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National chairman Ian Fozard: some brewers are doing well but others are struggling

SIBA AGM: duty reform, big brewers top concerns

Calls for unity and a strategy for clawing market share from the global brewers were the key themes at the Society of Independent Brewers (SIBA) annual general meeting. 

Staged at BeerX in Liverpool, chair Ian Fozard, of Rooster’s Brewery, opened the meeting by describing “a tough beer market” for smaller brewers that have to compete against “the sheer market power” of the major players.

“Consumers would say small brewers have never had it so good. They see investment in growth and crowdfunding campaigns, and the perception is that small breweries are prospering. But all the evidence I’m seeing is that brewery numbers are falling, and many businesses are not profitable.

“Some are doing well, but others are struggling.”

The keys to success, he added, are “product excellence, marketing and knowing the cost of what you produce – selling at a loss damages the market for everyone”.

Following last year’s acrimonious AGM, dominated by disagreements over Small Brewers’ Duty Relief (SBR), he insisted on maintaining solidarity.

“SIBA is a broad church and we must resist the temptation to retreat into factions. We are facing a challenge to keep SBR and the organisation lobbies centrally in your interests – would a smaller society have the access to government that SIBA enjoys? 

“We’re a respected trade body and we must stick together.”

A motion supporting SIBA’s position on the government’s review of SBR – which stands against reducing relief for any small brewer while “smoothing the cliff-edge” of the higher duty band encountered as a brewer’s production exceeds 5,000 hectolitres in a year – was passed overwhelmingly.

“Some are arguing for a reduction in relief for brewers brewing less than 5,000 hectolitres, which would be a serious threat to their existence,” said Fozard, citing an average figure of £33,000 a year that would be lost.

“SIBA also believes SBR needs reform to smooth the cliff-edge for brewers going above 5,000 hectolitres which only deters those that want to grow and penalises those that do.

“The simple truth is that duty is too high for all brewers, but the largest brewers have economies of scale we can only dream about.”

For the status quo

Only one delegate spoke against the motion. Dave Shaw of Big Hand Brewing in Wrexham argued that any reform was not in the interests of SIBA members and there should be no change to SBR.

Following the vote, chief executive Mike Benner said the organisation would continue to lobby for its position, which would cost the government only £9 million a year to implement. 

But Benner that that’s not the only challenge SIBA faces.

“There’s a lot coming our way. It seems to be non-stop. There are threats from deposit return schemes, the Pubs Code review of undrinkable sediment allowance and the Portman Code for alcohol unit limit on non-resealable packaging remains an issue.”

Membership is down from 830 to 750, he reported, as a result of increasing business closures, but overall production by SIBA members was up 0.8%.

“Some 88% of the UK market is held by four global brewers and we have to take share back,” he said. “Pubs are closing at an alarming rate and we need to open that market further. The craft beer market is maturing, and access is as restricted as it ever was.”

A survey for SIBA’s new Craft Beer Report that showed only 2% of consumers associate craft beer with global brewers was “a fantastic starting point” for a strategy to promote small brewers and open up new channels, including the 66% of on-trade licences that are not pubs.

“In contrast 43% identify craft with small independent brewers and 45% are happy to pay more for it.”

The theme was taken up by keynote speaker Emma Inch, host of the Fermentation Radio podcast and the reigning British Guild of Beer Writers’ Beer Writer of the Year, who urged brewers to “reach out to normal people”.

“Our conversations tend to take place within an echo chamber. But we’re not normal. Some people think beer is just a drink – though most of them share our values.”

“Younger people are still going out,” she said. “But they want an experience and that’s something small brewers can take advantage of, with a tap room, for instance, and tastings.

“People are drinking less, and lower alcohol beer is one way they’re doing it. The secret is to reach out and communicate with these people, use social media. 

“For women the main barrier is still male-oriented advertising. If you advertise solely to men or use marketing that belittles, alienates or stereotypes women, you are excluding half your potential customer base.”

And for the majority of people who drink global beers, small brewers have “a secret weapon”.

“In a globalised world there’s an increasing interest in the provenance of food and drink - 15% of consumers are described ‘belief-driven buyers’. You need to show them they’re not excluded from craft beer and throw open the doors of the echo chamber.”. 

Phil Mellows
29th March 2019

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