Adnams Broadside

Curiously the latest musings from Adnams finance director, Stephen Pugh, published in the Morning Advertiser last Friday (29/01/2011) have yet to appear on the MA's web-site. Perhaps he asked for it not to be, in order that only the brewing and pub industry gets access to it and you, dear normal consumer, remain blissfully unaware of his campaign. For if he and his friends get their way the world of UK craft brewing will be decimated.

In 2002 Gordon Brown announced the introduction of a 50% beer duty break for the smallest brewers, in order to stimulate local business. It worked, so well in fact that the number of small brewers has mushroomed across the country. This, in turn, has stimulated great interest from the ordinary consumer, leading to a small revolution in the brewing industry of this country. Cask ale sales have gone from decline to growth, strong growth, so much so that Molson Coors, one of our multi-nationals, has decided to get involved and has bought out Sharps, a cask ale brewer. This would have been unheard of a few years ago as the national brewers were falling over themselves to 'get out' of cask.

But Stephen, et al, doesn't like this, he wants my tax break reduced to less than 10% of its current level. That would result in two redundancies here (50% of the full time work force), zero investment, zero growth and me working many, many hours for very, very little. I would close down, immediately - unlike Stephen, I suspect, I have been there and done that, spending years brewing for pleasure and little else. I'm older now, and I have a family, so I need to earn a modest living, at the least.

Now Adnams turns over around £50m per year, resulting in post tax profits of around 2 to £3m. The directors are well remunerated, the shareholders get their dividend and the company marches on. So why the f%^k do they want to take my living away from me? And what the f5^k has it got to do with them anyway?

Whilst the rest of the brewing industry is working together to get the 'duty escalator' removed, for the benefit of all, some remain intent on attacking their younger, and significantly weaker, cousins.

Stephen likes to dress his arguments up as being in the best interest of the industry - now they may be in the best interest of *some* in the industry, they aren't in the best interest of the majority and they certainly aren't in the best interest of you, dear consumer.

Bear that in mind next time you come across a Broadside.

I went to Southwold to speak directly to Stephen and his boss Andy, they fed me a great lunch and promised they weren't in the business of putting anyone out of business. But they haven't changed their tack.

Intractable

The shape of the UK brewing industry has forever been in a state of flux: government legislation, beer duty and consumer preference constantly moulding the trading environment. In the last few years, with the introduction of Progressive Beer Duty (PBD - whereby the smallest brewers with the lowest output pay reduced tax), and the increased interest in localism, there's been a massive increase in the number of small brewers. This new influx of producers punches above it's weight: the total increase in UK production capacity hasn't significantly changed despite 370 new entrants (the vast majority of whom are tiny) yet the cask ale sector has changed from a state of stagnation (at best) to one of real vibrancy. The innovation and enthusiasm from the small brewers has struck a chord with the public (you and me) and everyone who produces great, tasty beer is benefiting, whether large or small.

You can read all about it here.

Fantastic! you'd think. But it ain't that rosey in this garden of UK brewers. You see, to those longer established players the increase in numbers looks pretty scary - 400 eight years ago, 770 now. Nevermind that the entire production of the small, PBD entitled section of the industry produces less beer than just one of their number, that appears not to have sunk in. What has piqued the interest of these more conservative brewers is simply the numbers (c'mon, 370 is a big number), and some anecdotal evidence/excuse given them by their free trade sales reps' struggling to sell: 'more micro-brewers, undercutting us'.

The upshot is that there is a growing group of larger brewers being cajoled into briefing against the small guys, and they're redoubling efforts to lobby this new government for change. We've tried negotiation - we want industry unity, *I* want it desperately - but, this evening, it looks like they simply want rid of us.

Have no fear, they won't get their way. I just wanted to let you know that I had a shit day today trying, and failing, to reconcile. There is a reasonable possibility that you'll hear more about this in the future, unfortunately.

Mr Angry won't go away.

You love your local beer, right? We all do; we like it tasty and we like it fresh. We like a little variety too, it's the spice of life, after all.

Well here's the truth: you're very lucky you can get local beer; economies of scale within manufacturing in general, and brewing in particular, provide a huge force towards centralised production and it is only balanced by two opposing forces: consumer demand (well done CAMRA) and a tax break for small brewers called Progressive Beer Duty (well done Gordon Brown, really). Without consumer demand there would be little point in brewing locally and without PBD there would be no economic possibility of brewing locally (well, not whilst making anything approaching a reasonable and fair income).

I rely on these two forces to keep my business afloat and I try to take care of them: if I don't brew consistently tasty, fresh beer local demand will fall away and if I lose my PBD I lose too any chance of bringing my beer to market at a realistic price.

You'll forgive me, therefore, if I feel a touch protective over PBD - it's vital for the survival of our business and gives us the chance, if we're good enough at what we do, to flourish and to enjoy the fruits of our not inconsiderable labour. For the moment, at least, you have the opportunity to enjoy tasty fresh ale and we have the opportunity to earn an honest living, working hard and working well for it.

But there are those that appear to be jealous of our cosy relationship and would seek to undermine it. They lobby against PBD, vociferously, in the hope it will be scrapped or reduced and in the short sighted, small minded belief that they will benefit from our downfall. Those that are large enough to enjoy the economies of scale do not need PBD but it doesn't seem to stop them from wanting to take it away from those of us that do need it. It's deeply ironic that the whole cask ale sector is enjoying a revival as a direct result of the quality, consistency and diversity that the new wave of breweries has been able to bring to the market since the introduction of PBD.

I doubt very much that the tone of this piece captures my feelings accurately for, were I to attempt to convey those feelings in writing, this post would be unreadable. I'm angry. I'm as angry as I would be if an adult were to pinch my 5 year old's football or deliberately frighten my 10 year old. And I'm as angry as I would be were someone to threaten my ability to put bread on my kids' table and shoes on their feet.

Next week there's a meeting between a few interested parties concerning this very subject and I will be present, along with some of the most influential figures in our little industry. They will discuss the pros and cons of the PBD system and seek to smooth out their little differences and reach a consensus so a united front can approach the Treasury with a plan. I, however, will be the only person in the room whose future is directly and inextricably linked to their discussion. I don't know how this came about, how we end up with a situation whereby I'm fighting for the right to continue making a living against people I have nothing whatsoever to do with otherwise, people who I have never had the least effect on, people I wouldn't know from Adam. I won't tell you who they are, not yet, not until I confirm their intentions and the effect it will have on me, my family and my friends. Then I'll tell you, I'll tell everyone the sordid little bully-boy story of petty jealousy and the vindictive use of power. And I'll tell it loud and I'll tell it wide and people will listen and they'll be appalled.

But hey, maybe I won't have to tell you. Maybe they've seen the light, changed their minds and elected to leave me, and others like me, alone to continue building little futures for ourselves. If they have, we'll be good friends, if they haven't, we certainly won't.

Hi guys! See you next week. Oh, and sorry if I might have described your intentions in the worst possible light - that's just the way it feels to be on the receiving end, so to speak. I'd been meaning to tell you but I was too busy being reasonable. We can get down to the nub of matter now.