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Government not going far enough to aid small brewers in crisis

By rotide
Created 15/06/2020 - 16:58
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In a new survey of small independent brewers in the UK, conducted by the Society of Independent Brewers (SIBA), 84% expect the Coronavirus pandemic and subsequent social distancing measures to have a lasting negative impact on their business and 80% believe the Government are not doing enough to support small breweries.

The survey found a staggering 90% of the UK's independent brewers think the large multinational brewers stand to increase their market share as a result Covid-19, directly to the detriment of small independents.

Competition on price, on 'soft loans' tying down publicans to bland mass market beer and worries about buying choices of pubs are huge concerns in breweries around the UK.

 97% of brewers can be ready to supply pubs by the proposed July 4th opening, but only if the Prime Minister offers a roadmap and guidance on social distancing imminently - brewers need at least 3 weeks notice to open and the clock is ticking. The message to Government on social distancing from brewers was clear: Half of brewers think most pubs aren't economically viable with social distancing at all but a further 47% said they're only viable at 1m of social distance.

  James Calder, SIBA [1] Chief Executive said;

"Getting pubs reopened quickly and safely is simply the first step on the road to recovery for small brewers - for others irreparable damage has already been done. Breweries have not received the same levels of financial support from Government as the rest of the sector, the global brewers are looking to eat our lunch and we face a hugely different, unpredictable and chaotic marketplace when things do re-open.

 Earlier this week SIBA and a cross party group of MPs wrote to the Chancellor calling on him to do more to give our sector a fighting chance:

"We and a cross party group of MPs who love independent beer, need Government to commit to a clear timetable and guidance of pubs re-opening, slash beer duty and extend business rates grants and support to breweries, otherwise the investment Government has made through furlough will go to waste. Opening pubs on the 4th July is a national priority, but without quality beer from local, independent breweries on the bar, what is the point?" Calder added.

Furlough and job losses

'Flexible furlough' has been received well by the UK's indy brewers, with some 53% saying it will help ensure the survival of their businesses, 71% saying it will relieve some pressure on their finances and 65% saying they will use it to phase brewers back into the brewhouse.

 But critically 35% of brewers say flexible furlough won't make any difference to making redundancies, and of brewers planning redundancies we could see as much as 15% of their staff made redundant, hinting at hundreds of job losses across our sector despite the Chancellor's action.

Social distancing in pubs

47% of brewers think most pubs are only viable at 1m of social distance, placing further pressure on the Government to act quickly to change the guidance to match WHO advice.

 But critically 50% of brewers think most pubs aren't viable with social distancing at all, highlighting the need for further support for the UK's smallest bars and micropubs which are popular amongst craft drinkers.

A slim majority of the UK's brewers are comfortable 'visiting a pub, or opening their own pubs at 1m social distancing' (57%), but a staggering 28% think they cannot, or will not open their own venues until a vaccine is developed or the R number drops further.

Readiness ahead of July 4th deadline

As the 4th July approaches we are in urgent need for the Government to commit to a proper timetable and give full guidance ahead of time. 55% of brewers could be ready for reopening now but the rest need as much notice as possible to open, with most remaining needing 2-4 weeks to get ready. With just a 3 week window to the 4th July, the clock is ticking and every day matters.

 Bottling and canning

Since SIBA's last survey in April, the proportion of brewers surveyed who are bottling and canning more of their beer has gone up, from 60%, to 76% showing how important a lifeline can and bottle sales have been during the lockdown period.

66% of brewers intend for bottle and can sales to continue to be an increasingly important part of their sales mix after the lockdown is lifted and life returns to normal, but anecdotal evidence suggests can and bottle sales have dropped off significantly as lockdown restrictions have been lifted.

Overall small pack sales across internet sales, local collection and local delivery are up 91% since pre-lockdown. But total sales are still between 60-80% down showing that cans and bottles have not, and cannot make up the difference lost to pubs.

 Government help

The proportion of brewers who think the Government isn't doing enough has stayed level at 80% since SIBA's prior survey in April, demonstrating the need for Government to spend more time and attention on the issues facing the UK's community focussed small independent brewers who employ people in every constituency in the UK, particularly in the 'red wall' seats in the North of England.

 Biggest Challenges brewers face

 When asked what the main challenges would be when supplying beer to pubs after July 4th most brewers citied 'competition from global brewers', 'cashflow', the 'impact of social distancing in pubs on sales' and the 'lack of clarity from Government' as their biggest challenges.


Source URL:
https://www.newbusiness.co.uk/articles/banking-finance/government-not-going-far-enough-aid-small-brewers-crisis