Sunday, 6 July 2014

Thoughts on brewing and investing

The big brewers are in retreat, globally, because all they are doing is trying to pinch market share off one another, spending millions to push their brands. In the meanwhile, small artisan, or craft brewers, are brewing beer with enthusiasm and passion; they brew because they love what they're doing, not because they have to provide shareholders with a good quarterly set of figures.

The other week in Auchan I heard a woman asking her husband: "Łomża or Perła?", a question unthinkable five years ago, when the question would have simply been "Żywiec, Lech or Tyskie?". Choice now runs deep. Five years ago, I was despondent about the state of Polish brewing. Now, I can see (at Warsaw at least) huge improvements. They've not come from the Big Three - Heineken, Carlsberg and SAB-Miller, but from small breweries intent on creating great beers for consumers who care about taste and quality.

In recent weeks, Auchan has been selling a beer called Lubuskie IPA from Browar Witnica, an India Pale Ale with a taste I remember from my youth, massively hoppy, and unlike Witnica's Chmiel (Hops), it's not sweet. Unless I'm in a specialist beer shop where the choice also includes micro-breweries like Pinta and Ale Browar, the appearance of Lubuskie IPA has wholly satisfied my craving for a hoppy, unsweetened beer.

What's this got to do with investing?

Beer can be made by a small, local company. So can cheese, ham and pork pies. Which makes stock-market listed brewers and food processors susceptible to competition from small, local brewers and makers of quality foodstuffs. Without expensive managers, advertising companies, and other corporate overheads, your money that pays for those things can instead go on quality ingredients.

Lots of things can be made by small, local companies. Furniture, bicycles and clothing for example.

But there are things that can only be made by global corporations - such as airliners, pharmaceuticals and microprocessors.

These are the companies in which you should invest - because they only have to compete against one another, and not have to worry about losing market share to an artisan.

So then - buy locally, from people you know to be passionate about what they do and only invest in companies that make things that are the product of huge research and development budgets and global supply chains.

If you have got any shares in big global brewers - start thinking of divesting yourself of them. Better buy shares in, say, Airbus or Boeing, because while a start-up entrepreneur can brew you a beer, he'll never build you a 500-seat airliner.

This time last year:
Cruisers and low-riders - cycle fashion

This time This time four years ago:
Gone is the threat of Państwo Smoleńskie

This time six years ago:
Bike ride to Święty Krzyż


Alexander said...

It may not be the case in Poland yet, but also small companies do out sourcing.
Clothes made in the Far East, bicycles made in Turkey, are examples I know of products suggesting / pretending to be made by local craftsmen and women.
And also small foodshops buy from whole sellers and importers.
Sometimes just a closer look on small print on the outside of the packing, or the web site shows a different story.

Regards, Alexander

Michael Dembinski said...

Even more reason why not to invest in any company making something that a smaller, more agile one, closer to the market, can make!