Rural Development Sub-Committee
Inquiry into the Wine. Beer and Cider Industry in Wales
Response from The Association of Welsh Independent Brewers
Thank you for the opportunity to submit information on the Welsh Brewing Industry to your inquiry.
The Association of Welsh Independent Brewers was set up formally in 2009 in order to promote and market Welsh brewers and Welsh beers. We firmly believe that Welsh brewers and beers are some of the finest in the UK, and even in the world (2 Welsh brewers were awarded Gold Medals at the 2009 International Beer Challenge). We believe that the Welsh cultural identity is strong and recognisable, but perhaps not as well known as it ought to be.
Your letter asks for responses to specific questions about our industry, so I will try to answer these for you:
What contribution does the beer industry make to the agriculture, food and tourism sectors to the Welsh economy and what opportunities exist for developing this further?
Agriculture
At the moment, not as much as we would like Traditional beers, (the members of AWIB all brew their beers in the traditional manner), are brewed using water, (which we have in excellent quality and abundance in Wales), malted barley (and occasionally other cereals), hops and yeast.
Barley production in Wales is, to my knowledge, mainly centered on feed and food production, with only a tiny proportion of Welsh barley going to the maltings. Malting barley needs to be grown to very exacting specifications, and will cost the farmer significantly more to grow - which is all well and good if the barley makes the grade, but is very bad news if adverse conditions, etc, means that the barley is not suitable for malting at the end of the season. Not many farmers appear to be willing to take the risk. I have been speaking with Robin Appel Ltd and Warminster Maltings to see if we can find more Welsh-grown malting barley to use in our breweries - this is an ongoing project. The current situation is that there are potential sources of high quality malting barley in Pembrokeshire and North Wales, and these farmers are being given the opportunity and help that means that these might become long term sources of the best quality malt suitable for Welsh Brewers. As an aside there are no official figures for malting Barley grown in Wales, as the Maltsters Association only define Scotland and England as growing areas, with any malting barley grown in Wales agglomerated into the English figures…
Hops - at present only very small quantities of hops are grown in Wales, although Tom Newman of the Celt Experience Brewery has set up a company to grow hops in the South Wales Valleys. So far, only trials have taken place, but the results were very promising. More details can be found at www.welshhops.co.uk .
Food
I’ll take a liberty here and assume this means the food and drink sector! Welsh Brewing is making an ever more important contribution to this Sector - the number of Breweries in Wales has grown significantly since the introduction of Progressive Beer Duty in 2002, and the quality and consistency of these brewers continues to be recognised in awards, distinctions and contracts. Welsh Brewers have made a real impact on the national CAMRA (Campaign for Real Ale) and SIBA (the Society of Independent Brewers) awards, as well as international awards, and of course, at the True Taste of Wales awards! Export activity is on the increase, and the reputation of Welsh beer continues to grow. At the moment there are some 40 active breweries in Wales, all contributing to local employment and local identity. In the wider sector, breweries, either directly or indirectly, bring employment to pubs, clubs, bars, distribution companies etc etc, and the taxation that we pay contributes a huge amount to the Treasury.
Tourism
Wales is rightly famed for being a beautiful country, and contains many of the leading tourism destinations within the UK. Local Breweries contribute hugely to local identity, and offer opportunities for co-operation with local events and local organisations. As an example, the Breconshire Brewery has created beers in collaboration with, and frequently for the direct benefit of various groups, including : the Brecon Beacons National Park, the Infantry Battle School, the Wellspring Fellowship, the Brecknock Wildlife Trust, the Brecon Mountain Rescue Team and so on. These kinds of collaborations are happening all over Wales, and provide direct links to the local community.
Both CAMRA and SIBA have collected and presented evidence that local beers enhance the perception of a pub, especially in a tourist environment, leading to longer stay time, greater spend and a greater chance of repeat business.
Opportunities to improve the current situation
- Help and encouragement for farmers to grow the barley and hops required to have more Welsh beers brewed with Welsh ingredients
- Ongoing, and improved, support for Welsh Breweries in the wider markets - the True Taste marketing team and the W.A.G. have created some excellent opportunities for us to promote our businesses, for example at the IFE exhibition in London, and at the Taste of London, the BBC Good Food Show, and so on. Safeguarding these opportunities and increasing the scope of them would be extremely desirable. It would be great if True Taste could come up with a way of promoting cask beer, rather than just bottles, which not all brewers produce. Exactly how will require some more thought, but anything that promotes the main marketplace of the brewers - the pubs - must be a good thing.
