Drama Among Britain’s Small Breweries
Something remarkable and largely unnoticed just went down in Liverpool. That was the site of the Society of Independent Brewers' (SIBA) annual meeting. SIBA is a trade organization representing small breweries in the UK, 861 strong, akin to the Brewers Association in the US. At issue was whether to raise the barrel limit for member breweries from 200,000 hectoliters (just over 170,000 US barrels) to 1% of annual beer production, or about 440,000 hl/370,00 barrels.
This issue is one that plagues trade organizations, and the internal conflict is difficult to resolve. These organizations exist principally to lobby for laws favorable to their members--as SIBA did in 2002, when it pushed for lower taxes on small breweries. They do other things, but they are second-order goals. Of course, when political might is at issue, bigger breweries have more money and more customers/fans. Thus larger breweries tend to dominate the activities of these organizations, favoring laws that affect their business--often immaterial to breweries that may be a tenth their size.
There's no right or wrong place to draw the line for brewery size, but a company producing more than 300,000 barrels might as well not even be in the same business as one producing 3,000. Fuller's, currently too big to join SIBA, has established great credibility among small craft breweries, and was one of the banner breweries offered as an example of the benefits of expansion. But the company also owns 400 pubs and had nearly £400 million in earnings--and £43m in adjusted profit. The ways in which Fuller's interests align with that little brewpub down the street are few, to say the least.
Which was exactly the point Dave Bailey at the tiny Hardknott Brewery made. Violating a SIBA gag order, he wrote a series of blog posts arguing against the expansion, noting:
Having sat on the SIBA policy committee I can absolutely give the reader full assurance that SIBA will not look after the interests of brewers under 5,000hl. Indeed, they are planning on weakening SBR and will be making representations to Government to that effect, if they haven't already done so.
“It is inconceivable to me that us little artisanal producers can be represented by the same organisation that represents some quite large Public Limited Companies who are listed on the stock market. They already have their own trade organisations.”
In a very sad moment following the vote, Dave announced he was shuttering his brewery after years of trying to make it profitable. This morning, he expanded on his brief comments and explained why he couldn't keep his brewery open. He did have a last laugh on the expansion issue, however. The final vote was 66-63 against. In his blog series, Dave posted information about how breweries could vote by proxy at the meeting, and his lobbying may well have pushed the measure over the top. (See, direct action works!)
There are many tensions in the beer business. Some of them relate to ownership, some relate to size, some relate to product category, some relate to market focus. And, because breweries grow, shrink, and change, membership in these categories is fluid. This issue is far from unique to the UK; little breweries in every country have had to contend with the best way to exercise collective influence for their industry. In the US, the Brewers Association has placed its greatest emphasis on ownership. Although its membership is limited to breweries producing two million barrels, this is a gigantic number; only five breweries in the US exceed it. SIBA, for the moment, seems to be focusing on size. It's worth keeping an eye on both to see how the dynamics serve their member breweries. The activities last week are far from the last word on the matter.