Selling boutique beer: Mission Impossible?

I'm partial to Mike's Place in Jerusalem.  It has a great atmosphere, nice selection of draft beers, friendly waitresses, and you can always find a quiet place for real conversation.  There are tables outside for the summer months, and although the menu is top-heavy with meat, the vegetarian Tex-Mex selections go great with beer.

Only, the beer is not Israeli micro-brewed.  There is one line in the list of bottled beers which says, "Selection of Israeli boutique beer."  And the price for the bottle: 32 shekels!

Udi Kaniel and Reuben Beiser of Mike's Place.

I made an appointment with the two very amiable owner-managers, Udi Kaniel and Reuben Beiser, to find out what was going on.  Their explanations help shed light on the problems faced by Israeli craft beers in the real world of pubs and restaurants.

I put the first question to Udi: "Why 32 shekels for a bottle of beer?"

"You have to understand that our business model is built around beers from the major brewers like Goldstar," Udi explained.  "I'm actually making less profit on a bottle of Israeli craft beer for 32 shekels than I do for a bottle of another beer at 27 shekels, or for a pint of draft beer at 30 shekels.  If I sell the Israeli craft beer for less, it means I don't sell another beer that brings me greater profit.

"We are running a business and that is our calculation."

It's hard to argue with that.  Only a restaurant that's profitable will continue to sell any beer at all.

"What about selling boutique beers on draft," I asked.  "Surely that would bring the price down." 

Mike's Place in Jerusalem: Great atmosphere . . .

"That's another problem," said Reuben.  "We have three very sophisticated refrigeration systems for beer which were paid for and installed by the two big brewers -- Tempo Beer Industries and Israel Beer Breweries -- and the Radex importing company, to be used only for their beers.  It would be unethical if we hooked up kegs of other brewers to their systems."

Udi and Reuben took me to see these refrigeration systems, worth tens of thousands of shekels.  They are located in the kitchen, far from the beer taps at the bars.  Gas propels the beer from the kegs through many meters of micro-tubing in frigid water, where the beer is cooled instantly, and from their through "pythons," thick insulated pipes, to the taps.

So if bottled craft beer is expensive and draft beer is not possible, what can be done?

Udi and Reuben say that Mike's Place does what it can to encourage patrons to buy Israeli craft beers.  "There are customers, mostly tourists, who ask us if we sell any Israeli boutique beers.  We point out what it says on our menu and we tell them about all the beers we have on stock.  We encourage them to try the beers.  We even have our 'six-pack special,' where you order any five bottles of Israeli craft beers and get the sixth one free.  Tourists really like that."    

Mike's Place keeps a changing line-up of Israeli craft beers on stock, depending on which beers are selling the best, and which breweries are offering special discounts and promotions.  When I met with Udi and Reuben, they were selling four kinds of Shapiro beer, two kinds of Jem's, and Alexander Green.

 . . .  and a great bar!

But more must be done by the micro-breweries themselves.    

"They have to do something to get their prices down," says Udi.  "Maybe they can join together in their marketing activities, or to pressure the government for more support and incentives.  The high tax on alcohol has hit the micro-breweries the hardest, while the big beer companies have ways to alleviate the tax hike."

Reuben adds: "The government should be encouraging small businesses like the craft breweries, not try to limit their sales.  They are being treated unfairly."

"Another problem with the micro-brews," says Udi, "is that they can't always supply us with the quantities we need.  Although the bigger of the micro-breweries -- and I'm talking about, for example, Jem's, Alexander, Dancing Camel, Pavo and Shapiro -- are making decent efforts to improve their marketing and production, they still have serious shortcomings.  For example, we recently placed an order with a boutique brewer and when he had to make the delivery, a week later, he was out of that beer!

"The micro-breweries have to do a better job if they're serious about selling their beers."