- Help in developing tourist trails that highlight the best of Welsh pubs and breweries, such as the Cambrian Rail Ale leaflet. Further investment in public transport that runs later into the evening, especially in rural areas would be extremely beneficial. Perhaps the creation of a website that showcases the best Welsh pubs, brewers, producers, visitor attractions, etc?
- What barriers to development are faced by the beer industry and how could these be overcome?
There are many barriers to trade for Welsh brewers to contend with, some specific to Wales, others applying to all UK Brewers.
Access to Market
Access to Market is probably the biggest challenge for Independent Breweries in Wales. This is true for both the on-trade and the off-trade. I am aware that the W.A.G. has various programmes of assistance for producers to meet multiple retailer buyers and for assistance in obtaining listings and even exports. However, I would like to see some of these programmes concentrating on the smaller multiple retailers, and on a more localised level. There is also a lot of concern about the effectiveness and value for money of some of these programmes. Welsh Country magazine hosted a meeting between Elin Jones AM and a number of food and drink producers in Aberystwyth last year, and the debate from this meeting is on-going.
The On Trade is more complicated. In Wales, we are fortunate in that the 2 biggest pub-owning breweries (Brains and Felinfoel) both run Guest Ale programmes for their pubs, so there is potential for the other Welsh breweries to have their beers sold in these pubs. However, there are a large number of pubs owned by the PubCos, especially in the more “touristy” areas, and these are significantly more difficult to sell beers to. There are only a tiny minority of these pubs that are allowed to buy their (cask) beers from their chosen supplier(s), but instead have to buy, at inflated costs, from a central list. It is the norm that brewers who want their beers to appear on these lists have to pay a listing fee to the PubCo, and offer substantial discounts, that are absorbed by the PubCo. The exception to this is SIBA’s DDS (Direct Delivery Scheme), which allows for beers to be ordered centrally, but delivered direct to the pubs. However, it is by no means a perfect system - it is open only to members of SIBA who have paid the relevant listing fee, and offers only the opportunity to have 3 of their beers listed with various PubCos, (Enterprise Inns, Punch Taverns, Admiral Inns, etc), whose selected tenants are then able to order and purchase these beers, assuming they are allowed to join the scheme. However, as the beers ordered through DDS are expensive, (margin for the PubCo), and do not count towards a pub’s barrelage figures, (on which discounts and Area Managers’ bonuses are based), there is a huge disincentive for pubs to be allowed to join or use the scheme. The latest figures for active DDS pubs in Wales (ie those pubs ordering 1 or more casks per week) indicate that only 22 pubs in Wales are using the scheme. On the positive side, where DDS does work, it is successful, in that there is an opportunity for local brewers to have their beers stocked in local pubs, without having to deliver to a central depot, and to have only one account and invoice system for all pubs in the scheme. Both SIBA’s and CAMRA’s research shows that pubs that stock a local ale tend to outperform pubs that do not, on both customer dwell time, customer spend and repeat custom. Offering local beers and local produce is generally perceived to be the sign of a better, higher quality establishment.
We regard it as a great shame that the OFT saw fit to quote SIBA’s DDS as a reason to dismiss CAMRA’s Super-Complaint on the mechanism of the beer tie - it shows how little the OFT understands about the state of the market and how it operates. SIBA’s DDS, whilst being a success on a UK scale, is by no means a solution to the problem of Access to Market, and the latest figures from SIBA DDS of just 22 pubs in Wales actively using the scheme make DDS an irrelevancy in Wales.
Hopefully the ongoing central Government review of the operation of the Beer Tie will force some form of reform. It must be noted that the de minimus regulations mean that only estates of more than 500 pubs would be effected by any change in the Beer Tie regulations, so any material change in the law would only effect those pubs in Wales owned by the PubCos and the small number owned by the Super-Regional brewers (Marstons, Greene King and Wells & Young).
A potential way forward for Welsh breweries (and other producers) would be some form of legislation to allow all retailers the opportunity to stock a local product of their choice, thus promoting Welsh producers, the Welsh economy and the Welsh identity.
Bureaucracy
Whilst the 2005 Licensing Act ushered in the opportunity for more relaxed opening hours for pubs, it also brought frightening amounts of red tape and massively increased costs to the brewing industry. The cost and complexity of obtaining licenses to brew and sell beer have multiplied almost exponentially since the introduction of the Act, and the costs are ongoing. I suspect however the biggest problems arise for those of us who operate in 2 or more local government areas - the variation in responses to the same question pitched to different licensing or planning authorities is mind boggling, and the utter inflexibility in the systems is baffling. For example, a Temporary Event Notice (TEN) needs to be applied for 10 days before the event - although this in fact equates to 12 working days before the event, as neither the day of the event nor the day the application arrives count towards these “10 days”. If a complication arises, meaning postponement of the event is required, a new TEN is required, with its “10 day” notice period - the licensing officers have no power of discretion to alter the TEN to suit. This compares very poorly with the previous system under the magistrates.
