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Local brewers are ‘thriving today, threatened tomorrow’ claims new report

A decade of Government investment in local brewing has produced an industry that is thriving today, but whose future is threatened by punitive levels of beer taxation, claims the Local Beer Report 2012, published today by the Society of Independent Brewers (SIBA).

Small Breweries’ Relief (SBR), introduced in 2002, demonstrates the power of targeted investment. In those 10 years, SIBA’s membership has grown from 235 to 550 brewers, most of them small businesses providing local jobs, contributing to the local economy and providing consumers in the UK with one of the widest ranges of quality beers enjoyed anywhere in the world.

Volume sales by SIBA members grew by 9.7% last year – compared to a -3.5% decline in the UK beer market overall – while the number of employees in member breweries increased by 25% and two-thirds of brewers invested in new premises and/or equipment to meet growing demand.

Yet, despite the evident success of SBR, the same Government seems intent on destroying these smaller brewers’ main route to market – the great British pub.

Economic arguments aside, current beer taxation policy also runs counter to the Government’s stated aim of combating alcohol-related harm. Consumers are shifting from draught beer, a drink with relatively low alcohol content, to stronger alcoholic drinks purchased cheaply from the supermarket.  It also encourages consumers to replace the supervised environment of the pub with the uncontrolled setting of the home or local play park.

Julian Grocock, SIBA’s chief executive, said, “The Government’s policies on beer duty are quite clearly failing to produce the desired result – of encouraging more consumers to drink alcohol responsibly and in moderation.  The type of drinking, in fact,  that is evident in thousands of pubs where consumers enjoy a couple of pints of draught beer as part of a social interaction rather than an end in itself.

“What frustrates us, in our pre-Budget campaigning this year, as in previous years, is the Government’s inconsistent approach to local brewing.  They can see the positive results of their investment, in the form of SBR, and yet they seem unable to apply the same logic to pubs, which are, like small brewers, capable of making a valuable contribution to their local economy.  The current beer taxation regime amounts to disinvestment in the local brewing industry.“

The Local Beer Report is based on a survey of 264 SIBA members – just over half of the 520 at the time of survey. Respondents included all sizes of brewer – micro, local and regional – reflecting the association’s membership. Almost half fall into its ‘Level 1’ category, producing fewer than 1,000 HL of beer annually.

Investment by respondents indicates confidence in continued demand for their beers. 65% of them made significant capital investment in 2011. Since setting up their brewery – which is within the last decade for two-thirds of respondents – 63% of them have had to increase brewing capacity, several of them more than twice. When asked to rate their spending priorities for 2012, new equipment and added capacity top the list with new staff close behind.

Draught beer makes up 82% of SIBA brewers’ output and 97% of this is cask beer. The number of real ales brewed by SIBA members is now estimated at around 3,000 permanent brands plus a further 4,000 seasonal ales and specials – to which can be added approximately 2,000 bottled beers. And while bitter is still a staple for most SIBA brewers, they are also producing porters, stouts, IPAs, barley wines, old ales and other innovative styles. It is this diversity, coupled with quality, that continues to drive interest in the craft beer sector.

Local brewers are proud of their ethical and environmental credentials, with around half the survey respondents committed to reducing energy and water usage, packaging and ‘beer miles’. Around one-fifth answered positively to a new question about building ‘green’ premises using bio-materials, energy conserving design and heat-exchange systems.  Investment of duty relief in such green technology is another powerful argument in favour of SBR.

SIBA itself continues to develop its services to members, helping them to bring their beers to market through its Direct Delivery Scheme (DDS). Sales of DDS grew by £6.6% in 2011, to £10.2 million, taking local beers to over 2,100 pubs nationally.  SIBA’s Cellar Services aim to improve the quality of members’ beer dispense, while they also have access to a helpline for brewing technical questions.

Grocock says, “This, our 10th report on local brewing, once again highlights the valuable contribution made by the sector. Smaller brewers have built a vibrant craft brewing industry in the UK, creating thousands of jobs, providing consumers with an enviable choice of draught beers which can only be enjoyed in the pub.

“We urge the Government to consider the evidence presented by SIBA and by other industry organisations and ask themselves what kind of future they want for the UK, socially and economically.  If it is one where pubs continue to play a vital role at the heart of their community, and where beer is once again seen as our national drink, then they must take urgent steps to rebalance excise duties in favour of both.”

To view the Local Beer Report in full, please visit www.siba.co.uk

Caption to attached image: the bar at SIBA’s National Beer Competition 2012 held at the Canalhouse, Nottingham

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Notes to editors

  • The SIBA Local Beer Report 2012 is based on a survey of 264 SIBA members, conducted during autumn 2011. The Report is now in its 10th year. In addition to survey submissions, Local Beer draws on definitive production statistics used for SIBA’s calculation of its members’ annual subscriptions

 

  • SIBA was founded in 1980 as the Small Independent Brewers Association by 20 pioneering microbrewers. Today, it has around 550 members, the majority classed as ‘micro’ or ‘local’ brewers and its campaigning success – particularly achieving the introduction of Small Breweries’ Relief 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.
  • 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. All SIBA full brewing members produce fewer than 2,000,000 HL
  • Small Breweries’ Relief was introduced in June 2002 after a 20 year campaign by SIBA. 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.

Issued on behalf of:                Society of Independent Brewers

By:                                           ShielPorter Communications

For information:                      Ros Shiel: 07841 694137 / ros@shielporter.com