Organisations representing the UK’s independent brewers and beer consumers have called for urgent action on energy and support for the sector.
The Society of Independent Brewers (SIBA) and the Campaign for Real Ale (CAMRA) have jointly signed a letter to the Chancellor highlighting the challenges which are putting the future of the UK beer industry at risk.
With brewers facing skyrocketing energy bills, frequent ingredient shortages and price hikes, and consumers unable to afford to support local pubs, the organisations are calling on Government to step in and tackle the issues. This includes an urgent cap on energy prices for small businesses as well as greater support to go green and reduce their energy needs through grants for renewable technology.
There are also concerns that the far reaching reforms to alcohol duty will be delayed from next year including to the game-changing Draught Duty Rate which gives a 5% reduction in duty for beer sold in pubs. The organisations have asked the Government to press ahead and prioritise these changes to help consumers, pubs and the brewing sector, but also expand the scheme to include the containers used by smaller breweries such as 20 and 30 litre casks and kegs.
Roy Allkin, Chairman of the Society of Independent Brewers (SIBA) said:
“With energy bills soaring we are calling on Government to back British beer and help independent brewers with an energy price cap for small businesses, and to offer grants and incentives for the many businesses looking to brew with more green energy.
It is also vital that the Governments plan to tempt people back to the pub with a new discounted draught duty rate is extended to the smaller twenty and thirty litre containers used by small brewers, or risk Global lager brands being the only ones who benefit.”
Nik Antona, Chairman of the Campaign for Real Ale (CAMRA) said:
“Pubs goers and beer drinkers want to see urgent action from government to make sure that the UK’s best beers, brands and breweries can survive these unprecedented times of rocketing energy and ingredient costs and a dip in consumer confidence.
“With businesses having pulled out all the stops to make it through the pandemic, it would be a travesty if more of our local, small and independent breweries were forced to close for good now due to the crisis with the cost of energy, goods, and doing business.”
The organisations have also asked the Government to pause and reflect on new regulations such as the Deposit Return Schemes which will separate the UK’s internal market for beer.
The full letter can be read here.
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The full letter can be read here, or below.
Rt Hon Nadhim Zahawi MP
Chancellor of the Exchequer
1 Horse Guards Road
23 August 2022
As representatives of the UK’s brewers and beer consumers, we are writing to seek your support at a time of grave uncertainty for the UK’s brewing industry.
We have entered one of the most challenging times for the brewing sector, which is facing the combined impact of energy cost increases, regular shortages and a cost-of-living crisis.
Small brewers are reporting that their energy bills are doubling or trebling, putting their future ability to brew at risk. They are regularly reporting shortages of equipment such as kegs, CO2 and cans as well as increasing prices of raw ingredients such as grain. With the recent high temperatures and drought, hop harvests in Europe are expected to be down 20-40% on last year, leading to higher prices and shortages in the months ahead.
This is a time of crisis for consumers too, with many being unable to support their much-loved local pubs and brewers as much as they would like, due to the rising cost of living.
The brewing industry was amongst the worst hit by the pandemic, relying on pubs that were closed by the Government which resulted in beer sales in pubs being down 55% in 2020 and 36% in 2021. Each small brewer came out of the pandemic with approximately £30,000 of debt which they have had to start repaying. We lost 160 active brewers during this period and have seen another 40-60 small brewers close already this year, with more on the brink of survival.
The closure of small and independent breweries poses a threat to consumer choice at the bar and the diversity of high-quality brews which have made the UK’s brewing and beer scene so successful in recent years.
There are ways that the Government can step in to secure the sector’s future and survival into the autumn. We would urge you to consider how the Government can help with the increasing energy and business costs.
An energy cap similar to that for consumers would be a useful immediate first step, as well as applying for the same relief energy-intensive industries receive. Many breweries want to introduce measures to reduce their energy use by installing green technology, and would greatly benefit from tailored Government policies on renewable energy generation and storage, electrolysis and small-scale CO2 recovery systems. While the Government has exempted business rates for green improvements, many of the Government funds available – such as the Industrial Energy Transformation Fund – are only aimed at large businesses.
Equally, the UK’s distilleries benefited from £11 million to help them go green. New grants for the UK’s SMEs would provide the assistance we need to make the transition to new technology.
Brewers and consumers also face uncertainty over the Government’s planned changes to the Alcohol Duty System. In last year’s Budget, the Chancellor announced radical proposals to transform the duty system and introduce a game-changing new Draught Duty Rate which will bring much-needed support to consumers, community pubs and the brewing sector.
However, an announcement on these changes has been delayed until at least the Autumn, putting its delivery at risk. Many brewers have already factored these duty changes into their planning for next year, but do not know if they will happen on time.
When the Draught Duty Rate is introduced we’d encourage you to expand from the proposed 5% discount to 20% to provide a boost for the brewing and hospitality sector and include 20 and 30 litre containers used by small brewers in the scheme.
Brewers are also facing a series of new Government initiatives, which are well meaning intentioned but add to the burden facing the sector. This includes the Deposit Return Scheme which is due to go live in Scotland next year and will then be followed by separate schemes in England, Wales and Northern Ireland, effectively separating the UK’s internal market for beer. We would urge you to work with the devolved administrations to introduce one scheme at a time for an industry trying to heal from the pandemic and now facing a series of new crises.
We hope that you will be able to consider these areas to ensure that the UK brewing industry has a bright future.
Press release from SIBA and CAMRA.