The Society of Independent Brewers (SIBA) has been calling on the Treasury today to suspend beer duty payments due on 25 April and for the next quarter to assist breweries with their cash flow. The industry’s call for beer duty payments to be postponed in March was rejected by the Chancellor.
“Breweries only work on a few weeks of cash flow and the Covid-19 outbreak has decimated our small independent brewers,” James Calder, SIBA’s Chief Executive said. “This is why it is crucial that the Chancellor suspends beer duty so breweries can keep themselves afloat.”
“If they’re left to the mercy of the HMRC’s time to pay arrangements then we may get a repeat of last month where brewers struggled to get through and many of those who did had payments taken anyway.”
Small independent breweries in the UK have been devastated by the impact of the Covid-19 outbreak. Following the closure of pubs last month, brewers have witnessed on average a fall of 82% in sales, with many businesses struggling to survive.
This showed a survey of 282 small independent breweries across the UK, which SIBA conducted from 9-14 April 2020. According to the findings 8 out of 10 brewers do not believe the Government is doing enough to support them with more than half (54%) of the UK’s independent breweries being unable to access any Government support. Nearly a third (29%) are now considering redundancies.
Despite beer production being part of the food supply chain – meaning brewers are designated key workers – with pubs, bars and restaurants closed the main route to market for independent breweries has been entirely cut-off, leading to 65% of breweries stopping production altogether.
“Unlike the Global beer brands who can supply supermarkets in great volume, small independent breweries sell the majority of their beer through pubs, bars and restaurants, meaning the lockdown measures have hit them much harder. While many have launched local delivery services or online shops to try to stay afloat, the increase in online sales is a drop in the ocean compared to the overall decrease their beer sales have seen” said James Calder, SIBA’s Chief Executive.
“Pubs, bars and restaurants have been receiving help from the Government, but none of the same schemes apply to our small breweries who saw their sales fall off a cliff almost overnight. They urgently need a package of measures to keep them going otherwise many won’t be able to reopen.”
The survey shows that 70% of breweries are offering new delivery or takeaway services in order to help supply their local communities with quality independent craft beer, with around 61% of those breweries now offering free delivery to local beer lovers.
SIBA are calling on Government to relax licensing laws to allow the 1 in 4 breweries who don’t have the relevant licenses in place to deliver beer direct to consumers in a variety of ways. The trade association says this should come as part of a targeted package of support for breweries and the brewery supply chain to match the level received by pubs, including making the grants and exemptions from business rates offered to pubs applicable to breweries.
In addition beer duty payments, which are often a brewers single biggest cost which account for 35% of turnover should be deferred by Government to help weather this storm.
The trade association is also working with beer consumer group CAMRA on the ‘Pulling Together’ initiative, which links independent breweries and pubs offering beer delivery and takeaway services with beer lovers across the UK.
