87 million pints down the drain.

Ian Curran

How have UK breweries survived the pandemic?

The gradual reopening of pubs and bars is a welcome relief for many in the hospitality industry. Still, it is important to acknowledge some fundamental changes that have occurred over the past year and the lasting impact of the lockdown measures.

Since the start of the pandemic, over £331 million worth of beer has been wasted in the UK. Pubs and breweries were forced to destroy 87 million pints as government restrictions made it impossible for them to sell their stock. Thousands of UK pubs and breweries were forced to pour their profits down the drain, with many blaming government failings for the preventable waste.

Pub beer sales dropped by 96% during the second quarter of 2020, the period which saw the UK plunged into its first national lockdown. The ‘Eat-Out-To-Help-Out’ scheme over the summer did go some way to bolster the sector. William Lees-Jones, the Managing Director of JW Lees tells me “August was a record August, and September was even better. But with our overall sales down 75%, we effectively shut down the business.” Even with the heavily publicised government initiative, industry-wide sales figures were well below the pre-COVID Summer of 2019. 

For many of the larger, commercial breweries, the forced pub and restaurant closures have had a devastating impact. William Lees-Jones states that “99% of all JW Lees beer is sold in pubs and more than half through our own 150 pubs in the North West. We can only trade if pubs are open.” For a company trading since 1828, JW Lees Brewery clearly has no problem producing products, but with their regular client base dried up, the company were forced to minimise their operations, attempting to generate some income through gift voucher sales.

Half-cut

With overall beer sales slashed by more than half, it’s hardly surprising to learn the hospitality sector has been the hardest hit by the pandemic. According to the Office for National Statistics, the industry lost 297,000 workers between February and November 2020. This is by far the highest number of recorded job losses across any UK industry, with retail and wholesale taking the second spot with 160,000. Record-high redundancies within the hospitality industry is only set to increase until the sector can fully reopen. Some workers may be offered their jobs back, but with businesses now carrying debt it may take some time before they are able to extend their skeleton staff.

Last orders for traditional breweries

Whilst the COVID-19 related government restrictions put a stopper on traditional beer sales, they inadvertently opened the taps on other revenue streams. Since the first lockdown, online shopping sales have soared, and some breweries and micro-breweries have been quick to adapt. Many have introduced their own webstores and delivery services to accommodate for the change in consumer behaviour. James Calder, Chief Executive of the Society of Independent Brewers, said: “Perhaps the most important impact of COVID on us has been the shift to brewers doing direct B2C sales…Most, if not all, have developed an online offering out of necessity.”

 

By selling products directly to the customer, innovative breweries have managed to stay afloat throughout the pandemic, with some even flourishing from the more level playing field brought about by the online revolution. Rebellious Goods, who pride themselves on selling ‘daring natural wine, craft beer and spirits’ online, reported a 1,000% increase in sales during April 2020 with the average online order going from £20 to £60.

With lockdown beer drinkers buying triple their tipple over the internet, it seems breweries with an “online offering” are more likely to survive the pandemic. Those developing new technical software, improving bottling and canning processes or testing new packaging systems to attract this new market also become eligible for government led, Research & Development tax relief.

Back to the local

With customers moving online, you would expect them to sample beer from all over the world. However, during lockdown, many people have consciously chosen to support local businesses. With the introduction of lockdown measures, Google saw a 1,300% increase in searches for local produce with a 500% increase in searches for ‘local beer delivery’. Google’s Managing Director for UK & Ireland, Ronan Harris, has recognised the substantial shift back to the local: “As we were forced into lockdown and limiting our movements, people were returning to their local businesses and wanting to find out: were they open, were they delivering, were they doing click and collect, and what was available.” Harris recently announced Google’s ‘Open for Business’ initiative, which will see the company invest millions of pounds providing UK businesses with digital training and online advertising. Breweries exploring online sales can now connect with Google and utilise this free service.

Changing optics

Whilst local loyalty has offered a lifeline for many businesses, finding new ways to generate income has also helped breweries survive. Tim Webb, co-author of The World Atlas of Beer  and spokesman for the independent consumer organisation Campaign for Real Ale has said; “CAMRA’s brewery liaison network reports fairly few small brewery closures to date, with a similar number opening: an unforeseen pattern that holds in much of mainland Europe currently.” New companies starting up during a pandemic suggests there remained a market out there, albeit for microbreweries with modern means and modern clientele.

Brewing for millennials has turned attention to the development of ‘healthier’ options, such as organic, vegan, gluten-free and low-calorie beers. To serve the increasingly health-conscious consumer, brewers face the challenge of achieving authentic flavours with high alcohol levels whilst using different processes and ingredients. Still, this challenge does come with its own rewards. In addition to attracting a niche market, companies testing new ingredients for new flavours, enhancing filtration and fermentation methods or developing processing and mixing techniques are all eligible for Research & Development tax relief.

Water Worries

Government support is also available for brewers working to make their products and processes more environmentally friendly. Reducing water consumption has always been one of the biggest challenges facing the industry. Those developing new or improved water recycling systems will not only be reducing their water footprint but will also be making themselves eligible for financial rewards.

Author Tim Webb believes “A rush to be the greenest brewer on the planet can be predicted as we emerge from the COVID gloom. However, the elephants in the greenhouse are the long supply chains associated with big brand beers, and the environmental cost of packaging, which is going to take more than cardboard cans to eradicate.” As restrictions relax, the larger breweries will once again benefit from pub and restaurant sales. However, as environmental consciousness filters down into consumer buying habits, it may be the smaller breweries with an online platform and an ecological ethos that come out on top. We may even see these smaller breweries being given more of a limelight within local pub settings in the years to come.

Breweries have survived the pandemic by adapting to their circumstances. Larger companies have minimised their operations until pubs can fully reopen, some brewers have increased their online offering with local delivery services, whilst others have developed new products and processes to attract a new client base. Whatever their survival strategies, breweries deserve our respect and our support for still being there to fill our glasses, as we raise them and toast “to the end of restrictions”.

For those working in the hospitality industry, Areande are offering free legal advice and a No-Win, No-Fee service for both business interruption and R&D claims.

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