Skip to main content

The death of the hospoda or the beginning of a golden age?


So, I was going to write something about alternative beers and capitalism (no joke), but Alan's wondering about the discounts Wal-Mart will have on craft beer got me thinking about something that was on several news outlets last week, Czechs are drinking more beer at home than at pubs.

Contrary to what the linked iDnes article says, this is nothing new, but a trend that started in 2010, when bottled beer outsold draft for the first time (that year, overall production of beer in the Czech Republic had dropped by 7.9%).

Although I still believe the impact of demographic changes, people and companies moving to the peripheries of large towns, which resulted in many being forced to commute by car, has been more significant than given credit for, it'd be silly to deny that the crisis, or in this country largely the perception thereof, has played a major role. But regardless of the reasons, people are indeed spending less at pubs and restaurants, and some may have even shifted a substantial part of their consumption out of them.

The iDnes article also mentions the difference in pricing between kegs (sold to pubs) and bottles (final price at supermarkets), which reminded me of a great piece Pivní Recenze wrote that last year on this issue (I can't find the link, sorry).

When I moved here in 2002 there wasn't that much difference between the price of a bottle of beer at a supermarket and a pint of the same brand at a neighbourhood pub. Now it's completely different, whereas prices at supermarkets have remained almost unchanged, the price of beer at pubs has in some cases almost doubled. As Pivní Recenze explains, this is because pubs today are buying beer, especially bigger brands like Gambrinus, at a higher price per volume what consumers pay at supermarkets, even though production and sales costs of bottled beer are quite higher than keg's. The conclusion is pretty obvious, breweries are subsidising the prices they are forced to give supermarket chains at the expense of pubs.

Could it be then that it is the breweries who are driving pubs out of business?

Well, not quite. About two months ago, the daily E15 reported on the topic of pub closures, and the chairman of the relevant trade association was quoted saying that ”our pubs have very uneven quality, some are very good, on the other hand, there are many that offer low quality and won't be able to survive long”. In other words, crap pubs are more likely to close than good ones.

This, of course, shouldn't surprise anyone. When going on the piss stops being something you can afford doing a couple of times a week, and becomes something almost reserved for special occasions, many people will become more selective and will tend towards those places that will offer better value. No wonder then that the largest Czech brewers are working so hard on their gastro-pub chains. Last July, in Nám. Míru, Vinohradský Parlament opened, which seems to be the first branch of a new chain by Staropramen, and on the opposite side of the square a new chain-looking Gambrinus pub, whose name I've forgotten, opened last week.

But, gastropub chains notwithstanding, if the the largest breweries aren't driving pubs out of business could it be that they are screwing themselves up to the point that they are putting their market dominance at risk?

Yes, it is still true that almost half of the beer drunk in this country comes from Plzeňský Prazdroj, with the other two multinationals, Staropramen and Heineken making another 30% or so. The problem is that this takes the Czech beer market as something more or less uniform, when the reality is that the off-trade and the on-trade have very, very different dynamics.

Their impressive logistic structures give the largest brewers a massive advantage in the off-trade. They can get their beers anywhere in no time, that's why you'll find Braník at the remotest grocery store, but regional breweries can't afford such luxury and that, together with their lower price flexibility, pushes them out of a substantial part of this market.

The on-trade on the other hand, is a lot more competitive. If those wonferful maps that Pivídky have put together are statistically relevant (and I think they are), they indicate that regional brewers, even small ones, are kings of their realms. They compensate their lack of infrastructure with proximity to the clients (and their local character, too).

What is most curious about this, though, is that the renaissance of the Czech regional breweries and the microbrewery boom, which is more evident at the bar than on the shelves, started pretty much at the same time as the industry stopped growing and began shrinking. I don't believe this is a coincidence, these two things must be connected.

In times when people are more selective, offering something different than the rest can bring customers through the door, which is the reason the owners of a couple of at the time new pubs gave me for their choosing smaller brands; they didn't want to have what everybody else around had. This can also help to revitalise existing, struggling establishments. The owner of the pub of my village that has Únětická 10° told me that the rather Hrabalian reason behind her decision: a couple of the old štamgasty had died and she thought having that beer would bring new customers and compensate for the loss. Jáma could tell a very similar story (death free, though), one that goes back more than three years, and I could give even more examples.

To some extent, this desire to be somehow different is something that Stella Artois used very effectively in the mid noughties to get the brand in, for example, pizzerias and not few trendy places of the time. We can see this happening again now with the new breed of cafés, pubs and bars that have been growing like mushrooms all over Prague, albeit with rather better beers. The difference, though, is that the owners seem to be more proactive and selective about the breweries they decide to work with, often choosing beers they themselves have a personal attachment to. I doubt breweries like KocourMatuška, Únětice or Břevnov, among many others, would have been as successful as they are now ten years ago.

To all this we should add the fact that more often than not, regional and not few micro brands are cheaper than the big ones.

Near I.P. Pavlova there's a nicotinous, old school dive called U Demníky. This place has always been a Pilsner Urquell and Gambrinus den, but earlier this year I noticed that they started selling Hubertus 10º (Kácov) and Krakonoš 12º, both at a significantly lower price than the other two. Guess what I see most people drinking every time I drop by for a quick pint.

Now, I believe Hubertus is far superior to Gambáč, and I'm sure most of you will agree with me, but at the same time, it's very possible that many of the patrons in this pub don't give a third of a fuck about flavour, and that they are responding solely to the price; and, as it often happens, when all other things are equal or comparable, cheaper makes better.

 However, there are still tonnes of pubs, especially in small towns and villages, with short-sighted and timid owners who refuse change. But how much longer can they last with an ageing and ever less affluent clientèle and little, if anything, to attract new business?

Whatever the fortunes of those places may turn out to be, what we are seeing here is a trend that is already irreversible. One that, if the shelves of Tesco and Kaufland are anything to go by, might be spilling to the off-trade.

Interesting times are ahead and, a lover of good beer who values diversity, I couldn't be happier.

Na Zdraví!

Comments