SMALL breweries are facing a “perfect storm” of financial challenges and must be provided with further support to ensure their survival, an SNP MP has insisted.
Owen Thompson, the party’s chief whip, is set to lead a debate on reforming Small Brewers Relief next Tuesday. He said independent firms are grappling with not only soaring energy prices but a fall in sales with people choosing to sacrifice going to the pub as their incomes are squeezed.
With many having only just found their feet again following the pandemic, the Society of Independent Brewers (Siba) has said brewers are facing energy bill increases of up to 400%.
They said many will not survive the winter “without immediate action such as an energy cap for businesses and relief similar to that provided to other heavy energy users”.
The Small Brewers’ Relief scheme – first introduced in 2002 – allows smaller brewers to pay less tax, which helps compensate for the economies of scale enjoyed by larger brewers. Tax relief also makes the beer market more competitive, increasing consumer choice at the bar.
Thompson said: “The pressure of energy prices is just going off the charts and brewing is an energy-intensive process.
“We’ve got local businesses which are at the point of trying to renew their energy supplies and can get no guarantee of what it’s going to cost. There are no deals currently being offered.
“We need to increase the discount that these small brewers get on beer duty. When you’re talking about overall tax take for the Treasury, it’s not a massive proportion of it but it would make a big difference to small producers that are facing so many other costs if the cost per unit they were having to put to the Treasury went down.”
The owners of Stewart’s Brewing in Midlothian – which Thompson visited this week – have admitted running the company has “never been more challenging”.
They have called for an imminent energy support policy for SMEs (small and medium-sized enterprises), beer duty reform measures, and a re-think of the “massively costly” Deposit Return Scheme (DRS) system.
The DRS – where customers pay a small deposit which is refunded if they return their empty single-use bottle to the retailer to be recycled – is not being introduced in Scotland until next year, but brewers are having to prepare now and it is thought it will have a disproportionate effect on smaller operations.
Co-owner Steve Stewart said: "Never before has running a craft brewery been so challenging, and progress on these key measures will help contribute to a strong and sustainable independent brewing sector.
"It was a great pleasure to show Owen Thompson around the brewery. He clearly has interest and the desire to support the craft brewing industry, and we are very grateful for his continuing support over the years throughout multiple crises.
"We are hopeful that Owen’s representation of local breweries concerns will help quickly bring forth successful outcomes for an imminent energy support policy for SME businesses, a pause and re-think of the currently unworkable and massively costly DRS system, and success in beer duty reform measures.”
Independent brewers – of which there are more than 100 in Scotland – wrote a letter to Chancellor Nadhim Zahawi this week calling for urgent government intervention, highlighting additional struggles such as a poor hop harvest and shortages of equipment like kegs and CO2 gas.
Pub operators have also said they are up against it financially. There are reports some energy suppliers are refusing to offer new contracts to the sector because they fear pubs may not be able to pay their bills.
More than 35% of operators said they had seen their utility costs double while 30% said their costs had tripled in a survey by the Morning Advertiser. Almost three-quarters of respondents said they would not be able to afford the increases.
Barry Watts, Siba head of public affairs, said: “Independent brewers have been put into a holding pattern by the Government as we wait for a new prime minister, but they are running on empty and need urgent support to make it through the winter.
“Independent brewers are facing skyrocketing energy bills with increases up to 400% which is placing businesses and jobs at risk, and sadly many will simply not survive without immediate action such as an energy cap for businesses and relief similar to that provided to other heavy energy users.
“Brewers also desperately need clarity on the alcohol duty system, especially the future of Small Breweries’ Relief which the Treasury has been considering for four years, creating an atmosphere of uncertainty for small businesses trying to survive the pandemic and current challenging trading conditions.
“We hope that the Government can deliver on the promised positive changes such as the new draught duty rate which could provide a boost for community pubs and small independent brewers.”