Planning legislation
This requires both tightening and relaxing… It would be good to see planning legislation beefed up to protect community pubs which are faced with the prospect of closure. There have been many instances of pub operators actively running a pub business down so as to be able to sell the pub for redevelopment, or convert it to a dwelling, which will be worth more on the market. This practice can rob communities of their valuable assets. Where the legislation needs relaxing is in respect to minor variations to pubs - at present the full planning (and licensing) legislation needs to be followed, where common sense and discretion could prevail. We would also like to see the practice of selling licensed premises with restrictive covenants on them prohibiting their further use as licensed premises outlawed.
Taxation
Beer Duty has been on an upward spiral for some time now, in contrast with virtually all other forms of alcoholic drink. Spirits (which is the Duty band for alcopops) have enjoyed a relatively easy ride under the present administration, and cider producers benefit from a very generous allowance and flat rates of Duty. We strongly feel that beer, and in particular cask beer, is not
the drink of binge drinkers, and the consistent misrepresentation of beer in news items about binge drinking is actively damaging the public perception of beer and brewers. We would join with CAMRA and others in urging for Duty on beer to be cut, with the taxation made up by increasing the rates of Duty on spirits, wines and cider, so as to create a level field. We also feel that lobbying the European Parliament for a change in the rules allowing for a separate, lower Duty rate on draught beer, which can only be available in pubs and bars, where drinking is done in a supervised, convivial environment, would not only boost our industry, but work towards combating binge drinking and the problems associated with that. We also would urge that pressure is brought to bear on the Treasury to maintain Progressive Beer Duty, without which many of the small breweries in Wales might become unviable.
Business Rates
Rural and Community pubs are in trouble - the number of pubs shutting each week is terrifying - the loss to communities is almost incalculable. The recent decision to remove rural rate relief has no doubt accelerated the rate of pub closures. We would like to see some form of Rate Relief scheme reintroduced to help protect and promote rural and community pubs.
Pricing
We feel that the practice of below-cost sales of alcohol is both irresponsible and immoral, and legislation should be enacted to outlaw the practice. Would the Welsh Assembly Government be able to enact legislation such as this?
Whilst the concept of minimum pricing per unit of alcohol looks attractive, we have reservations about the price of our products being set by Government.
Education
Traditional beers suffer from being combined with all other drinks, despite the fact that moderate consumption can actually have health benefits - cask ale contains no fat, but does have important levels of vitamins and minerals, as well antioxidants derived from the hops. However, woe betide any brewer who dares to make such a claim - the Advertising Standards Authority have acted swiftly and draconically against any brewery advertising that might point this out (qv Gales’ bar mats with the “Vitamins in Beer” concept).
I mentioned earlier that the Press, when covering a story on binge drinking, invariably show a Hand Pump (associated only with Cask Ale). More needs to be done to convince the Press to get the facts right.
Likewise, the concept of 24 hour drinking in relation to the 2005 Licensing Act is a Press created fallacy, and is one that continues to be perpetuated by ill-informed politicians and lazy reporters - the total number of 24 hour licenses in place in Wales is a tiny percentage of the total number of licenses issued, and of those, only a tiny minority refer to the on trade, and of those, only a very few are actually operational - i.e. we are talking about a small number of mostly hotel bars who have 24 hour licenses to continue to be able to serve their residents when required, as per the situation under the Magistrates. The sooner that people understand that “24 hour drinking” is a misconception, the better.
Under Age Sales
The current attitude by the majority of Police Forces is to prosecute a person making a sale of alcohol to a minor, not the minor for attempting to make the purchase. This attitude is backed up by Trading Standards Officers who issue posters stating “It is an offense to sell Alcohol to anyone under the age of 18”, which is correct for the staff of a licensed premises, but these are aimed at the public. My suggestion is that these notices should state “It is an offense to buy, or attempt to buy alcohol if you are below the age of 18. It is also an offense to buy, or attempt to buy alcohol for another person who is below 18 years old”, and for the Police to actively prosecute minors who buy or attempt buy alcohol. This would immediately increase the threat of punishment to minors, and may significantly reduce the incidences of under-age drinking.
There are also arguments for working on a system to allow people under the age of 18 to drink in certain pubs - pubs are supervised environments, controlled by responsible, licensed retailers, where young people can learn how to drink sensibly, in moderation, and learn self-responsibility and respect. I’m sure that if a straw poll was undertaken for the members of the Sub-Committee, the majority of its members will have had a drink in a pub, or other venue, before they were legally allowed to do so, and are no worse a person for having done so…
How much use is made of locally produced basic ingredients by the beer industry and what opportunities are provided within these industries in Wales for crop diversification?
