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Jamie Lawson: asking that government support continue after pubs reopen until distancing measures are no longer necessary and consumer confidence returns


 

Ossett Brewery owner warns of potential pub, brewery closures 

Jamie Lawson is warning of a potential "bloodbath" of hospitality businesses with perhaps as many as half closing should the government not support the trade after it begins to reopen.

The owner of Ossett Brewery also thinks that with less beer being sold in the on-trade once it reopens that it is “inevitable” that there will be resultant brewery closures. 

“There’ll be less custom when we reopen, I don’t think anybody is denying that. To what extent is difficult to know,” he says. 

“Therefore the likelihood is that some brewers are going to fall by the wayside. Unfortunately, it’s an inevitable fallout from this. I just hope that it’s minimised.” 

Lawson says that pubs will initially face extra costs, such as having to provide table service. Against this revenues will be curtailed, with a need for social distancing limiting numbers. 

He adds that there will be a reluctance on the part of pub-goers to return, those who are not yet confident that the spread of Covid-19 has been curtailed. 

“If you’re operating anything really below 60, 70 per cent of your normal sales basis then you’re losing money, quite frankly, to just open.

“And so if there’s no continued support we’re literally looking at a bloodbath in hospitality. There’s no point in mincing words here. If the support finishes before the market is back to full confidence then there will be a bloodbath because people will not be able to be able to pay their bills.”

Lawson argues that to successfully reopen there needs to be a combination of landlord assistance; government support, particularly continuation of the Job Retention Scheme; and sensible practice in the pubs. 

“With a combination of those things done right it is hoped that the majority of hospitality businesses get through it. But without any one of those things I think we could be looking at anything half, two-thirds of hospitality businesses going by the wayside.”

Lawson is calling for support from pub landlords on rental costs in the absence of any income. Ossett has 26 trading sites, of which 11 are mortgaged and the balance are leaseholds of various descriptions. 

Some Ossett landlords have deferred the first three month’s rent but there’s clarity as yet as to the terms of these deferments.
 
“We’ll be looking for a lot more, that’s for sure,” he explains. ”We’ll need that deferment for at least another three and ideally another six to make any difference. And then the terms of that deferment, it’s going to be negotiated on a case-by-case basis, but I think the landlords will have to share some of the pain.

“There’s got to be a kind of mid-point where we share the pain and then the monies that are due form our side are deferred later down the line.”

Moving brewing to off-trade sales

In its brewing operations Ossett is transitioning from its focus on pubs to serving the off-trade. It is packaging additional beer brands in cans, has repackaged warehoused stocks, and has created brewery click and collect and home delivery services. 

There is a 3,000 can per hour line at the brewery in Ossett that before the onset of the coronavirus had been used to package its SALT brands, these from the company’s craft brewery in Saltaire.

Lawson notes that supermarkets seem to be sticking with bottles rather than cans but that there will be discussions with the multiples about switching to Ossett 500ml canned brands, namely core beer range, Excelsius, Silver King and Yorkshire Blonde.

Currently there are SALT brands stocked in Booth’s, Tesco and Morrison’s. Ossett products are on the shelves in Co-op, Morrison’s and, from July, Asda. 

Two-thirds of the brewery staff have been furloughed, leaving 15 people employed with some working from home. The Ossett site is 15,000 square feet internally plus there is the brewery yard, meaning that social distancing isn’t an issue. 

“The team have done an amazing job, really, of adapting the business from what was essentially on on-premise supply chain to pubs and wholesalers that supply pubs … to a completely off premise distribution.”

The brewery’s production, now consisting largely of bottled and canned product, is at 40% or pre Covid-19 levels. Profitability, however, lags behind. 

“Unfortunately, that’s not 40% of profit because the margin on what we do is much smaller,” says Lawson. “It’s probably something between 10 and 15 per cent of profit. That’s just the nature of the beast with off-trade sales.” 

The brewery is also making use of the 650 brewer’s barrels of beer that were in the warehouse prior to the on-trade being locked down. Some of the beer has been repackaged into mini kegs and bag-in-box. Some has also been donated to charities and to the Yorkshire Ambulance Service. 

The best-case scenario, Lawson says, is that between half and two-thirds of the barrelled beer has been repurposed. The remainder will be disposed of with the duty claimed back from HMRC. 

Larry Nelson
26th May 2020

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