Gareth Edwards: Breweries feel pinch as beer sales dry up

Published on Friday 13 March 2009 08:49

RECENT damning reports about Scotland's booze culture have put the nation's drinking habits under the spotlight once again.

The antisocial binge-drinking "epidemic", which costs the taxpayer 2.25 billion a year, has put us on a European league of shame and led to calls for more control over the drinks industry.

While there is little doubt too many Scots are drinking too much alcohol, it also appears they are shunning beer for harder spirits.

Beer sales in Scotland are now estimated to be at their lowest point since the 1940s.

The knock-on effect is that not only are pubs closing, but breweries – like Edinburgh's Caledonian Brewery – are now considering laying off staff as demand continues to fall.

The latest industry figures showed that beer sales across the UK had dropped 8.3 per cent in the fourth quarter of 2008, the highest fourth-quarter fall since records began in 1997.

The British Beer and Pub Association (BBPA) said pub beer sales had dropped 9.9 per cent, while supermarket and off-licence beer sales were down 6.5 per cent. This roughly equated to 2.2 million fewer pints being drunk every day in the final quarter of 2008 than in the same quarter of 2007.

Compared with the fourth quarter ten years ago, 404 million fewer pints were sold across the country in the final quarter of 2008 – a decline of 4.4 million pints a day. In total, beer sales for the whole of 2008 fell by 5.5 per cent, compared with the year before.

Declining beer sales have been a fact of life for publicans since the 1970s, but the sharp drop over the last year has led to dire predictions for related industries.

Figures have shown that on average three pubs in Scotland are closing every week and there were warnings last year that if the situation continued, pub closures in Edinburgh could soon average one a fortnight.

This could see around 60 of the 600 pubs in and around the Capital forced to close their doors over the next three years.

The sharp decline in sales has been attributed to a wide range of factors, from the knock-on effect of the smoking ban, introduced in 2006, and the high price of a pint to a wider choice of drinks being available to the consumer.

Deep-discounting in supermarkets has also been blamed for the decline in pub sales, as canny consumers go for cut-price supermarket offers – which can see beer and spirits sold cheaper than water – rather than a night out at their local, where a pint can cost up to 4.

Paul Waterson, chief executive of the Scottish Licensed Trade Association, said that while pubs had worked hard to overcome the problems of the smoking ban, with more now offering hot food and live entertainment to entice back customers, other pressures were harder to fight.

"This is a very difficult time for pubs, and that will hit beer sales," he said. "There is a wide variety of drinks to choose from, so it's not like the days when there was little choice other than beer, and the smoking ban has had a huge impact.

"Of more concern are the discount sales at supermarkets, which means people are more likely to drink at home.

"The minimum pricing plans by the Scottish Government will hopefully balance things out, but despite this there will almost certainly be pubs in Edinburgh closing down over the next year."

The knock-on effect of declining beer sales will not just affect the bars, however. The Caledonian Brewery – the city's last brewery – admitted this month it was considering asking staff to cut working hours because it expected to need only half of its 200,000-barrel capacity this year.

The alternative for the maker of award-winning ales such as Deuchar's IPA and Caledonian 80/- is to cut jobs.

Jon Howard, a spokesman for CAMRA, the Campaign for Real Ale, said: "One trade body predicted last year that beer sales are at their lowest since the Great Depression. This is partly due to huge beer tax rises, which have forced publicans to increase beer prices, making visiting the pub less affordable."

He suggested that one possible way to attract people back to pubs and help beer sales was with speciality real ales, and the Caledonian Brewery is constantly producing "guest" ales, such as Evolution, a beer to celebrate the 200th anniversary of the birth of Charles Darwin.

"Real ale can only be drunk in pubs and, simply stated, pubs selling real ale will attract people," he said.

The BBPA has calculated that the drop in beer sales has cost the Government 181 million in tax revenues since last March, and is pressing for further alcohol tax increases and red-tape to be scrapped.

BBPA chief executive, Rob Hayward, said: "Last year the Government loaded an 18 per cent tax increase on alcohol. Now they plan to increase beer taxes by 40 per cent over the next four years. They must recognise the damage this will do."

One brewery bucking the trend is Dunbar-based Belhaven, which has reported a continued rise in sales at its pubs.

Chief executive Euan Vengers said the results were due to the brewer, and its bars, offering consumers value for money, but insisted the wider industry problems meant they could not be complacent.

"I think now consumers are looking for good quality bars with a good service, and that is what we provide," he said. "We are not complacent though, and we realise there are big difficulties in the sector.

"We know that it will take a lot of hard work to keep our sales up."