New research from the Society of Independent Brewers (SIBA) shows that the UK’s independent breweries are struggling to cope with a fall in beer sales, just as the government threatens them with increased taxes.
This previously small but booming sector is now under threat, with the global lockdown seeing a considerable drop in beer sales.
Even after pubs and restaurants started to re-open this summer, beer sales remained at just 51% of what they would have expected for a normal July, and the new 10pm curfew and rules around table-service only have given pubs and brewery taprooms another hurdle to jump.
The fall in sales comes just as the government is set to slash the small brewers’ relief, which was introduced to take account of these firms’ relatively high cost of production and to allow them to compete with global brewers.
The government is yet to reveal exactly how much these taxes will rise, and it is this uncertainty which means 58% of brewers say they are delaying investment, 51% are delaying employing new staff, and 49% are delaying growing their brewing capacity — with just 4% of respondents greeting the government’s proposed tax changes positively.
SIBA chief executive, James Calder, said: “This new data shows very clearly that breweries are delaying investment and growth as they simply do not know what their tax bill will look like in the future.
“It is making a very difficult situation near impossible for small independent breweries across the UK — businesses which have been hit extremely hard by coronavirus.
“Breweries saw their sales slashed by over 80% when pubs closed, and even in July, once things had re-opened, sales were at half of what we would have usually expected. The timing of announcing a tax rise for many small brewers could not be worse.”
‘The changes as proposed would seriously damage what has been something of a British success story in recent years’
Conservative MP and former pubs minister, Andrew Percy, is backing small brewers and says the proposed changes would seriously damage the industry.
He said: “The growth of small and craft breweries across the UK in recent years has been something of a jobs and economic success story. As well as supporting new jobs in brewing directly, this growth has supported jobs and businesses right across the country, be that farmers, local pubs, or bottle shops.
“This has been, in no small part, thanks to support offered by the small brewers’ rate relief. This relief has led to a revolution in brewing whilst, at the same time, increasing choice for consumers and introducing consumers — especially younger consumers — to new styles of beer.
“The changes as proposed would seriously damage what has been something of a British success story in recent years, and one of the few bright spots in what has been a difficult decade for our local pubs.”
This research follows the launch of a petition to back local beer, calling on the government to reverse their proposed tax rise that would affect up to 150 small breweries. The petition, started by John Hobday, of Anspach & Hobday, has reached more than 40,000 signatures in a few weeks and now has the support of CAMRA. You can sign the petition here.
CAMRA’s chief executive, Tom Stainer, said: “These figures highlight the fragile situation that our brewing industry is in following lockdown, and why the government’s proposed tax increase for some of the smallest brewers poses a real threat to competition and consumer choice.
“We need the government to rethink their plans for changes to small brewers’ relief to make sure that our local and small brewers can overcome the challenges they have faced during the coronavirus crisis and can invest and grow in the future. This is why it’s so important that all CAMRA members and beer lovers back the petition on the Parlaiment.uk website today.”
Key findings from the research
- 58% delaying investment into business
- 51% Delaying employing new staff
- 49% delaying increasing capacity
- 2% say it has encouraged them to make investment into business
- 2% say it has encouraged them to increase capacity
The covid factor
- Beer sales halved: sales at 51% of what brewers would have expected for a normal July.
- Breweries did not produce as much beer this summer due to covid: 68% of breweries have remained trading, but brewed fewer times; 11% temporarily closed the brewery, but have now re-opened, 8% remained the same throughout; 6% remained trading but didn’t brew.
- Staffing levels still lower: 35% of staff back full-time following furlough, and 30% back part-time .
- Government lack of support: 90% of respondents do not believe the government are doing enough to help small independent brewers
- Global brewers grabbing market share: 96% of respondents think the large multinational brewers stand to increase their market share from covid-19 to the detriment of small independent brewers overall.
- Lasting negative impact on industry: 64% expect covid to have a strong negative impact on their business throughout 2020 and 2021; 27% except a moderate negative impact; 4% expect a neutral impact; 2% expect a moderate positive impact; and 2% expect a strong positive impact.