Conference 2011

1. Conference 2011 Nick Stafford Commercial Director

2. SIBA MEMBERS’ INTERFACE:‘SMI’ • Your time is precious, we don’t wish to waste it • You can not remember how to navigate every website you visit • How many different passwords do you have for all your internet/credit card/TV activity? • Everything at one glance • Immediate links to what you select • One click to select/order/print • Control in your business who gets what from SIBA • Messages to you are automatically prioritised and deleted when no longer important

3. SIBA MEMBERS’ INTERFACE:‘SMI’ • Personalised messages to your company’s staff • Join the Forum for interactive exchange of information to help your business • View the various Joint Purchase schemes which help save you money • See what’s available from SIBA Technical Services • Access the brewing and legal Helplines • Find in one easy list all the documents you need to make your business work better

4. SIBA MEMBERS’ INTERFACE:‘SMI’ • And access your orders from the SIBA Direct Delivery Scheme!

6. KEITH BOTT GUY SHEPPARD CARL BEESON NICK STAFFORD JULIAN GROCOCK STEPHEN GOULD FRANCIS PATTON JOHN HART

7. Brewing Business Awards Presented during the SIBA Retail Conference in Nov 2010, the Brewing Business Awards are an important vehicle for recognising particular effort and success.

8. Beer Competitions SIBA’s support for the Regional and National Beer Competitions is budgeted to top a staggering £40,000 during 2011 – a major investment to ensure the highest standards of presentation and increase national awareness of the superb quality of local beers.

9. Support for the GBBF SIBA members’ beers - consistent winners of CAMRA awards - will once again be highly visible at this year’s event, thanks to continued investment in the SIBA Champions’ Bar. Joint sponsors of CAMRA Good Beer Guide 2012.

10. Joint purchase schemes SIBA staff are working to increase sales and expand the range of bulk purchase schemes, which currently cover items such as beer mats, bar towels and runners, glassware, compostable tumblers and polypins.

11. Supplier Associates SIBA is fortunate to have over 130 supplier associate members, all of whom are extremely keen to work with SIBA brewers. The first Supplier Associates’ Forum was held at the NBC in October 2010.

12. SIBA Technical Services Most visible to SIBA members through its work at Regional and National Beer Competitions, SIBA TS continues to provide quality cask beer dispense for a growing number of customers.

13. Cyclops A widely-supported industry initiative which has now accredited more than 1200 beers from over 200 brewers. SIBA continues to subsidise the accreditation of members’ beers, and is currently considering joint sponsorship opportunities with Cyclops.

14. Off Trade Much thinking and discussions with a variety of partners to work out a sustainable primary consolidation route to market. A particularly exciting project is ExtraOrdinary Ales.

15. SIBA DDS SIBA’s key commercial venture, a significant route to market for many SIBA brewers, continues to grow volume and turnover, with a sales value of over £10.75m in the year to Sept 2010.

16. FOUR 10,750 6

17. Barrels by Pubco

18. Outlet buying analysis July – September 2010

19. On Trade Barrels

20. No. of pubs ordering in a year

21. Average firkins per pub

22. Increasing participation

23. Top 30 brewers have less share

24. Differing fortunes in DDS

25. WORLD ECONOMY Inflation in emerging markets; China, India, Middle east, Brazil and Africa. Food shortages and political turmoil forcing up prices. • China: food inflation went up in January alone by 10%. • Egyptian cotton prices have risen dramatically. • Not to mention oil prices! Wage increases are being demanded to cover inflation. • Workers in Bangladesh in January went on three day strike, Govt. doubled their wages and then they rioted – offer did not cover food inflation. These increases are passed on to us through imports. We import too much. • Cadburys have reduced the size of the Mars Bar – again. Sugar price from Cote D’Ivoire gone through the roof with political violence WE CAN’T FEED CURRENT 7 BILLION PEOPLE, HOW ARE WE TO FEED THE EXPECTED 9 BILLION IN 2050?

26. GOLD is still the best investment ONE OUNCE OF GOLD STILL BUYS 350 LOAVES OF BREAD 2011 AD 560 BC

27. Hops and Malt • “Hop prices have dropped considerably over the last 12 months and are likely to remain stable over the next 12 months.” • “Global cereal stock shortages in Russia, Canada and Australia have been well documented. Coupled with nature we now have unstable political situations in North Africa spreading to the Middle East which will bring financial market speculation to bear. There is unlikely to be any good news on the barley and malt front in the short to medium term.” .

