In the wake of Budget 2014 with 10 cents added to the pint (before VAT being applied) and the announcement that minimum pricing is to be introduced, Government also decided to put off the banning on alcohol advertising at sporting events. Various sporting bodies and associations breathed a sigh of relief because it removed the risk of losing a valuable source of income. This will of course be of little benefit to Ireland’s craft breweries but the growth in independent breweries elsewhere have seen them encroach into the previous taboo area of mainstream sports advertising and sponsorship.
Take for instance that the second-tier of English rugby is the Green King IPA Championship. Marston’s Pedigree is the official beer of English cricket and its English Pale Ale is a big seller at Lords. The Kent county cricket team is sponsored by Spitfire. The best craft beer sports sponsorship link-up has to involve newly arrived to Irish shores Dale’s Pale Ale from Colorado’s Oskar Blues Brewing. It holds the honour of being the very first Nascar-branded beer.
With the Heineken Cup seemingly in disarray and a new competition structure in the offing, might we see some interesting sponsorship deals? For example, the Cork County teams being sponsored by Franciscan Well? Singha is now the official beer of the 2015 Rugby World Cup but if Ireland hosts it in 2023, will one of our existing independent breweries provide the official beer? Unlikely but I’d settle for more choice at sports venues. However, they’d limited to draft or taking a page from US craft breweries, cans. I don’t think too many Irish breweries would want to produce beers in plastic bottles (although maybe the technology will improve over time) because they’ve left that behind in the early home-brewing days.
So in short the wasn’t too much to cheer the Irish independent brewers in the Budget, except for the fact that the 9% VAT rate is retained and we have seen the growth in pairing good food and beer. Also, there were positive measures introduced to support entrepreneurs such as changes to the Employment and Investment Incentive Scheme and Capital Gains Tax. The ‘Start Your Own Business’ scheme grants a two-year exemption from income tax to founders who have been receiving social welfare for fifteen months or more (up to a limit of €40,000). This could be an opportunity for Beer Ireland and the Taste 4 Success Skillnet to really make a difference because those already on the live register availing of their courses/network could be really encouraged to go out and start their own brewery. Let’s hope these measures work.
With the International Craft Beer and Brewing Convention being held last month in Dublin, there’s no more appropriate time to talk about beer entrepreneurship. The Convention was the brainchild of Dundalk-native and now resident of Lexington, Kentucky Dr. Pearse Lyons.
Entrepreneurship and people who created their own businesses has always been an interest of mine and it was a natural fit to mix in beer as the dynamism in the explosion of microbreweries really embodies the spirit of entrepreneurs everywhere – combining a passion for their craft together with a sense of collective togetherness and striving for success against big beer’s marketing muscle. I first heard about Pearse Lyons in Brian Yaeger’s book Red, White and Brew. It’s amazing but in Ireland we don’t really celebrate our successful entrepreneurs. Perhaps this is down to our character or perhaps down to the fact that we have so many multinationals in this country but we undervalue the role that the likes of Naughton, Quinn, Smurfit, Ryan and co have played in Irish life.
In 1980 Lyons founded of Alltech, a global leader animal health product through its innovative use of yeast fermentation, enzyme technology, algae and nutrigenomics. Over that time he has not shied away from constant innovation and a drive to create new business. As such, he returned to his brewing routes to create Lexington Brewing and Distilling Co. which consists of brewery (four beers – Bourbon Barrel Ale, Kolsch, Pale Ale and a Bourbon Barrel Stout with coffee) as well as the Town Branch Distillery. He also found the time to have business interests in beef, coffee and a golf course.
It was with that spirit that Dr. Lyons brought the convention to Dublin. While it remains to be seen if the convention inspired many to just go and do it, their was definitely a sense that many more breweries will be popping up all over the country. Over the course of two days, delegates heard about issues in brewing and distilling, whether you were experienced in the trade or were dreaming of starting your own operation. What was particularly poignant was that an enterprise day was held as an individual track because let’s face it Ireland needs to do more in terms of new business start-ups.
A lot of attention in the discourse in Irish craft brewing has been placed on the 2005 tax break for brewing as a key driver of growth in the sector. Indeed it it had been in place in the 1990s, perhaps the initial wave of new breweries might have had a few more survivors. However, some of the other framework conditions for encouraging entrepreneurship also played a part such as the Business Expansion Scheme. It would be fantastic if the Enterprise Incentive and Investment Scheme will encourage new investment in the sector. It is unlikely that start-up or expanding companies will attract venture capital or angel investment (a lot of negative experiences from investing in US breweries during the mid-90s). Brewers continue to turn towards informal networks such as family and friends for investment. Thankfully the rise of crowd funding is proving to be an additional source of funding. This is all without discussing the issue of access to credit, which is a subject for another day.
Bord Bia and Enterprise Ireland have important roles to play. While start-up breweries can turn to the city and country enterprise boards, more can be done by the agencies to support the actor as a whole. While many breweries are too small at present for many of the direct support schemes operated by Enterprise Ireland, the agency should be encouraged to take a cluster approach to the sector to promote growth and exports, which ultimately will lead to job creation. Brewing is no different to other sectors in that sustainable growth needs to come through exporting. Perhaps the agencies can fund not only marketing initiatives and market entry support but also provide support to share export costs and minimising potential risks. This is not to say that Irish independent beers cannot be found in overseas markets but as the number of breweries grow, pressures on the existing channels in Ireland will increase.
Hopefully Budget 2014 does not bring any additional problems to Irish micro-breweries. Increases in excise duties as well as VAT in recent budgets were unwelcome but alcohol has been seen as a soft target by successive governments. The jury is still out on minimum pricing and it’s impact on craft beer. It is too simplistic to see it as just affecting cheap beer and the like. One of the particularly unwelcome proposals being out forward on behalf of publicans is the “lid” tax, a surcharge on off-sales. This is the latest in a long line of attacks on the off-licence trade in Ireland. If this measure is introduced it could significantly impact on the price and choice of craft beers by bringing them closer in line with the price of the pint. Such a strategy could discourage off-licences to take chance on new or unknown beers or even cause a few establishments to shit outright. pro-pub strategy is similar in line with the approach taken by the music industry in the face of online file sharing. They ignored the need to innovate at their peril. People cons be enticed back into pubs and a number of them have bucked the trend during this recession and can provide useful lessons. They have to acknowledge that people’s tastes have changed. Also, we are in the middle of yet another baby boom and as such people are staying at home, and I haven’t evenstarted on the impact of tougher drink-driving rules etc. Two definite area pubs need to improve on is their food and of course their beer selection. Look to the success of the Cottage Group, the Porterhouse and other specialist bars for showing that choice can safely coexist with success. I wonder if any new pub being established today does not offer a craft beer or two?
Ireland it on the right track in terms of the number of breweries being established. We need to ensure that the right environment is in place to help them survive and thrive. This will complement the passion of all those breweries who are also entrepreneurs.