic beer styles as we
possibly could. At that time our company was focused on
beer. Years later we expanded to include sakes and ciders
and classic meads. That’s our concept. We didn’t want to
bring in a product because everyone just said it was the
best thing. We wanted to have some expertise so we basically
talked with various beer writers, including Michael Jackson
and Roger Protz and others from Europe and later on from the
United States, and others who in our opinion are basically
unbiased. In some cases we take on brands because they meet
our criteria. In others, we might think it is a great brand
but still won’t bring it in.

AC
In recent years, B. United has been active in working with
foreign breweries to produce a variety of new products for
export to the United States. Many of these products are not
even available in their home markets, be it Belgium or
Germany. How did you get started with this approach?
MN
We are a very sensitive company and one of the things we
don’t like is when someone says, “Oh, you guys are just
another importing company.” From the beginning, we’ve tried
to be as creative and innovative as we possibly could.
Obviously, you need to build a relationship with these
brewers so you don’t start off that way. Eventually, we
asked brewers whether they could do something that we either
read about – maybe a classic style that was discontinued, or
just a brand new recipe that might create something unusual
and exciting. Now we have fifteen brands like that we
created or helped to innovate. And the breweries, thanks to
their infinite complexities, executed them and their results
have been tremendous.

AC
One product innovation in particular that has been very
popular is the Houblon Chouffe Dobbelen IPA Tripel produced
by the Brasserie d’Achouffe in Belgium. Can you tell me a
little about how that product came into existence?
MN
Obviously, Belgium is very famous for brewing and one of the
classic styles is the tripel. And in America, one of the
great innovative styles to develop is the double IPA or
imperial IPA or, as some call it, the San Diego IPA. It’s an
intense version of the traditional English IPA. We figured
that maybe somebody should combine them as I like the
character of the Belgian tripel and the dryness of the
American double IPA. We thought this might be a great way to
combine two styles, one classic and one that is brand new.
And we felt that d’Achouffe might be the right brewery to do
it. When we approached them, we didn’t expect them to say
yes because they have been in the past four or five years
very strict about focusing on La Chouffe and on N’Ice
Chouffe. But surprisingly they said yes as long as we
guaranteed them a minimum run and did all the work on label
design.

AC
Is this higher price point market sustainable, be it called
luxury beer or not?
MN
I really think the luxury segment is the opposite of what we
do. Budweiser doing magnum bottles of beer to celebrate New
Year’s Eve is what I associate with the luxury segment but
that’s not what we’re doing. When you look at what has
happened in the United States in the last twenty to
twenty-five years, people have shown they are very
open-minded and very innovative and you can’t really find
anything like that back in Europe. People have had some bad
experiences in the past but they have hung in there and the
beer has become so much better. People here keep trying,
keep experimenting and learning about it. When people try
something like a Schneider Weisse or a La Chouffe, how can
they ever go back to those one-dimensional beers? It just
indicates to me that there is a market for people who are
trading up and I don’t see the end of it to be
honest.

But there is one
trap that you have to avoid and that is you cannot mislead
the customer. The customer is incredibly smart and
sophisticated and people find out very quickly when you
overcharge for something that doesn’t have the flavor. You
have got to be absolutely honest with people and offer them
something very complex. If you do this, I don’t see an end
to this market.

AC
You bring up a point about people suffering through bad beer
in the past and this is an issue I wanted to address with
you. Many brewers do not date their bottles for freshness.
Talk about the challenge of freshness in the face of
charging such a premium price for more flavorful beers.
MN
It’s a very good question. About fifty to sixty percent of
our beers are very strong – and some when we receive them at
our office are actually too young to be released. These need
extended time to age, mature and become ready. Other beers
fall into the category that they should be consumed earlier.
Due to the three-tier system, we try to bring in smaller
shipments. This is very opposite to what many other
importers do. As the specialty beers do not sell as much
volume, a lot of beer will sit in warehouses before it gets
to stores. So the brand will not be fresh when it gets to
the store shelves. I hate that, absolutely hate that. When
shipping from Europe or Japan, we will put together beers
from many breweries before shipping it back instead of
sending a full pallet of one brewery’s beers.

AC
We’ve seen a substantial increase in the price ceiling for
beers in recent years. We are seeing some bottles of Belgian
beers, which sell for five euros in their home market,
selling for more than thirty-dollars here. What are your
thoughts on the price differential we are seeing?
MN
It’s an obviously free market system here in the United
States and it’s not like the former Russia with government
agencies setting the price. I doubt we would like that. My
basic argument is that – in a free market system – if you
don’t like the price point, don’t buy it. That is the free
market idea of supply and demand and I think it works very
well. You can’t forget that here in the United States we are
subject to the three-tier system. Wholesalers work on
margins of thirty to thirty-five percent, retailers work on
margins of thirty to thirty-five percent, and if it goes
into an on-premise restaurant you’re looking at seventy
percent. These are enormous margins that you don’t see in
Europe because there is no three-tier system. A brewery can
sell directly to a consumer. A brewery can sell directly to
a retailer if he wants to do it. Obviously, the three-tier
system adds a lot of price to the final amount. But there
certainly are players out there who seem to be over-priced.
But again, that is the free market system. If the company
makes the decision on the pricing and it sells, then the
price is fair.

AC
What advice do you have for retailers who want to better
cultivate or attract consumers who are willing to spend the
extra dollar or ten for a bottle of beer?
MN
It’s incredibly easy but very few people do it. It all comes
down to making sure your staff is incredibly knowledgeable
and trained and educated. If you have this kind of staff,
they will help develop the kind of informed clientele who
will push you to bring in other things. We have people who
will help you develop a menu of specialty beers that will
help generate money for your account. But you have to have
the commitment to getting the training and giving knowledge
and not many people do that. In many places, if you go into
a store and ask for help, you’re really not getting the type
of assistance you need.

AC
Do you believe there will come a time when we consumers
finally will be unwilling to pay the prices?
MN
It all depends on the quality of what is being brought in,
but it seems like every beer made in Germany and Belgium is
available here in the United States. I believe that it is
possible that somewhere along the way the customer may say,
‘enough is enough’ and if you mislead customers they will
switch to another brand that is not quite as expensive but
is equal in flavor. I don’t really see that the price,
however, is too high right now. If you put our most
eccentric beers up against some of the best wines and
whiskeys in the world, they are still very cheap. Even if
I’m paying twenty dollars for a beer, if it’s exactly what I
expected it to be in terms of complexity, I still think it
is very very cheap.