St Austell CEO: tax burden on sector is ‘punitive’

The boss at St Austell Brewery – which earlier this week reported record turnover for two years in a row​ – told The Morning Advertiser​ he believes there is a high degree of disillusionment with politics at the moment.

“Nobody seems to be able to articulate a clear vision for where they want this wonderful country to be and we seem to be making policies on the hoof,” he said.

“I find that pretty depressing, if I’m honest. The country is crying out for more inspirational leadership from our politicians to set out a clear vision for the country and then bring policies in to demonstrate how they’re going to do it. That’s what’s lacking.”

He added the on-trade needs and what a much more fair and incentivising tax regime.

He said: “We have made the case continually that the tax burden on our sector is disproportionate, unfair and punitive.

“As the Euros start, if you’re cheering on England or Scotland, you’re going to be paying 54p of duty on that pint of beer when you’re sat in the pub watching the game whereas if you’re cheering on Germany or Spain, you’ll be paying 5p in duty.

“It’s an extraordinarily punitive approach to tax on our sector. And, traditional industries that operate in high streets, in communities, in villages, in buildings and employ lots of people are being disproportionately taxed versus emerging sectors such as digital, which are clearly the future, to some extent. The tax burden needs to be shared more fairly and evenly.”

Investing heavily​

He added that Phil Thorley recorded an interview with The Morning Advertiser​​ recently and called it “the difference between bricks and clicks”, and said the online economy needs to be considered and traditional industries can’t continually be expected to pay disproportionate amounts of tax all the time.

“We are investing heavily in our industry, we are employing lots of people, we create huge opportunities for young people, in particular, we create social cohesion, we’re part of the fabric of the country,” he explained. “The policy making that’s in play at the minute is actually hindering us and is unfair and punitive.

“I don’t want it to appear like we’re moaning and whinging because we’ve invested £23m in our business down in the south-west and our peers across the country are all investing in their businesses – but we’re doing it despite the economic and regulatory context.

“There’s a real opportunity for our sector to play a significant role in the primary objective of both of the political parties, which is to get the country back into growth but they need to think more.

“They need to think and they need to listen more about creating the environment through which we can play that significant role in growing the economy, creating employment, creating opportunities and helping bring communities back together again.”

On St Austell Brewery’s recent results, he said 2023 was a very strong year of progress for the business and was delighted with the progress the business has made and the financial results, in particular that it was a second successive year of record turnover and, importantly, which is “a bit more unusual in the sector”  that operating profits rose by 15% and that puts the Cornish company “at the top of the market for 2023”.

He explained: “Our managed houses had a particularly strong year and it’s part of the business we’ve been really focused on and invested in. Our like for likes in our managed business in 2023 were up 20% and our profits are now back ahead of pre-pandemic levels and that’s despite £2.5m of like-for-like increase in energy costs and all the significant levels of inflation.

“Our investments and acquisitions are performing well and ahead of expectations.

“We sold 16 pubs to Red Oak in the summer of last year and some of the proceeds from that have been reinvested into buying Bath Pub Company, which is performing very well for us. “

Cask and craft investments to continue​

He said St Austell is winning market share in all parts of the business: in its managed pubs, beer business, in the off-trade and on-trade while team engagement scores have also increased and its customer advocacy metrics are improving across the businesses as well.

“We’re still very much focused on releasing the potential we’ve got in our managed business, so there’s a strong focus on continuing to invest and improve the customer experience in our managed pubs. There’s still more to do,” Georgel admitted.

“We’re going to continue to invest in the cask category, which is obviously having a challenging time at the moment, but we’re championing the cause.

“We are evolving our portfolio: we invested into Harbour Brewing Company, a modern craft Cornish brewer and have a 36% equity stake in that business and it’s going extremely well. This means we are evolving our portfolio to meet the needs of the future.

“We’re finding ways to support our tenanted business because clearly it remains a challenging market and the onus is on us to support them as much as we can and we’re seeing a robust performance.”

The business has recently refreshed the Proper Job beer brand, which comes in a number of formats but is very much a cask beer.

It also added Anthem to its cask beer range last year, which is an all-English hops cask beer from brewing director Georgina Young and her team.

Georgel said: “She’s fantastic. We’re blessed to have her. She doesn’t get involved in Harbour. She’s there to support but we’re very fiercely protecting the independence of Harbour Brewing. It’s their business and we’re there to support and share experience and knowledge but they remain very much an independent business in which we’ve invested. They’ve got some great brewers in that business already but clearly we do share some of our knowledge and expertise where appropriate.”

St Austell has also created a joint venture with ETM in London and created its first premium sports bar and kitchen in Bath site called Ludo, which Georgel said is a “really exciting innovation for us”.