Two consecutive cuts in beer duty in the last two Budgets and the end of the Beer Duty Escalator have helped fuel sales growth, boosted employment and encouraged investment in the independent brewing sector as confidence rises according to SIBA’s British Beer Report.
According to an analysis of independent brewer members of SIBA in British Beer 2015, which will be published on 19 March by the Society of Independent Brewers (SIBA), production by SIBA members grew by an estimated 15.8% per cent in 2014 to 2.99 million hectolitres or 526 million pints. Added to the 9.4% increase in 2013, this broadly translates into a 25% uplift in sales since the Beer Duty Escalator was abolished in March 2013. From 2011-2012, before the duty cuts, production grew by only 5.7%.
British Beer isbased on survey responses from 270 SIBA brewers and was written by Dr Ignazio Cabras, a leading economist with an interest in beer, based at Newcastle Business School at the University of Northumbria. This is the first time that the survey has been carried out independently using new survey methodology.
It is estimated that 1,600 jobs were created at SIBA member independent breweries during 2013 and 2014. The sector creates much-needed local employment, often in rural and deprived areas with around two-thirds of employees living within five miles of their brewery.
The huge majority of independent brewers plan to recruit over the next 12 months, with 83% of them planning to create one or more jobs, and 38% planning two or more new jobs which could result in around 840 new jobs. They are also committed to training, with 77% planning to invest in this area.
The majority of SIBA members invested in their breweries last year, with 12% spending more than £100,000. New brewing equipment, new premises and staff recruitment were the most popular investments by members during 2014, and are indicators of their future growth ambitions: 85% plan to increase their production and annual turnover in the next three years with around 20% hoping to double their current levels.
As well as the benefits of the two duty cuts, British Beer highlights the importance of Small Breweries’ Relief (SBR) to the sector. Over 70% of brewers say SBR is ‘vital’, with a further 24% saying it is very important or important. The survey shows that duty savings are invested mainly in creating more capacity, new equipment, pub acquisition and new staff.
SIBA managing director Mike Benner said, “The results of the survey clearly demonstrate how the two consecutive cuts in beer duty and end of the Beer Duty Escalator have had a positive impact on independent British brewing and have boosted confidence. Our members have invested the duty savings in their businesses, buying new brewing equipment, increasing production and recruiting new staff.
“By announcing a third cut in beer duty in next week’s Budget, the Government can ensure that the momentum of the previous cuts is maintained and the independent brewing sector, now recovering and starting to thrive after years of unfair taxation, continues to grow, bringing jobs and investment to hundreds of local economies around the country.”
Dr. Ignazio Cabras said, “After years of studying the UK’s breweries and pubs at many levels, it was fascinating to work with SIBA on this report. With two years of data since the end of the Beer Duty Escalator, we can track growing confidence among independent brewers, which translates into investment in their business. It will be interesting to see how a third duty cut, if introduced, will have an impact on the sector and particularly on developing and sustaining exports.”
The full British Beer report will be published on 19 March at SIBA’s BeerX annual celebration of British beer and brewing in Sheffield, when Benner will deliver the organisation’s first ever strategic plan. ‘The Future of British Beer’, will set out SIBA’s direction for the next three years.