Categorized | News

Could Small really be the new Big in UK Brewing?

Green shoots from grass roots’: local brewers outperform market

An industry in growth despite challenging market conditions. One that is confident of, and investing for, further expansion over the next year. And one that is ideally placed to benefit hugely from consumers’ increasing engagement with localism. This is the picture of the UK’s smaller brewers that emerges from the annual Local Brewing Industry Report, published today by the Society of Independent Brewers (SIBA).

In marked contrast to the decline in volumes reported by national and global brewers1, the local brewing sector grew by a total of 10 per cent in 2008. Of this, three per cent was contributed by new brewers not operational throughout all of 2007, leaving ‘like for like’ volumes up by an impressive seven per cent.

The growth of the local brewery industry has been achieved through both increased distribution – the average number of pub customers per brewer grew from 79 to 94 last year – and increased rate of sale – throughput of local beers grew by an average of nine per cent over the last two years. While draught ale, through the pub, is the mainstay of the local brewer, accounting for 86 per cent of volumes, bottled beer is growing fast. Last year, bottled beer volumes increased by over 50 per cent, which helped to grow total sales turnover by an average of 20 per cent.

Chief executive of SIBA, Julian Grocock commented, “These are impressive figures that speak volumes for the talent, entrepreneurship and hard work of small brewers throughout the UK. They also demonstrate how the right fiscal support, in the shape of Progressive Beer Duty, can encourage companies not only to thrive, but to invest in their future. We applaud this Government’s commitment to retain PBD, and urge them to reconsider other, punitive aspects of their taxation policy, which risk causing irreparable damage to the sector.”

Beer duty has risen by 17.8 per cent over the last year, a record hike that, coupled with the increased cost of ingredients, fuel and utilities, has hit the margins of smaller brewers. Forty-five per cent of local brewers saw their gross profits fall last year and only one in eight managed to improve their margins.

brewer shovelling spent grain

brewer shovelling spent grain

Despite these adverse conditions, local brewers have continued to invest, proving that Progressive Beer Duty, introduced seven years ago, is still helping to build thriving small breweries able to contribute to their local economy throughout and beyond the current downturn. Local brewers invested for growth last year and are set to spend more this year. During 2009, 81 per cent of local brewers plan to invest in new equipment, 82 per cent in marketing and 75 per cent in increasing brewery capacity to meet rising volume demands.

The confidence in the local brewing sector that underlies these investment plans is also evident in its production estimates for 2009, which anticipate growth of 15 per cent. Although an ambitious figure set against the gloomier outlook for the total UK beer market next year, local brewers have every reason to be cautiously optimistic.

Grocock comments, “Consumers’ desire to shop ethically, and their willingness to pay a premium to do so, are holding firm through the recession. Local beers tick all the boxes for the ethical consumer: genuine provenance, low food miles, sustainable production and contribution to the local economy. If there was ever a right time for the local brewer, it is surely now.”

1 The British Beer & Pub Association’s ‘Beer Barometer’ shows total sales of beer among its members in 2008 were down by 5.5 per cent on the previous year. In the last quarter, total sales were down by 8.3%, and on-trade sales by 9.3 per cent. www.beerandpub.com

Local Brewing Report 2009

Tags | , ,

Saturday, November 25, 11:34 am

Search by Tag