UK beer market must stay fresh

British drinkers enjoy a wider choice of beers than almost any other nationality. Lagers, stouts, real ales, cream ales – the range available in British pubs is the envy of most other European countries. And yet there are many in the brewing industry who feel that more could be done to encourage competition between beers at the bar.

Not that the hold of the four major brewers – Bass, Scottish Courage, Whitbread and Carlsberg-Tetley – on the UK beer market necessarily militates towards higher prices. The big four may control 82 per cent of the sector, but the existence of a similar number of big pub chains brings healthy price competition and forces those prices down. Beer is expensive because Chancellors have deemed it should be, and have piled on the excise duties accordingly.

The problem lies in the way the industry is structured. As a spokesman for Bass readily admits: ‘The structure of this market tends to work against small brands.’ The big brewers control most of the national brands, and these are the ones the pubcos want, largely because of the heavy advertising investment that goes behind them.

As the market for beer gently declines, developing alternatives such as alcopops assumes a new importance. Big brewers have a patchy record with new product development. Bass launched the alcopop sector with Hooper’s Hooch – though it was an idea culled from Australian entrepreneur Duncan McGillivray who originated the sector with Two Dogs. And Bass went on to launch Caffrey’s, which opened up the smooth flow beer sector.

But while alcopops were always going to be a short-term trend, smooth flows have been copied by every other major brewer and it is now hard to find any other kind of bitter in most pubs. The pack mentality of the big brewers – and the pub companies – leads to increasingly regimented drinking behaviour.

The solution? One is to introduce progressive beer duty, charging lower duty for smaller breweries, or even for smaller production runs. This could lead to a flood of niche, speciality beers from the UK’s 400 independent brewers. Who knows, maybe a new product would emerge to revitalise the flagging beer sector. Whitbread, after all, bought a regional ale called Boddingtons and turned it into a national brand.

Ten years after the Beer Orders attempted to introduce more competition to the UK beer market, action needs to be taken to stimulate competition which will in turn lead to innovation – extending the guest beer rule to pub chains is one possibility. Without some radical action, it is hard to see where the new brands which stimulate the market will come from.

Cover Story, page 24


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