28. Is this your brewery? • A brewery producing cask ale only • averaging 35 barrels per week (over 50% of SIBA members produce 12 barrels per week or less) • One transit van and one ‘midi’ van (2nd hand purchase) • Rent 3500 sq. ft. @ £5 • Equivalent four full time staff • Duty: at full PBD relief

29. Is this your brewery? • Production materials: Duty, malt, hops, yeast, minerals, finings, processing aids, shives & keystones • Direct expenses: labour, gas/oil, water, electricity, cleaning, road fuel, courier • Overheads: rent, rates, marketing, vehicle maintenance, office supplies and equipment, insurances, professional services, bad debts, subscriptions, refuse, travel, bank charges

30. Is this your brewery?

31. FUNDING REQUIREMENT

32. Is this your brewery? • Income Tax or Corporation Tax? • What profit should a commercial enterprise make? Minimim 5%? • Total Costs £334,452 per year • Funding Costs £29,200 per year • Total enterprise costs £363,652 per year • Profit of approx 5% = £20,000 • Tax at, say, 20% = £5,000 • You can reduce your overdraft by £15,000!

33. Is this your brewery? • Enterprise costs are £363,352 • Profit is £20,000 • Turnover is therefore £383,352 • Sales per barrel = £210

34. Is this your brewery? • Enterprise costs are £363,352 • Profit is £20,000 • Turnover is therefore £383,352 • Sales per barrel = £210 • If we wished to play a safer game, then 10% profit or more must be desirable • Profit is £40,000 • Turnover should therefore be £403,452 • Sales per barrel = £221

35. Is this your brewery? • Enterprise costs are £363,352 • Profit is £20,000 • Turnover is therefore £383,352 • Sales per barrel = £210 • If we wished to play a safer game, then 10% profit or more must be desirable • Profit is £40,000 • Turnover should therefore be £403,452 • Sales per barrel = £221 • Are my assumptions underestimating your real costs? If so, you can not afford to sell for less than £221 • Full duty rate adds £57 • Sales price should be £278 per barrel

36. Price Increases 1991 - 2011

37. Price Increases 2001 - 2011

38. DDS 2001 - 2011 DDS has maintained brewers’ price comparison with industry increases

39. DDS Wholesale Prices are equivalent to other brands £270 per barrel should be your target minimum price to receive from any customer. Why?

40. Price maintenance Local Brewers who were around in 2001 said SIBA DDS was absolute minimum. SIBA DDS has maintained prices with the rest of the industry for 11 years.

41. Price maintenance 2011 SIBA SURVEY £244 BREWERS’ MINIMUM IN 2001 Local Brewers who were around in 2001 said SIBA DDS was absolute minimum. SIBA DDS has maintained prices with the rest of the industry for 11 years.

42. Price maintenance £26 TOTAL REDUCTION IN “MINIMUM ACCEPTABLE” PRICE = £41 PER BARREL £15 Local Brewers who were around in 2001 said SIBA DDS was absolute minimum. SIBA DDS has maintained prices with the rest of the industry for 11 years. However, brewers have ‘given’ away £41 per barrel.

43. Is this your brewery? • Are my assumptions under estimating your real costs? If so, you can not afford to sell for less than £221 • Full duty rate adds £57 • Sales price should be £278 per barrel

44. Are my assumptions underestimating your real costs? If so, you can not afford to sell for less than £221 • Full duty rate adds £57 • Sales price should be £278 per barrel £41

45. Back where we were 20 years ago? Giving away £41 of £57 of PBD leaves £16……. …….and my estimate of your costs could easily understate your actual costs. You may not have left any of the PBD benefit.

46. Price Increases 1991 - 2011

47. How many brewers are under pricing their beer in the market? 54% !!!!!!! 92% Post PBD Pre PBD

48. Not even keeping up with Retail Price inflation – madness??????

49. What is the lowest price a 4% beer is being sold by a brewer? Survey of 12 brewers: (£270 PER BBL = £67.5 PER FIRKIN) £72 £65, £65 £57 £55 £54 £53 £50,50,50 £45, £45 ALSO BREWERS ARE OFFERING BUY 4,5,6, GET ONE FREE! …and ONE BREWER offering 3 firkins for £100 including VAT !!!!!!!!!!!! Another brewer in January selling 2 X FIRKINS FOR £49!

50. One week in February • Special offer to beat the gloom! • Instead of selling 25 barrels, sell 40 for £12 per barrel less • 60% increase in volume, leads to 32% increase in profit • But profit is only £666 in return for selling an extra 60 firkins • Telesales, deliveries, casks etc. Is it worth it?