The philosophy at Binjai Brew has always been to make beers that are familiar yet different, and in doing so, we hoped that would push the boundaries of what beer could be in Singapore. When we launched, we started off with Error 404, an India Pale Lager, Sol Mate, a French Saison, and Alt-O, a German Altbier, each beer being a refreshing twist of what was in the market.
Our lineup, however never consisted of an India Pale Ale (IPA), the beer which started the craft beer revolution. Many a time, when out on sales runs, restaurants or bars would ask us if we had an IPA and well, we didn’t. It was a conscious choice on our part because 2 out of 3 of us were not a fan of IPAs. Then came a challenge by an Indian restaurant, brew an IPA that pairs well with Indian food and that’s what we tried to do.
Covid-19 was still taking shape in China, and at that point, we didn’t think it would envelope the world in uncertainty the way it did. Haji Lane was still packed to the brim, and the Indian restaurant was sure that they would be able to sell it on tap. We went ahead with the brew but two weeks later, things had changed in Singapore. We were in a circuit breaker daze and people couldn’t enjoy beers on site anymore. Online sales had picked up and we decided to sell it online. The beer was to be called Hop Forward, as Covid-19 had struck the world, and how we wished we could hop forward into better times. And well, IPAs are hop forward beers too.
However, the finished beer had an astringency which we just couldn’t appreciate, and the decision was made to not launch Hop Forward. We had to stomach a loss which consisted of cost incurred on printed labels, and tax that was paid on the beer which could not be refunded. We had been making progress in the past couple of months, sales were improving, so it did make the loss easier to swallow, but even then, we cannot afford to have this happen again.
Economics vs Innovation
As a small company, where cash flow is critical to our survival, there is a dilemma when it comes to dumping a bad batch. On one end, there is a likelihood that we would still be able to sell that batch of beer and reap the profits associated with it. However, we would be doing so at the expense of our brand. In the craft beer world, customers have come to expect regular innovation, and innovation comes at a cost, which in this case, is a bad batch of beer.
In Singapore, tax on beer is paid in advance based on the expected alcohol by volume, which, in the case of Hop Forward, amounted to $3/litre. The tax on a litre of Hop Forward alone, could buy 2 litres of milk or a small serving of chicken rice. There is a case to be made that paying tax before a beer is made, is prohibitive of innovation.
A possible work around to this problem is to pay tax on the finished product instead of prior to brewing, and to penalise for wastage, a wastage fee is incurred instead of the brewer bearing the full tax duty on beer that will not be sold.
What happened to Hop Forward?
Instead of dumping Hop Forward outright, we found other ways to use it. We passed some beer to a restaurant so that they could make beer battered delicacies and the remaining beer which we have left, we are using it to experiment on how to package an IPA effectively. Beers which contain a lot of hops need to be consumed quickly as hops degrade over time, so experimentation on IPA packaging is a worthy endeavour for when our next IPA is released.