The Virtual Beer Garden

The Micro Brewery Scene in the UK
By Neil Chantrell

At first glance to an outsider it may appear that the almost explosive growth in the micro brewing industry in the US and the UK are just two manifestations of the same process. Whilst it is true that there are many similarities it is also true that there are as many differences.

In the UK in the sixties, the large brewers instituted a change away from the traditional cask conditioned beers towards filtered and carbonated keg versions. These beers had less character and flavour than those that replaced as most of them were designed to be distributed nationally and so had to avoid the pitfalls of regional flavour differences. This change was opposed by consumer groups such as CAMRA ( The campaign for Real Ale) but given the shoddy background of the traditional pub, lack of investment in cellars and training, the real ales were often served below there best. The licensees welcomed the keg products because they were easy to look after. The timing of these changes coincided with the introduction of lager to the UK market by the big brewers, this also placed the sales of traditional real ale under pressure. The UK market is different from that in the US in that majority of pubs are owned by the brewer and a large percentage of the clubs are tied to take a specific brewer's beers because they have borrowed money from them. There are some pubs that are privately owned, (free of tie) but these are the minority and are geographically separated making distribution difficult for small operators.

It was against this difficult background that a few intrepid micro breweries were formed in the early seventies. They were usually very small, producing a maximum of 5 to 10 Brls. Per week and often built within or adjacent to a free pub that sold all or nearly all of their production. All the beers produced by these brewers were traditional cask conditioned products noted for the love and care bestowed on them as much as their rich heritage of flavours and character. These beers were not known nationally but known to real ale aficionados who made pilgrimages to taste them.

This situation continued through the eighties with the addition of a few more small players and a general decline in the overall production of cask conditioned beers. It was the day of lager that now enjoyed over 50% of the UK beer market.

Late in the 1980's a change in the market began. For the first time it was consumer led, but not by the marketing divisions of the national brewers. Membership of CAMRA took off, the demand for real ales grew, perhaps the wheel had gone full cycle and the consumer was revolting against the bland fizzy products that they had been weaned on. Whatever the reason the big brewers were caught wrong footed and had to some extent in their frenzy of rationalisation shut most of the older breweries capable of producing quality traditional cask ales.

The day of the micro brewer had arrived and they started opening up all over the UK. For the first time they were being built as free trade producers, relying on selling all their production to free trade pubs and clubs. They were still mainly small players.

The early 90's saw the trend increasing with some new breweries opening with capacities of over 200 Brls. Per week. However these were still very much the minority. The smaller players were opening at the rate of 2-3 per month. No doubt helped by the continual rationalisation by the big brewers who were shutting breweries and turning trained but unemployable brewers onto the streets with large redundancy checks. Between 1992 and 1994 there was a 30% increase in the number of independent brewers. There were thirty new ones listed in 1993 alone.

There were two institutional changes at this time which in theory at least, favoured the small brewer. Firstly in June 1993 the method of charging excise duty was changed from a levy on the original gravity of the wort to a charge against the alcohol content of the beer. This involved the change of an allowed loss that favoured rich brewers and now placed the small brewer on a level playing field for the first time. Secondly, there was the introduction of the Beer Orders by the Government in 1989 which was intended to open up the pubs owned by the big brewers and allow them to trade with the micro brewers. In theory any brewer who owned more than 2000 pubs must let his tenanted landlords purchase a guest beer from an outside source. This beer had to be a cask conditioned real ale.

In theory this was good for the micro brewers but in practice two years on it can be seen that the concentration of brewing by the six biggest brewers has increased from about 50% of the market to over 65%. They have achieved this by sale of outlets but retaining a tie to their products and by making life difficult for their licensees who take advantage of a guest beer.

Micro brewers have shown great initiatives by producing stunning ranges of beers. Many are producing seasonal and special occasion beers. Coach House Brewery for instance produces over 20 different cask conditioned beers over a twelve month period.

The big brewers have not taken this quietly and some are now investing in equipment to produce real ales again themselves. Most of them are starting to produce seasonal beers and special occasion beers. The market, consequently, is not getting bigger for the micro brewer but smaller. An ever increasing number of small brewers is chasing a declining number of outlets.

The current situation is that last year 68 more micro brewers entered the market. The two biggest brewers share 53% of the market and there is no reason to assume that without Government intervention that this will not reach 90% as in Canada and Australia.

The British beer market is not a closed one there are over 200 different imported beers from over 40 different countries on sale. British pubs offer the widest choice of draught bees in Europe and the second widest choice of bottle beers. In addition, British pub prices are amongst the lowest in Europe when our ludicrously high levels of beer tax is taken into account. Cask conditioned beer accounts for 17% of the beer market today.

The overall market, however continues to decline as in most developed countries. The current growth in micro breweries cannot be sustained . There will be a number of closures leaving only the fittest to continue and supply the choice the customer obviously wants. Without Government intervention the consolidation of the Brewing Industry seem set to continue and if that happens the day of the micro brewer in the UK may be over.

Any questions or comments about this article? Send them to Neil @ neil@beer.u-net.com