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Microbreweries: Brewing Up A Storm?

When the Chancellor of the Exchequer announced in 2002 that he was to introduce a low rate of duty for small breweries, he could understandably have expected this to be welcomed broadly across Britain, with a few glasses raised in appreciation of his gesture.

Four years on, he can probably be forgiven for thinking that he should have left well alone. For whilst there has been broad agreement that small breweries are beginning to thrive for the first time in years, there are also rumblings of dissatisfaction from within the UK brewing industry.

So what now ails the producers of Britain's famed real ales? This Argument looks into the murky glasses on the UK's bar counters and sees our two protagonists ask: who is brewing up a storm in the brewing industry?

I'm Only Here for the Beer

Seen the Ad, Bought the Bottle

	I see the Dirty Duck's shut down.
			Good riddance I say: smoky, dirty dive, selling foaming pints of warm dross. Not for me, thanks. Sooner they make it one of those trendy bars with sofas and all that, the better.
	Turn all the pubs into fake modern living rooms? That's just not right! What about our heritage of old pubs serving local people?
			Wiped out, mate. The locals now want more than what the Dirty Duck could offer.
	Do they really? Or have they just been told that's what they want?
			You've lost me!
	You know the old song, 'The public gets what the public wants. And the public wants what the public gets.' In other words, it's all down to marketing. Tell them what they want and people come running.
			Been listening to your old 'Jam' records again, have you?
	Nothing wrong with that, mate. You could do with a reminder of what you once believed in.
			Times move on, my man. You should too.
	Whatever! Anyway, you won't be pleased at the news. The Dirty Duck's going to become one of these microbreweries, making and selling the brown foamy stuff so beloved by yourself.
			What?! Why not a nice leather sofa-filled lager emporium?
	Dunno. I read that it's some local fella keen on his real ale and wanting to give it a go on his own, rather than relying on the big breweries to make it for him What're you shaking your head for?
			Not a hope, that bloke! Remember the sausage shop, the pasta shop, the 'dry your own sun-dried tomatoes' shop? All fads! He'll be gone within a year. Then we'll get our nice modern bar.
	Hmm, I'm not so sure.
			You'll be there, will you? Sinking a few pints of 'Old Welly' on your way to the curry house?
	Yeah, why not? As you know, I'm quite into my real ales.
			I don't understand the fuss about it, me. I mean, if it's not advertised on the telly, it can't be any good, can it?

What is real ale?

			Sounds to me like the sandal-wearing, beard-growing, old hippies are trying to make a fast buck!
	Well, if that's true, there's a lot of old hippies out there. These microbreweries have really caught on.
			Yeah, until the big boys blow them out of the water, you mean.
	I'm not sure they've got the time to worry about small-scale business. They're more concerned about taking over the world!
			Don't think you're exaggerating somewhat there?
	Maybe so, but it's still the old story of the big getting bigger, I'm afraid.

What is the structure of the beer brewing industry?

	So you still think I was exaggerating over the major breweries taking over the world?
			I thought you meant it literally, not just the brewing world!
	Yeah, well, there you go. I doubt there's a beer you drink that's not owned by one of the big boys.
			I don't know! My favourites are those French and German bottled lagers. Ice cold, not too much gas, a touch of the continent to go with the atmosphere in the trendy bars down town.
	We'll see just how continental they are, those bottles. More like intercontinental, I reckon!

How many familiar brands are owned by the majors?

			Blimey! That's my all-time favourite beers all owned by two firms.
	I thought that would be the case. It doesn't really leave many big-named beers, does it?
			Nope. Even the cider I drink is in that list!
	Well, that's what I was on about. If the big boys control so much of the market and aren't interested in making a variety of different tasting real ales, someone's going to have to do it. That's where the bloke with the Dirty Duck steps in.
			I suppose there's only so much that the global companies can keep their eye on at any one time.
	Exactly. And if they fail to convince us all to drink their beers, we're going to look elsewhere, aren't we?
			Yeah, by starting drinking wine instead.
	Let's sort the beer producers out first, eh?

Why can't big business meet all consumers' needs?

	OK, so if we agree that there is a role for the small beer brewery, what do you think can be done to make their life easier?
			Well, hang on a minute. What's all this about making small firms' lives easier? I thought you were into people having the choice to drink what they want, not having some firms getting an easier ride than others.
	Yes, but that's the point. If the market is left to sort it out, guess who wins? The biggest firms, of course.
			But why?
	Well, they own the biggest brands, as we've seen. They have the biggest amount of money to spend on advertising their brands to us. They also have what I've learned to call 'large economies of scale'.
			Yeah, since you swallowed that business text book from that course you're on!
	Don't knock it! It might convince me to start my own firm. And when I need to take on staff, who'm I gonna call?
			Umm, me?
	Not if you're cheeky! I'll be straight onto the employment agency!
			OK! What *can* be done to make life easier for the small breweries, then? How come this bloke has the dosh to start up a business where the Dirty Duck used to be?
	Search me. There's ways to raise capital for a business. No, what I'm talking about is tax.
			Don't tell me they let him off paying his tax!
	Not all of it, no. But there's ways to encourage him to start up in the first place.

How are the microbreweries incentivised to enter the industry?

	Good news I reckon, worth celebrating with a pint or two?
			If you're buying, then I'm all in favour.
	It'd have to be a proper real ale, though.
			I'm willing to try something new, 'specially if it's free! So all's well that ends well, then, as far as the beer industry goes, eh?
	Not quite.
			I was afraid you'd say that! Who's feeling bitter then?
	Boom boom!

Trouble brewing in the beer industry?

	That's how the tax system can be used to change business. I don't think you can argue with that.
			You know me. I can argue with anything!
	Let's see you argue with a free pint of locally-produced real ale from the Dirty Duck, when it opens for business, then.
			You could have me on that one!

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