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Funding in the Microbrewery Sector

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Funding in the Microbrewery Sector Gary Bosworth & Victoria Ellis 4th Beeronomics Conference York, September18th - 21st, 2013 Focus for Research What has been the ... – PowerPoint PPT presentation

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Title: Funding in the Microbrewery Sector


1
Funding in the Microbrewery Sector
Gary Bosworth Victoria Ellis 4th Beeronomics
Conference York, September18th - 21st, 2013
2
Focus for Research
  • What has been the impact of increasing funding
    for microbreweries?
  • How has funding contributed to local economic
    development objectives?
  • How has funding impacted upon the business
    approach of microbrewery owners.

3
Methodology
  • Analysis of market data to assess the economic
    context
  • Interviews with a sample of 15 microbrewery
    owners - both funded and non-funded
  • Thematic analysis attitudes and behaviours,
    wider socio-economic impact
  • Inform a future survey of microbrewers to better
    understand future challenges and opportunities in
    the sector

4
Microbreweries facts and figures
  • Source British Beer and Pub Association and H.M
    Revenues and Customs

5
Microbreweries facts and figures
  • Source British Beer and Pub Association

6
Microbreweries facts and figures
  • Source British Beer and Pub Association

7
Routes To Market Traditional
Public Houses free of tie Public House tied to
Microbrewery for showcase Inter-brewery
swaps
8
Routes To Market Public Houses
Source British Beer and Pub Association
9
Routes To Market Public Houses
  • In 2012, 49,537 public houses in the UK
  • Brewery and Pub Company tied public houses
    account for 31,500 pubs in the UK
  • Potentially 63.58 of the total pub trade is
    unavailable for ale sales.
  • Source British Beer and Pub Association

10
Routes To Market - Entrepreneurial
Beer Festivals Supermarkets Farmers
Markets Farm Shops Onsite Shops English
Heritage/National Trust shops Online
11
Infrastructure
  • High start up costs
  • Physical size of equipment is large
  • Size of premises
  • House Equipment
  • Storage of full casks, empty casks, ingredients
  • Risk of exceeding business footprint for small
    business rate relief
  • Beer Miles
  • Vehicles
  • Fuel
  • Beer Duty
  • Duty relief as outlined in HMRC Notice 226 Beer
    Duty

12
Micro-enterprise support
  • Lower population and business densities in rural
    areas make it more expensive to deliver business
    and training support than to comparable urban
    firms (Bennett and Errington, 1995 Smallbone et
    al, 2003).
  • However, if the aims of intervention take into
    account non-economic outcomes, approaches such as
    LEADER become more potent.
  • What is the goal of funding to support a
    microbrewery or to support a farm or pub to
    diversify?
  • There are very little incentives from the
    government to do anything unless you are in an
    area like Wales or if you are a farmer. If you
    are farmer you can get grants to do anything.
    There are quite a lot of farmers that have
    started up breweries and got a huge grant from
    DEFRA to do it

13
Rural Entrepreneurship characteristics
  • Risk taking financial, social, uninsurable
  • Innovation including creativity and technology
    adoption
  • Perceptiveness alertness to opportunities and
    the vision to make them happen
  • Personal motivation independence, drive, profit
    orientation, social motive?

14
Grant funding and business outlook
  • Allows microbrewers to gain independence and
    autonomy in a business that is completely
    governed and run by big players
  • it meant that I could buy higher spec kit...it
    is semi-automated and can even be operated
    remotely
  • the grant enabled us to spend money on things
    that we werent really going to budget for
    beforefor example, the grant will enable us to
    get a much better website...a much better
    vehicle, where without the grant, these would not
    have been in the frame

15
Grant funding and business outlook 2
  • Trade off between independence or accepting
    funding with consequent administrative burden
  • Application process sharpens up business planning
  • Environmentally friendly approaches
  • Increasing innovative thinking
  • Expanding horizons in terms of routes to market
  • Increased competition is also forcing unfunded
    businesses to review their strategies

16
Job creation and training
  • It is estimated that 1 job in brewing supports
    21 others in supply and distribution 1 in
    agriculture, 1 in the supply chain, 1 in retail
    and 18 in pubs (SIBA, 2013 17).
  • If I went to a 30 barrel brewery tomorrow I
    wouldnt have to increase my staff at all, I
    could maintain the amount of staff, but I could
    triple the amount of beer Im brewing.
  • One doubled in size without public funding and
    recruited a new marketing specialist, another
    with funding was expecting to need to recruit
    someone in the near future
  • Little requirement for training but still
    providing skills for employees Were constantly
    bringing people through, were training them up
    and were getting nothing for this.

17
Spill-over effects
  • The brewery provides an alternative route to
    sustain a village pub when local people do not
    support it enough they want it here to keep
    the house prices up
  • Impact for tourism and working with other local
    producers
  • Use local business services but many raw
    materials and equipment suppliers are national
    businesses

18
Concluding thoughts
  • Awareness and eligibility for funding is variable
  • Funding distorts the market
  • Competition is already tough
  • Any interventions need to be assessed against
    clear objectives
  • There are opportunities for innovation and
    business development and these should be
    supported
  • Networks and collaboration can add value
  • More detailed research comparing funded and
    non-funded businesses can yield new evidence

19
Thank youany questions?
Gary Bosworth Victoria Ellis gbosworth_at_lincoln.
ac.uk vellis_at_lincoln.ac.uk Lincoln Business
School Brayford Wharf East University of
Lincoln Lincoln, LN5 7AT UK
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