Independent brewers booming as consumers switch to local beer
Handpulls on the bar at the SIBA National Beer Competition 2012
Local beer is offering a lifeline to Britain’s troubled brewing and pub industries, with volume sales up by an estimated 6.8 per cent last year to over 1.4 million barrels, according to the Local Beer Report, published today by the Society of Independent Brewers (SIBA). Over the same period, on-trade beer sales overall declined by 4.7 per cent (BBPA Beer Barometer).
The report, based on a survey of 315 brewers belonging to SIBA – around 50 per cent of its total membership – celebrates local beer as a British success story. Local brewers now employ nearly 5,000 people directly and the majority are investing to generate further growth and employment opportunities. At the same time, their brewing skill and innovation is providing the UK’s drinkers with a staggering 3,200 permanent ales encompassing a wide diversity of beer styles.
While many larger brewers and pubs are cutting staff numbers, SIBA members expanded their workforce by 25 per cent last year. Reflecting the labour-intensive nature of craft brewing, SIBA’s smaller brewers employ one person for every 500 hectolitres produced, compared to one per 3,000 HL in larger breweries.
SIBA chief executive Julian Grocock said, “The local brewing industry described in this report is one that we should all be raising a large glass to, such is its positive contribution to the economic and social health of the nation.
“Local brewing is unusual, if not unique, as a British manufacturing industry that is increasing production and market share, welcoming new producers, generating significant employment, investing for a sustainable future and contributing economically and socially to the hundreds of localities where independent brewers are based.”
BeerX, SIBA’s celebration of British beer and brewing, will continue the themes of the Local Beer Report. BeerX is a new event this year, taking place in Sheffield on 13 – 16 March. On 15 March, a number of speakers from the brewing industry in the UK and abroad, as well as politicians and one TV chef, will set out their vision for British beer. BeerX also includes a Festival of Beer, offering some 600 beers to trade and consumer visitors.
SBR and the ‘investment dividend’
Fundamental to the success of the local brewing industry is Small Breweries’ Relief (SBR), the relief on beer duty for smaller brewers, introduced in 2002. The report states that “the crucial role of government through the introduction of SBR cannot be underestimated,” and adds that 85 per cent of survey respondents would struggle without SBR, and more than half believe their brewery would fail.
Small Breweries’ Relief is a powerful demonstration of the benefits of targeted investment. Small brewers in receipt of SBR are, almost universally, using the saving to secure their brewery’s future. Last year, two-thirds of SIBA brewers invested in their brewery, with new equipment and quality systems – to ensure their beers are of the highest standard – at the top of the priority list, followed by marketing, staff recruitment and training. Using SBR savings simply to discount beers is not a priority for most SIBA members, despite the very competitive market.
SIBA chief executive Julian Grocock said, “On average, SIBA brewers re-invested 23 per cent of turnover in 2012, demonstrating real confidence in the prospects for their business. This young, buoyant local brewing industry, creating employment and contributing to local economies and communities across the country, is, as we term it in the report, the ‘investment dividend’ that the government continues to reap from SBR.”
He added, “Given the clear connection between investment and a thriving industry, we remain baffled by the government’s stance on beer duty, which amounts to a disinvestment in the same industry that they are supporting with SBR. This year, as in previous years, SIBA is urging the Chancellor to extend their investment in British beer, by abolishing the unpopular, outdated and ineffective beer duty escalator.”
Forty year campaign
Today’s local brewers are indebted not only to Gordon Brown, who as Chancellor in 2002 introduced SBR, but also to the consumer revolt that led to CAMRA’s foundation in 1971 and to the 20 or so pioneering microbrewers who started SIBA in 1980.
As the report points out, the stand these brewers and drinkers took against the seemingly unstoppable tide of brewery takeovers, mergers and closures, prevented the realisation of The Beer Drinker’s Companion prediction in 1973 that, “…another 10 years could see the eclipse of the regional independent brewer and the supply of all beer vested in the hands of a few large combines.”
The rejuvenation of Britain’s local brewers has completely reversed this grim trend. Their growing numbers and geographical diversity also counters the accepted wisdom that manufacturing industry must concentrate to prosper. Local beer has been at the forefront of the drive by the British craft food and drink sector to respond to growing consumer demand for local products with genuine provenance.
Diversity and innovation
The proliferation of British brewers has been more than matched by that of the beers they produce. The 308 cask ales listed in the Good Beer Guide of 1977 has turned into a 25-page index in the 2013 edition, listing 4,500 beers in regular production. SIBA members account for 3,200 of these, as well as an estimated 5,000 seasonal ales and 2,500 bottled beers.
The last 30+ years have also seen an explosion of beer styles. Golden ales are almost universally brewed – by 94 per cent of the survey respondents – although traditional bitter increased its share slightly last year. Historic styles including stouts, porters, barley wines and India Pale Ales have enjoyed a resurgence, while influences from across the brewing world are also exerting an influence on British craft brewing.
Eighty-five per cent of SIBA members’ output is cask ale – a 5 per cent increase on last year’s figure. Sixteen per cent are producing some keg beer, while 75 per cent offer bottled beers.
Grocock comments, “The plethora of beers produced by smaller brewers has transformed the pub visit for millions of drinkers. In many cases it has also transformed the fortunes of the pub: as a drink that can only be enjoyed in the on-trade, draught beer is giving a growing band of appreciative consumers a reason to drink in the pub, rather than buy beer more cheaply from the supermarket for consumption at home.”
Bringing beers to market
Ensuring its members had the best possible opportunity to bring their goods to market was SIBA’s founding principle and led to the Access to Market initiative, established in the late 1990s. The Direct Delivery Scheme, launched in 2002, is the most commercially successful output of the scheme, with sales of more than £12 million last year – a 3 per cent increase on 2011.
However, as tie relaxations and alternative free-of-tie buying take hold in a growing number of pub estates, DDS sales have begun to level out, replaced by direct sales by SIBA brewers. SIBA continues to explore opportunities with pub operators and off-trade retailers this at will make it easier for its members to put their beers in front of a larger audience of prospective buyers.
Building sustainable business
SIBA members are committed to building businesses that are not only successful but sustainable. Brewers of all sizes demonstrate exceptional environmental credentials: 72 per cent are committed to reducing their energy usage, 68 per cent are reviewing their water usage and half are looking at ways to reduce their packaging and ‘beer miles’.
Perhaps the most sustainable element of the local brewer’s business, however, is the beer itself. A glass of local beer, enjoyed in a local pub, is much more than just a drink. Its relatively low ABV means it is never requested for its ‘alcohol hit’, but is instead the responsible drinker’s choice, to be savoured while relaxing with friends, or to accompany a pub meal.
Grocock said, “SIBA’s 11th Local Beer Report, once again highlights the valuable contribution made by smaller brewers to their local economies and communities.
“Small Breweries’ Relief has helped the nation’s entrepreneurial brewers to create a vibrant, young, craft brewing industry, creating thousands of jobs, and investing in the communities where they are based and which in turn support them, creating a virtuous circle of local sustainability.”
Click here for the report
