The Vultures Are Circling – Pt 2 :

Take a look at that brewery, of a typical size for a Micro being 5bbl (or approx 8 Hl).

Because if the Small Brewers Duty Relief Coagulation (sic) get their way, breweries like this are likely to be priced out of the business.

I’ve learned quite a bit about duty relief this last week – much of which was down to a quite forensic post from Steve Dunkley of Beer Nouveau (read that post here) and feel much the better for it. I like numbers, I like graphs. They are my friends, I understand them.

The members of the SBDRC are quite large (in a brewing sense) businesses. And they spend quite large amounts of money – employing smart and talented people – on PR. Smaller breweries (Let’s say up to 5000 Hl in annual output – THE pertinent figure in this “debate”) can’t afford that. They have to let their product do the talking. Via the tried and tested media of flavour. And design.

The SBDRC have started to respond to the “outcry” sparked by their proposals. About which I feel sure they are unsurprised.

They respond most effectively by the twisting of language. Reaching for the black Thesaurus of PR. Taking a word and finding a shady verbal alternative to paint something in a negative light. It is actually a very simple and effective technique, beloved of politicians everywhere.

A recent article in the trade publication “The Morning Advertiser” provides some wonderful examples from the unnamed “spokesperson for the coalition”. Read that here.

An example : “For brewers brewing under 5000hl of beer per year, the Government provides a 50% discount on beer tax….”

The word used in taxation IS actually “relief”. This relief technique is not unique to breweries. There are all kinds of relief mechanisms across the entire spectrum of taxation.

But then “discount” is a much dirtier word in the business world when compared to “relief”

Another example of PR verbal weaselling :

“…… proposals that will ensure that the vast majority of small brewers are better off and will allow the creation of much closer to a level playing field

Let’s take two elements of this….

Proposals…… vast majority of small brewers are better off

HOW? HOW???

They are proposing to reduce the lower volume level for the 50% relief from 5000hl to 1000hl. So HOW does that make those tiny outfits brewing less that 1000hl better off if they are getting the same relief?

“…. will allow the creation of much closer to a level playing field”

Ah. That beautiful egalitarian phrase. “Level playing field”

How can there be a “level playing field” when a small micro brewery doesn’t have the economies of scale of breweries up to 80 times the size of production?

How can there be a “level playing field” when some of these breweries have substantial tied estates with generations of customers that take that product?

How are these Micros ever going to be able to compete against such resources?

Progressive Beer Duty – or SBDR – (being) a misnomer because once a certain level is reached it is anything but “progressive”. ”

Actually, that is PRECISELY what it is. Progressive. In that it increases gradually and in stages.

The spokesperson stated that the 50% discount offered to breweries producing under 5000hl was an enormous disincentive for growth…. ”

Tell that to Cloudwater. Whose founder Paul Jones in his own figures believes they will increase production to approximately 7500hl in 2018. So you can be progressive, make fabulous beer AND grow past that magic 5000hl figure.

I could go on. Some say that I frequently do. But I’ll be damned if I sit back and just watch whilst the big boys deploy PR verbal weaselling to defend their proposals.

We would lose too many tremendous breweries should they succeed. Breweries and businesses that – let’s not forget – sustain thousands of jobs.

Yes. Not even I will argue that there isn’t overcapacity in brewing. How could there not be with the never ending story of pub closures. There will be a reckoning.

Many Micros are one or two person operations. In the long term, the “rewards” at the smaller end of the production scale simply aren’t worth the enormous effort. Breweries will close. And I will lose some talented friends from the business.

But I’ll be similarly damned if I sit by and watch them close due to the manipulation of taxation relief and government lobbying.

Defend your businesses by all means. But don’t pretend you have the interests of the Micro Breweries of the UK at heart.

You don’t.

8 comments on “The Vultures Are Circling – Pt 2 :

  1. Well said, the Big Brewers have not changed their attitudes in 40+ years, only their m.o. We probably have to reinvigorate CAMRA to push a big campaign.

  2. The onslaught is double edged; people actually believe the craft credentials of the larger breweries. Go in a town centre pub and many don’t realise the craft kegs and some of the handpumps are Marston’s for example.

  3. Jim. This is part reply to your previous post and part to this.

    As we know for sure, beers being sold to pubs at low prices rarely if ever equate to beers to customers at low prices. That’s a worryng aspect too.

    Moving on, to continually allow more and more breweries to be subsidised by the state to enable them to join a declining market is surely worth a raised eyebrow or two? A sensible argument can be made that it is a model that needs revisiting in a saturated market with declining opportunity, though of course, you could argue that within that crowded pond, the resulting cannibalism will sort things out. Sadly such sorting out as takes place may not be the breweries you or I might wish to see leave the market though.

    I don’t have a lot of sympathy for the view that the answer is to spread duty relief in the way the breweries in the SBDRC propose either, but I personally don’t see the harm in reviewing the system to see if, 16 years on, it is still serving the purpose intended, or if a new purpose and definition is needed.

    I’m not sure though, whichever way you look at it, that we can go on exactly as we are, but I do refer to my previous answwer to you about all having their fleas biting them.

    As for the BBPA, I don’t trust that lot with much.

    • But this “subsidy” as you call it is hardly unique. Tariffs, taxation manipulation is a tried & tested government business support tool.

      It works.

      The SBDRC members aren’t in any way concerned with anything other than their own bottom line. They want to increase market share and profits. And use HMG to shoot the fish in the barrel.

      I think we do have common ground in that there are too many breweries chasing the same coin. And yes, some who fall will be / are ones that I personally like. But such is the business. Sometimes, good beer isn’t enough.

      The statement from the “craft” former members of SBDRC points in a direction towards common ground. And is welcome.

      I’m getting the popcorn out….

  4. IMHO, this ‘reckoning’ of which you speak is sadly inevitable. There are too many breweries and not enough pubs or bottle shops to cope. Heartbreaking as it is too consider people’s dreams being dashed on the rocks, didn’t they think about whether there was a market BEFORE purchasing the equipment?

    • I’ve been quite blunt with one or two new setups.

      In this market, a USP is essential. Without it (or exceptional skills and bottomless cash), there is no future.

      Perhaps the future is Brewpubs?

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