Page last updated at 00:03 GMT, Thursday, 18 February 2010

Small brewers taking on the global giants

By Will Smale
Business reporter, BBC News, Surrey

Ascot Ales pint glass
Ascot Ales is looking to expand to keep up with demand

Chris Gill hardly has space to move when he brews his award-winning real ales.

His Ascot Ales brewery, a small unit on an anonymous industrial estate in Camberley, Surrey, is about the same size as a double garage.

With his brewing tanks beside one wall, and barrels on the floor, there isn't much room to turn around.

Add the piled up sacks of malted barley and bags of pungent hops, and you really do have to watch your step.

Thankfully small seems to be beautiful for the 40-year-old's growing band of customers.

Made entirely by hand, his range of real ales use only four natural ingredients - water, barley malt, hops and yeast.

Being a microbrewery we can afford to brew something that some may find a bit too challenging, but others will love
Brewer Chris Gill

Mr Gill has no truck with the chemicals or cheap additional ingredients like rice and maize that the global brewing giants add to keep costs - and flavour - down.

And he foregoes any thought of pasteurising his brews - a process used by big brewers to nominally extend the shelf life of their beers, but also destroying a lot of the taste in the process.

As a result, his range of Ascot Ales can be bit too flavoursome for many, but for those that like a tasty pint, Chris and his co-worker - wife Suzanne - are brewing at full capacity to supply 70 local pubs and members of the public at a number of farmers markets in Surrey and Berkshire.

Booming sector

But far from being unique, Mr Gill is just one very small part of a major change in the UK beer market - the rapid growth of tiny microbreweries - breweries with very small output levels and only a few staff at most.

Workers protesting at Anheuser-Busch InBev brewery in Belgium
The world's largest brewer AB Inbev has had some trouble of late

According to beer pressure group Campaign for Real Ale (Camra), there are now more than 600 microbreweries across the UK, with no less than 70 new ones starting up last year.

And this situation is being replicated in beer-loving countries around the world - especially in the US and Canada - as drinkers seek a more local and interesting pint.

The booming growth in the microbrewery sector could not be in sharper contrast to the current woes facing the multi-national beer giants - their sales are falling as people turn away from mass-market brews.

This is most evident in the continuing travails of the world's largest brewer Anheuser-Busch InBev, the maker of Stella Artois, Budweiser and Becks.

Its most recent financial results showed that its sales are falling in all parts of the world except Latin America.

Its sales in the US and Canada fell 4.7% in the third quarter of 2009, while those in Western Europe lost 3.3%, and sales in Central and Eastern Europe slumped 16.8%.

The falls resulted in the Belgian-Brazilian company announcing at the start of this year that it would cut 10% of its 8,000 strong European workforce.

The news has sparked continuing strikes by its staff in Belgium, who have blockaded its breweries, hitting supplies getting to bars and shops.

Rival SAB Miller, the world's second largest, also recently reported a 2% fall in European sales; although at the same time sales of its premium brands Pilsner Urquell and Peroni Nastro Azzurro were up strongly.

'Flavoursome'

Camra spokesman Iain Loe, says the growing success of microbreweries can be easily explained.

Brewer Chris Gill at work
Chris Gill says he was determined not to make bland beers

"They are producing the type of beers people want to drink - flavoursome and interesting," he says.

"And they are locally brewed as well - these are what more and more people want."

Back at Ascot Ales, where Mr Gill can currently make just 12 barrels a week "when working flat out", he is looking to expand into the next door industrial unit, so he can increase production.

"The business started in 2007, and sales have grown steadily since then," he says.

"The idea was to sell very distinctive beers - we didn't see any point in producing something bland.

"If you are a big brewer you have to play it safe, because you are producing so many thousands of barrels of beer a time, you need it to have mass market appeal.

"Being a microbrewery we can afford to brew something that some may find a bit too challenging, but others will love."

Tax boost

In addition to consumers' increasing demand for different flavours from their beer, the growth of the microbrewer sector in the UK has been further helped by the Progressive Beer Duty scheme, which was introduced by the government in 2002.

Under the rule, brewers of up to 5,000 hectolitres (110,000 gallons) per year, only pay half the excise duty.

For a pint of typical 4% beer, this cuts the duty a microbrewer has to pay from 37.44p to 18.72p, giving them a financial helping hand.

But as Camra's Mr Doe says, at the end of the day it still all comes back to the taste.

"A successful microbrewer has to produce something distinctive," he says.

"Thankfully because they are often brewing in very small amounts, they can afford to take risks and try out different recipes until they get one that is popular."



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SEE ALSO
No deal in Belgian beer dispute
19 Jan 10 |  Business
Belgian beer dispute hits supply
15 Jan 10 |  Europe
Beer giant cutting European jobs
08 Jan 10 |  Business
Profits up at giant global brewer
12 Nov 09 |  Business
Costs are threat to micro-breweries
13 Jun 08 |  Scotland

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