Funding in the Microbrewery Sector
Gary Bosworth & Victoria Ellis
4th Beeronomics Conference
York, September18th - 21st, 2013
www.lincoln.ac.uk
Focus for Research
• What has been the impact of increasing
funding for microbreweries?
1) How has funding contributed to local
economic development objectives?
2) How has funding impacted upon the business
approach of microbrewery owners.
www.lincoln.ac.uk
Methodology
• Analysis of market data to assess the economic
context
• Interviews with a sample of 15 microbrewery
owners - both funded and non-funded
• Thematic analysis – attitudes and behaviours,
wider socio-economic impact
• Inform a future survey of microbrewers to
better understand future challenges and
opportunities in the sector
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Microbreweries – facts and figures
No. Breweries
1,000
900
800
700
600
500
No. Breweries
400
300
200
100
0
Source: British Beer and Pub Association and H.M Revenues and Customs
www.lincoln.ac.uk
Microbreweries – facts and figures
Total Beer Sales (000 Barrels)
45000
40000
35000
30000
25000
On-Trade
Off-Trade
20000
Total
15000
10000
5000
0
1985
1990
1995
2000
Source: British Beer and Pub Association
www.lincoln.ac.uk
2005
2010
2015
Microbreweries – facts and figures
Cask Conditioned Percentage of Total UK Beer Sales
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
Source: British Beer and Pub Association
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Percentage
Routes To Market – Traditional
Public Houses free of tie
Public House tied to Microbrewery for ‘showcase’
Inter-brewery swaps
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Routes To Market – Public Houses
Pub Numbers
65,000
60,000
55,000
Pub Numbers
50,000
45,000
40,000
1985
1990
1995
2000
Source: British Beer and Pub Association
www.lincoln.ac.uk
2005
2010
2015
Routes To Market – Public Houses
• In 2012, 49,537 public houses in the UK
• Brewery and Pub Company tied public houses account
for 31,500 pubs in the UK
• Potentially 63.58% of the total pub trade is unavailable
for ale sales.
Source: British Beer and Pub Association
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Routes To Market - Entrepreneurial
Beer Festivals
Supermarkets
Farmers Markets
Farm Shops
Onsite Shops
English Heritage/National Trust shops
Online
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Infrastructure
• High start up costs
• Physical size of equipment is large
• Size of premises
• House Equipment
• Storage of full casks, empty casks, ingredients
• Risk of exceeding business footprint for small business rate
relief
• Beer Miles
• Vehicles
• Fuel
• Beer Duty
• Duty relief as outlined in HMRC Notice 226 Beer Duty
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Micro-enterprise
support
• Lower population and business densities in rural areas make it more
expensive to deliver business and training support than to comparable
urban firms (Bennett and Errington, 1995; Smallbone et al, 2003).
• However, if the aims of intervention take into account non-economic
outcomes, approaches such as LEADER become more potent.
• What is the goal of funding – to support a microbrewery or to support a
farm or pub to diversify?
• “There are very little incentives from the government to do anything unless
you are in an area like Wales or if you are a farmer. If you are farmer you
can get grants to do anything. There are quite a lot of farmers that have
started up breweries and got a huge grant from DEFRA to do it”
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Rural Entrepreneurship characteristics
• Risk taking – financial, social, “uninsurable”
• Innovation – including creativity and
technology adoption
• Perceptiveness – alertness to opportunities
and the vision to make them happen
• Personal motivation – independence, drive,
profit orientation, social motive?
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Grant funding and business outlook
• Allows microbrewers to: “gain independence and
autonomy in a business that is completely governed
and run by big players”
• “it meant that I could buy higher spec kit...it is semiautomated and can even be operated remotely”
• “the grant enabled us to spend money on things that
we weren’t really going to budget for before…for
example, the grant will enable us to get a much better
website...a much better vehicle, where without the
grant, these would not have been in the frame”
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Grant funding and business outlook 2
• Trade off between independence or accepting
funding with consequent administrative burden
• Application process sharpens up business planning
• Environmentally friendly approaches
• Increasing innovative thinking
• Expanding horizons in terms of routes to market
• Increased competition is also forcing unfunded
businesses to review their strategies
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Job creation and training
• It is estimated that: ‘1 job in brewing supports 21 others in
supply and distribution: 1 in agriculture, 1 in the supply
chain, 1 in retail and 18 in pubs’ (SIBA, 2013: 17).
• ‘If I went to a 30 barrel brewery tomorrow I wouldn’t have
to increase my staff at all, I could maintain the amount of
staff, but I could triple the amount of beer I’m brewing.’
• One doubled in size without public funding and recruited a
new marketing specialist, another with funding was
expecting to need to recruit someone in the near future
• Little requirement for training but still providing skills for
employees: ‘We’re constantly bringing people through,
we’re training them up and we’re getting nothing for this.’
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Spill-over effects
• The brewery provides an alternative route to
sustain a village pub when local people do not
support it enough – ‘they want it here to keep
the house prices up’
• Impact for tourism and working with other
local producers
• Use local business services but many raw
materials and equipment suppliers are
national businesses
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Concluding thoughts
• Awareness and eligibility for funding is variable
• Funding distorts the market
• Competition is already tough
• Any interventions need to be assessed against clear
objectives
• There are opportunities for innovation and business
development and these should be supported
• Networks and collaboration can add value
• More detailed research comparing funded and nonfunded businesses can yield new evidence
www.lincoln.ac.uk
Thank you…any questions?
Gary Bosworth & Victoria Ellis
gbosworth@lincoln.ac.uk
vellis@lincoln.ac.uk
Lincoln Business School
Brayford Wharf East
University of Lincoln
Lincoln, LN5 7AT
UK
www.lincoln.ac.uk