22 February 2010
Growth through recession for resilient local brewing industry

Over a million hectolitres brewed for the first time, sales growth of nearly 4% in a year of deep recession, increased on-trade listings despite record pub closures, and investment in the equipment, staff and technology for brewery expansion, are highlighted in the annual Local Brewing Industry Report, published today by the Society of Independent Brewers (SIBA).

While the overall UK beer market declined by 4.2% last year1, the local brewing sector achieved an impressive 3.75% increase in volume sales. Three-quarters of all local brewers recorded volume growth in 2009 and on average, they achieved a 17% increase in turnover. And the number of pubs sourcing local beers through SIBA’s direct delivery scheme (DDS) grew by 12% – a reflection of local cask ale’s unique ability to help pubs weather the recessionary storm.

SIBA’s chief executive Julian Grocock said, “Over 60% of our members were founded after 2000, so the current recession is the most severe they have traded through. That the vast majority managed a sales uplift last year and are anticipating the same in 2010 speaks volumes about the resilience and resourcefulness of the UK’s quality independent brewers.”

This year’s report from SIBA contains the organisation’s pre-Election manifesto, which highlights the current Government’s ‘schizophrenic’ approach to the local brewing industry. The list leads with a commitment to retaining Progressive Beer Duty (PBD), introduced in 2002, and is followed by a series of other fiscal strategies such as cancelling the beer duty escalator, freezing beer duty and considering lower duty rates for lower strength beers.


Grocock explains, “The Government’s support for PBD is welcomed and has helped the formation and growth of many smaller brewers, whom it claims to support. Yet, with its punitive taxation policies, which have meant a 20% rise in beer duty over the last two years2, it appears set on destroying them.

“We urge whoever is elected in May to take a fresh look at the local brewing industry. Cask ale – which accounts for over 80% of our output – is a relatively low alcohol drink, served in the controlled environment of a pub where drinking is part of a social occasion, rather than an end in itself. As such, we deserve to be treated as part of the solution to alcohol-related harm, rather than part of the problem.”

Elsewhere, the Local Brewing Industry Report contains much worth raising a glass to. Local brewers continue to use PBD to build their businesses, by adding capacity, buying new equipment and marketing their beers, while a sizeable minority also state an ambition to buy a pub during 2010. Much of the investment planned by SIBA brewers is directed at the communities where they are based and which in turn support them, creating a virtuous circle of local sustainability.

Regardless of the political colour of the next Government, SIBA members demonstrate exceptional green credentials. Some 80% are committed to reducing their energy usage, more than half are looking at ways to reduce their packaging and ‘food miles’, and a similar number source ingredients locally. Sixteen per cent either already brew organic beers or plan to do so.

Grocock comments, “The UK’s local brewing industry, though rooted in tradition, is a relatively young one. Most of our members are younger than SIBA itself, which celebrates its 30th anniversary this year. Our success through the past few, exceptionally tough years, however, surely demonstrates that local ales are no passing fad, but a permanent asset that can offer a much-needed boost to the nation’s troubled pub trade.”
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Sources
1. British Beer & Pub Association’s ‘Beer Barometer’ www.beerandpub.com
2. Beer duty was increased by 2 per cent in the April 2009 Budget. In the previous year there was a 9.1 per cent increase in the Budget in March 2008, and a further increase in beer duty of 8.0 per cent was announced in the Pre-Budget Report in November 2008. The total increase since March 2008 is 20.1 per cent – a tax increase of £600 million.


Notes to editors

1. The SIBA Local Brewing Industry Report 2010 is based on a survey of around 200 SIBA members, conducted during November and December 2009. Members who participated in the survey were all brewers producing fewer than 30,000 hectolitres per annum. The Report is now in its eighth year.

2. SIBA was founded in 1980 as the Small Independent Brewers Association by 20 pioneering microbrewers. Today, it has around 450 members, the majority of them classed as ‘micro’ or ‘local’ brewers and its growing credibility and campaigning success – particularly achieving the introduction of Progressive Beer Duty in 2002 – have established it as one of the most authoritative bodies in the brewing industry. SIBA was renamed as the Society of Independent Brewers in 1995, but retains its original acronym.

3. HM Revenue and Customs defines a microbrewer as producing up to 5,000 hectolitres (HL) per annum, and a local brewer between 5,000 and 30,000 HL. Above that, a regional brewer produces 30,000-2,000,000 HL, and a national brewer in excess of 2,000,000 HL

4. Progressive Beer Duty (PBD) was introduced in June 2002 after a 20 year campaign. Originally, it offered relief on duty only to brewers producing up to 30,000 HL, but was extended in 2004 to an upper limit of 60,000 HL. 86% of SIBA’s members currently receive the maximum 50% relief on duty, and only five receive nothing at all.

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Issued on behalf of: Society of Independent Brewers

By: Shiel Communications

For information: Ros Shiel
07841 694137 / 01403 267971
ros@shielcomms.co.uk

Julian Grocock
01949 843136 / 07702 201582

Date of issue: 19 February 2010