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POINT OF BREW ---- Michael J. Lewis

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Finding the Appropriate Balance Between Profit and Beer

Many years ago in I attended an Institute of Brewing lecture in Edinburgh or Manchester or somewhere. 

The speaker was an executive recently appointed to a senior position at a major brewery though his experience was in finance. 

He quickly came to the point of his lecture:

“Gentlemen, (no women present in those days) let me remind you we are not in the business of making beer we are in the business of making money.”

Now brewers always have been, are now, and always will be very proud of the fact that brewers make beer. It is the central focus of brewers’ art and science and endeavor; it gets no better for brewers than to know that they make a superior pint that is enjoyed and appreciated by their customers who return to it time and again because they enjoy it and gain pleasure from it. For brewers to submerge their commitment to beer quality and excellence under the rubric of making money, and to define making money as the objective of their labor is an insult.

The senior executive who thought brewers make money, not beer, did not last long and doubtless soon returned to the stock exchange where he could regale his colleagues with the quaint commitment of brewers to what they proudly do: make beer. 

The senior executive has a point, however.

Brewing companies and brewers are in business to make money. Brewers make large investments in technology and infrastructure and skilled labor to take relatively cheap raw materials (malts, hops and water) to make beer and put the product on draft in their tap-rooms or (even more expensive) put it on supermarket shelves in bottles or cans. Of course this must be done at a profit for the brewers, the wholesalers and retailers otherwise the system grinds to a halt.

So there are two ways of looking at things and a healthy balance between the two aspects is a wise and even essential approach: we can evaluate things capitalistically or socialistically. Investments are made to achieve a goal; then (painting with a broad brush) capitalistically the profits accrue to the investor as cash and socialistically the profits accrue to the community as goods and services and perhaps better wages.

Workers go to work every day capitalistically to earn a living wage and socialistically to render a service from which the community profits. This applies whether a plumber, a priest, a policeman, a pilot, a ploughman or a professor is at work and generally we understand the capital/social balance each case represents.

I suggest, on the other hand, that we do not understand well the capital/social balance of, for example, education, health care and climate change; ideas about these issues will likely arise in the 2020 election season now (God forbid!) upon us.

Some candidates for president propose that a college education should be available at little or no cost; many voters think that is a breathtaking and revolutionary proposal. Maybe that amazes us because we are accustomed to thinking of education beyond K-12 in capitalistic terms. That is, students invest in their own education for their own benefit and that investment will pay off for them in cash as high income in a few years of employment. We ignore the huge benefit to the community as a whole of education, of making use of all our talent and human resources, that is, its socialistic aspects. Hence we easily accept the idea that the financial burden many students (and their families) take on is justified and we reject the idea that it should be at least substantially if not wholly refunded as fantastical.

Similarly, many view health care in a capitalistic way as a prudent protection for the assets of a family against catastrophic loss caused by serious illness and surgery.  But socialistically a healthy population contributes mightily to the general good of society. It is odd that we discount that idea and leave tens of millions who cannot afford such protection for assets they do not have. The determined effort of the present administration to destroy Obamacare, an attempt to address this issue, mystifies me. As a community, a society and as a nation we lose out on so much potential.

The dangers of climate change are impending and imponderable and similarly have capitalistic and socialistic aspects. Breweries, among many other industries and businesses, are “going green”. This means aggressively searching out wasteful practices and fixing them, adding recyclable elements into processes to save water and energy and installing energy generating systems such as biomass fermentation, wind turbines and of course solar arrays. Now, you might well ask the question: Are they doing this socialistically for the good of society to reduce the weight they place upon the planet? Are they doing it capitalistically to save money by going substantially “off the grid”, and to promote their “greenness” to customers?

I’m sure my senior executive, with whom I opened this column, would like the chance to restate his argument. He might remind us that it is not all about making money or all about making beer, but about finding the appropriate balance between the two.

 

Michael J Lewis MUG Picmonkey

Michael J. Lewis, Ph.D., is professor emeritus of brewing science at the University of California, Davis, and the academic director and lead instructor of UC Davis Extension’s Professional Brewing Programs. Lewis has been honored with the Master Brewers Association of the Americas’ Award of Merit and the Brewers Association’s Recognition Award. He is an elected fellow of the Institute of Brewing & Distilling. He is also a recipient of the UC Davis Distinguished Teaching Award.

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