Beer sales decline: Should the industry be worried?

Earlier this week, The Morning Advertiser (MA)​ reported 35m fewer pints were sold in British pubs​ between July and September of this year.

Trade figures have reacted by warning that failure to support the industry could lead to more pubs closing. The British Beer & Pub Association has called on the Chancellor to freeze beer duty in the Autumn Budget on 22 November, and has labelled current levels of beer tax as “unsustainable”.  

However, not all industry figures are worried. Christian Campbell, manager and landlord of the Cock Tavern freehouse in Hackney, east London, dismissed fears over declining beer sales, insisting that while overall sales may have dropped, the craft sector is booming.

“We are at the centre of Hackney and London's craft brewing renaissance so we are not really subject to the same pressures necessarily as the broader market, and in that context we have not seen a drop in sales. If anything, it is the opposite,” he said. “There's a real buoyancy in the craft beer sector. The number of breweries is increasing every month, and these are things that are driving sales."

“I think innovation in the beer market place is helping drive sales in the sector,” he continued. “We try to be as affordable as possible, and we do think about price, but it isn't price that sells the product. If we get an exciting beer in, people will spend on that and they are not interested on what the price is. They don't mind paying a bit more for a really good quality product.”

Offer better quality 

Jonny Garrett, marketing manager for beer distribution service Cave Direct, echoed this sentiment, stating that pubs should seek to offer better quality to combat slumping sales.

"We’ve seen beer as an overall category shrink, but the speciality and craft sector are growing exceptionally fast,” he said.  “Whatever the cause, as the price of a drink goes up, it is natural customers will want more for their money.

“People have access to cheap beer at home but they go out for a better taste experience. Offering that is how pubs should combat any slump in sales."

Russell Bisset, director of Northern Monk brewery in Leeds, also emphasised the importance of breweries putting quality control at the top of their agenda.  

“I don't know what the market will look like in four or five years but it's just about doing what we do and trying not to look down,” he said.  “There will be many breweries that will struggle but if you have an excellent product and quality is the first and foremost thing you focus on, then I think you will still be able to do well in the UK market.”

“I wouldn't necessarily say we are concerned,” he continued. “I didn't know those exact figures [the 35m drop in sales] because it's not something I try to get involved in. We just keep our eyes on where we want to go and keep up the passion and enthusiasm to make some of the best beers in the world.”

On the subject of whether a cut in beer duty would help combat the overall malaise in the market, Campbell said: “While it [a cut in beer duty] would be useful, it would probably have more of an impact on tied pubs and on the broader market. For a craft beer pub, small brewers relief (a duty discount paid to breweries that produce less than 60,000hl of beer a year) helps the most."

Small brewers relief defended

In a debate in Parliament last week​, Conservative MP for Dudley South Mike Wood stressed that more research needed to be done to ascertain whether small brewer relief, as currently framed, is preventing some brewers from expansion.

However, Campbell dismissed suggestions the fund was stifling the growth potential of craft breweries: “It’s true that the more established brewers are reaching a point and then pausing as a result of the fund but I don't necessarily see that as problematic,” he said. “Do we just want every business to grow to a point where perhaps the quality of the product might suffer?”

“I think it is healthy and positive for new businesses to be able to set up and innovate in a way that doesn't encourage monopolistic growth of businesses to take over a sector.”

Breweries have also been staunch in their defence of the scheme. Bisset told MA​ the scheme had “levelled up the marketplace” and helped small breweries like Northern Monk get a foothold in the marketplace.

"I think it has been great. For us it gave us the opportunity when we started, and it is something we have benefited from,” he said. “We considered whether or not we wanted to break through the initial threshold and go onto the escalator, but actually the cost savings through the economies of scale offset the additional duty costs. In that sense it has worked really well for us and in the way the Government would intend it to work.

“It has levelled up the marketplace and helped a lot of new small brewers get a foothold.”In an interview with MA​ earlier this year, Cloudwater managing director and co-founder Paul Jones warned that an end to small brewers relief​ would cause an end to the craft brewing scene in the UK.

“If small brewers relief finished, micro-breweries would finish in the UK, I'm pretty confident about that,” he said.

“Nobody is sat on a comfortable enough margin to be able to absorb an increase in duty. The small brewers relief is the growth enabler and the marketplace entry enabler that it was designed to be and it needs protecting.”