UK: Brewing sector hits back at Prime Minister

Prime Minister Rishi Sunak’s appearance at The Great British Beer Festival (GBBF) has provoked an impassioned response from the beer sector, The Drinks Business reported on August 2.

Sunak, who attended the beer festival at London’s Olympia stadium, was there to promote the government’s changes to alcohol duty, the biggest change to the system in 140 years, which came into effect from 1 August 2023.

Despite the Prime Minister’s efforts, his presence fell flat for brewers and beer business owners since the photo opportunity also followed Sunak’s recent claims that Brexit had secured cheaper beer for Brits, after he told the nation back in the spring: “We reformed the alcohol duties that mean this summer you will be able to get cheaper beer in pubs. These are all very tangible benefits of Brexit that I’ve already delivered.” A self-congratulatory soundbite he has since been heavily criticised by the brewing sector for making, owing to it being too simplistic to give context to the real issues affecting the cost of beer.

Speaking to the drinks business, Lancashire-based Lune Brew Co sales and marketing director Justin Rivett, said: “I don’t think he understands the plight of anyone in the UK right now.”

Continuing, he said, “From a professional point of view, the government seem to have absolutely no plan to look after our breweries and pubs, seeing them as an inconvenience and a nuisance, they keep raising alcohol duty, not doing anything about the rates issue for pubs, and we are all affected by spiralling inflation in ingredients costs, energy costs, CO2 costs and everything else. And then there is the completely unfair tie system that urgently needs reviewing to enable landlords to buy from small independent brewers, and some form of minimum pricing for supermarket beers, especially those from macro brewers to encourage people back into pubs.”

Manchester-based Beer Nouveau head brewer Steve Dunkley chimed in and added: “I don’t even know why he’s there except for pure publicity. Although some of the larger family brewers like Greene King stand to do very well indeed out of these changes.”

Dunkley observed that “if he’s serious about talking to brewers, publicans and drinkers, then he should have done that before such a massive overhaul of the system. That he’s pretending to do so now shows that he didn’t do so beforehand, that there are serious flaws with the new system (else he wouldn’t be out talking), and that he’s not talking to people shows he’s no intention of listening anyway”.

One unified point among the beer industry right now is how disenfranchised they feel from such political decisions that will impact on big beer businesses and pub companies and not be felt by the smaller independent pub and brewery owners who are already juggling many costs.

As rumours of Sunak’s presence at GBBF circulated, with many saying they had glimpsed him laughing “smugly” while enacting a pint-pulling stunt, the move was speculated by attendees as one that only served to further amplify the wider industry’s sense of invisibility with their government right now. As a result, Sunak’s presence as a teetotaller at a national get-together for their industry served as a further blow for many to witness. Some festival attendees noted that seeing Sunak “just playing court to bigger national breweries and trade organisations that are meant to represent all of our views is in poor taste” and explained that seeing those organisations “cosied up” with Sunak for publicity photographs “clanged” somewhat with the “real hardships” people in the sector faced and that this was “just a PR stunt”.

Liverpool-based Neptune Brewery co-founder Julie O’Grady asked: “Why doesn’t he do more to support us with the cost of utility bills given the massive profits these companies are making? Such as British Gas with record profits this year, up 900%. It’s killing small businesses. Also, the unfair duty change he’s just imposed. Only going to support big companies with their volume of production.”

One outcome to the new reforms comes in the form of Draught Duty Relief, which will see pubs benefit from lower alcohol tax on drinks served on tap. Indeed, the duty paid on drinks on tap in pubs will be up to 11p lower than at the supermarket, the government has said. But the beer sector in particular has pointed out that, despite this, many of the smaller business owners are still struggling with costs and more can be done.

Rivett pointed out that “if Rishi really wanted to help small brewers and publicans, he’d review business rates, abolish VAT on drinks bought in pubs and restaurants – giving everyone a 20% reduction from day one – hold a wide-ranging review on duty rates in the UK and introduce legislation to make it far easier to open a ‘micropub’ in some of the empty retail units in our high streets, helping with that issue too.”

Derbyshire-based brewery Thornbridge COO Simon Walkden agreed that “protecting British pubs would be better done by business rates reforms, and getting inflation and interest rate rises under control [because] the gap between the cost of drinks in a pub and from a supermarket has been allowed to widen so much over many years so that this change to the duty regime doesn’t make a material difference”. He highlighted: “A pint of lager in a pub is, say, around £5. The equivalent volume of lager bought in a multipack from a supermarket is less than £1.”