The simple answer is not enough, and lots! I have discussed the current situation with regard to the main raw materials supply - and I am hopeful that the situation is changing for the better, as market demand increases, so local supply will. There is a strong demand for Welsh beers with Welsh identities, and this means providing Welsh grown raw materials. However, that said, there are a number of grains and hops that are in use in Welsh beers that are not, and can not be, grown in Wales. On the other hand, there are specific ‘unusual’ ingredients, (honey, nettles, elderflowers, bog myrtle, fruits, etc), used in Welsh beers, that are actively sourced as locally as possible to the brewery.
Overall, the situation is a positive one, and I look forward to the not too distant future where Welsh malt and Welsh hops are sought after and respected all over the world, for their quality and excellence.
Does the planning system facilitate or hamper development, and what changes would be desirable?
Again, this has been covered to a certain degree above. Clearer and more consistent response from the different local authorities is highly desirable, as is a lessening of the bureaucracy involved with the running of our businesses.
One easily attainable objective that would improve the current situation would be if the Welsh Assembly adopted and enacted the Sustainable Communities Act.
How effective is current promotion of Welsh beer as quality products in Wales and beyond?
Becoming better and better. However, the vast majority of the W.A.G.’s promotion of Welsh produce is aimed at the current True Taste of Wales award winners, with little wider scope given. That said, the promotion and opportunities provided by True Taste and the Howell’s Food team, (amongst others), are excellent, highly professional, and should be commended. The suggestion has been made for a specific Welsh Quality Marque for beer, but the logistics of stipulating the qualifying criteria and auditing the breweries for an achievable cost make this all but impractical. SIBA is in the process of finalising a self-assessed audit, aimed at promoting legal compliance and increasing quality and consistency. This audit would be aimed at the smaller brewers, (although applicable to the larger ones as well), and would be cost effective, especially as it will be backed by the BRi (Brewing Research International), who are an accredited Auditors. AWIB is in negotiation with SIBA to see if Welsh brewers who are not SIBA members can have the audit rolled out to them.
Although Welsh beers are excelling in UK competitions, it would be good to see some form of help available to brewers wishing to have their beers entered in some of the international competitions - we know we brew some of the best beer in the world - we just have to prove it!
There have been discussions with various bodies about how Welsh produce, Welsh beers and Welsh pubs can be effectively promoted - there is more work going on with matching food and drink, and it would be good to see more centrally funded tourist trails aimed at highlighting the best of Wales’ hospitality industry.
What is the easiest way the W.A.G. and local authorities can promote Welsh beers (and indeed all Welsh produce) ? Simple - insist that only Welsh food and drink are served at civic functions, at local authority meetings and events, and even at the bars and canteens in Government buildings. It is disgraceful that national and local government continue to serve and sell foreign wines and beers, (and other produce), when we have an astonishingly rich diversity of local producers, literally on their doorsteps, who would be more than willing to supply.
Is there sufficient support currently available for the set-up and expansion of businesses in this sector - including research and development support – and is the support provided effective?
Whilst there are funds available from the W.A.G. in the form of grants and promotional opportunities, the timescale involved with the grant procedure leaves a huge amount to be desired. Reports of 18 months required for a grant application to proceed are not uncommon, and that makes expanding a business very tricky. We would like to see the grant process streamlined, and a simpler, fast-track process for small scale grants put in place. It is all well and good stating that there is £X million available to Welsh producers, but if they cannot access it in a timely manner, the business opportunity that has been identified, requiring a grant-funded expansion, may be missed.
What further action could the Welsh Government take to support the development of the beer industry in Wales?
- Lobby for lower taxation on beer, and rate relief for community pubs
- No new controlling laws or regulations, instead better use of the existing powers.
- Recognise the fact that beer, when consumed in moderation, has some health benefits
- Recognise the role that pubs play at the centre of communities
- Recognise the fact that pubs are run by responsible retailers, and offer a controlled, social environment for the consumption of alcohol
- More work with, and support for, organisations such as Pub is the Hub, to ensure the continued viability of pubs at the heart of their communities
- Further promotion of Pubs as tourist destinations, and showcases for Welsh drink and food
- Promote education and skills development within the industry, with the aim of promoting quality and consistency
- Work to find a way to outlaw the sale of alcohol as a loss-leader, and below-cost deals on alcohol.
- Recognise the brewing and pub sectors as a part of the solution to alcohol misuse
- Insist that locally produced food an drink are served at national and local authority functions, and are made available in all government buildings.