Dunkley admitted, however, that his overriding feeling is that the Prime Minister doesn’t actually truly care about fixing things for those struggling, because if he did he would be listening to the smaller voices that are being drowned out. He lamented: “The cynic in me thinks that he just doesn’t care, and that he’s happy to deal purely with big business and tow the line they give to him. Given how much of the hospitality industry is actually funded by multinationals, things like the BBPA etc need that money to be able to effectively run, but the problem there is the ‘effectively’ part, because while they’re funded by a part of the sector, they are kind of beholden to them, if not heavily influenced by them. So industry bodies and pressure groups with the same story as the large corporations means any outside voices can be lost.”

UK Hospitality CEO Kate Nicholls told the drinks business that the Prime Minister had in fact spoken to people and listened too. Nicholls explained that during Sunak’s time at GBBF, he had spoken to her, as well as with BII CEO Steve Alton, BII non executive director Mike Clist, Punch Pubs strategic corporate affairs & environmental social and governance lead Jon Dale and Titanic Brewery managing director Keith Bott along with representatives from Greene King and CAMRA. The topics of conversation ranged from an overview on trading and cost price inflation, as well as “the need to tackle energy costs in particular to see prices falling in the supply chain and the overall tax burden.

But Dunkley pointed out how such “organisations are too concerned with ‘being at the table’ that they’re not realising they’re being ignored, but they don’t want to kick up a fuss. I don’t think it matters what anyone says until the organisations are much more brutally vocal about it all”.

There is evidence that many not invited to the table for discussion still wish that they could have a say. For instance, London bottleshop Hop Burns & Black co-founder Jen Ferguson said that, given the chance to speak to the Prime Minister, she “would ask him about his family’s company’s recent £1bn investment into oil and gas, and why he has chosen short term greed over the future of this planet. Does he realise that his drop in draught beer duty will be shortly wiped out by the massive increase in ingredient costs due to the climate chaos he continues to fuel?”

Ferguson admitted that she is “still cringing at that awful photo opp at Fourpure a couple of years back” where Sunak and former Prime Minister Boris Johnson held a photoshoot during October 2021 brandishing beer kegs to promote a cut in the duty charged on draught beer, yet failed to recognise that the keg size they proudly held would not qualify for the tax relief under their proposals – a gaffe that showed their lack of understanding about the sector.

Nicholls insisted, however, that Sunak had listened to the trade and that the topics addressed were “the underlying positive growth potential for the sector – forecast to grow six times faster than the as a whole over next five years” and the chance to “drive real gross domestic product (GDP) growth and generate jobs and investment locally on the back of that”.

Nicholls did state, however, that the government needs to help the industry “to first get through cost price inflation and energy crisis in particular” and hinted that “implementing the Ofgem reforms and encouraging energy suppliers and banks to renegotiate and address cost headwinds would accelerate that”.

Giving a level view on the appearance of the Prime Minister, Suffolk-based Adnams Brewery production director, Fergus Fitzgerald, said he recognised the issue from both sides – the political opportunity to shed light on some of the changes as much as the ruffled feathers among the beer industry.

Fitzgerald told db: “There are some positive moves in the duty changes, the reduction on beer duty under 3.4% ABV is welcome, and has a better chance of success than the same policy that was pursued since 2012 for beer under 2.8% ABV. Similarly, the principle of draught beer in pubs being taxed less than beer in supermarkets is one that most breweries would support. We can discuss whether this could have been better achieved using a VAT reduction, or whether the higher costs right now is compatible with a desire to reduce inflation, but there is a need to raise revenue.”

He explained: “What isn’t helpful for any brewery or pub is the picture that has been painted that beer will now be cheaper. This is not true, and while the category of beers under 3.4% ABV may grow due to this reduced rate, it is not currently significant, and draught beer duty as a whole has not reduced. It has stayed still. Building an expectation that prices will now reduce is unhelpful for an Industry that is already stressed.”

Fitzgerald added that the reason why everyone is so cross is because “the current positioning feels like it’s more about generating some positive news for the Conservatives and not the honest grown up politics we need right now”.

But, when asked what the industry could do in response, Fitzgerald insisted: “We should keep pointing out when he’s factually wrong, and the reality vs the spin. The real pressures on businesses. But really we are now in an election cycle. So it won’t end until there is a new government. I think most businesses want to stay out of the politics, but we can all call out inaccuracies”.

04 August, 2023