Empty vessels make the most noise
March 9, 2018 – the day I clicked publish on an article called ‘Tilt and Pour – An Open Discussion’- one of the most viewed article I’ve written to date. In it I discussed a variety of factors within the Northern Ireland beer landscape and highlighted some barriers to entry to said landscape, etc. (Check it out here) Over 4 years later I am looking back to see what has changed.
As of today 21/10/2022, there are 31 breweries and 4 contract brands currently active within Northern Ireland – @Breweries page and check out Quare Swally (Roy does a lot a great work here, so make sure to support him). 24 breweries, 7 contract-based breweries were noted in the post, so in theory we have gained 7 breweries and lost 3 contract brands since March 18.
Delving a little deeper within the timeframe you can see a significant wave of change, involving several breweries ceasing operations (Hillstown, Barrahooley, Glens of Antrim, Pokertree Brewing*, etc.), new entrants to the market (Out of Office Brewing, Bells Brewery, Ormeau Brewing, to name a few), as well as some brands moving their processes elsewhere due to ownership changes and economic factors (Station Works).
*Although based on the Discover Northern Ireland website, Pokertree is going strong and still producing.
Brexit, the Covid 19 Pandemic, Routes to market, Licensing, consumer preferences have all been a factor. Each one of the changes has impacted the scene in different ways, which I hope to convey here. I originally started writing with one piece covering a range of topics, however after half an hour, I realised this couldn’t be achieved within one blog post.
First up we have Licensing. This is a little insight to the most restrictive market in the UK, Ireland and arguably the EU. With the hope to encourage you to talk to your local Publican, Licence holder, MP, MLA or Councillor about the sector, the monopoly control and its restraints for growth.
Within Northern Ireland, as we know Stormont works in its own way across the parties. This is a major issue in general, so it is easy to see if for whatever reason 1 of the bigger parties are not interested in, then something is unlikely to move forward, progress or change.
With the Licensing and Registration of Clubs (Amendment) Act (Northern Ireland) 2021 I think we all had such high hopes for better, fairer and more transparency within the sector.
However, what we ended up with was a very watered-down tick box exercise to be seen, or to put it bluntly a missed opportunity due to how things work on the hill- in my opinion.
In the amendment the following changes were made:
- Pubs and Hotels can apply to open until 2am up to 104 nights per year.
- Smaller pubs can apply to open to 1am up to 104 nights per year.
- Drinking-up time has been increased to 1 hour.
- All additional restrictions on opening hours over Easter weekend have been removed.
- Opening hours on Sunday evenings are now the same as any other night.
- There is potential for flexibility around opening hours for bars at major events.
- A new category of licence has been created for local producers of craft beers, ciders, and spirits.
- Cinemas are able to apply for a liquor licence and serve drink to customers watching a movie.
- Sporting clubs are now able to use their grounds for functions up to 6 times per year.
- Registered clubs can apply to open to 1am up to 104 nights per year.
- Self-service of alcohol and sales by vending machines are prohibited.
- Restrictions have been placed on off-sales drinks promotions.
- Loyalty schemes will not be able to award or redeem points for the sale of alcoholic drinks.
For more details click here.
Let’s focus on the local producers’ licence; under section 10 & 11 which, under specific conditions, allows local producers to sell their own products on their premises. Yes, that’s right they can do what the rest of the UK can do, right? – Not exactly.
To summarise; local producers can apply for a licence for patrons to drink on site between the hours of 4pm and 10pm on the specified date (Not including Christmas Day). They can only have up to 104 authorisations of these events within any 12-month period. Essentially, every Saturday and Sunday for the year for 6 hours per day. They can also offer a sample at the end of a tour that does not exceed 1.5 pints (852mls) of beer up to and including 6% abv or 1 pint of beer at over 6% abv.
I appreciate the addition of the new licence but can see how restrictive it is for small producers to utilise effectively.
For example, if you utilise the 104 authorisations and the 6 hours associated with each authorisation, there are 624 hours of opportunity within a year to sell goods produced on site to be consumed where they are produced. Let’s say that is applied to minimum wage £9.50 which is £5,928 per annum or £494 per month depending on frequency of authorisations in any given month.
For effective use, these authorisations would likely be used at weekends or in periods over the summer months, this casual work is arguably not attractive for workers, who within the current climate are likely looking for more consistent, frequent, and secure work.
From a brewery’s perspective, how likely are they to hire additional staff to look after them? Unlikely as they may not have the cashflow to allow hiring, putting more strain on them to work longer hours in an already demanding sector.
We haven’t even considered any additional costs the brewery takes on for each authorisation such as legal/administrative costs, security, first aid, food offering, energy costs etc, and all of this before they can even contemplate if these authorisations are actually feasible.
One thing that is possibly a huge opportunity from within the bill was SDLP’s Matthew O’Toole’s amendment with cross party support from Alliance, UUP and DUP. This amendment allowed for an independent review into licensing within Northern Ireland. This review is likely to last 2 years and whilst there are other economic and global concerns, it is vital that all small producers work together for a fighting chance of establishing a more transparent, less restrictive and developed market.
Looking at the wider context, these changes have enhanced potential revenues and experiences for publicans and their patrons across NI. According to the Department for the Communities, as of December 2021, there were 1,193 liquor licences for public houses and 637 for off-licences, as shown above. These licences are split between urban and rural areas, with 52% within urban defined areas. Unfortunately, it does not highlight the actual owners of the licensee. This would be beneficial to highlight how the monopoly within Northern Ireland essentially control the beer taps.
Below is an attempt to give insight to a list of licence holders to help showcase the monopoly due to the number or licenses at their disposal for off sales and pubs. This is not an exhaustive list, , as at the time of writing the data is not publicly available information.
Taking the diagram above in general terms you can see that key licenses are not differentiated to represent which ones are now part of supermarkets or an actual pub and so on – this leaves confusion with the number of available taps within Northern Ireland. It also highlights that a potential ceiling will always be in place within NI for tap space leading to a very narrow and restrictive market.
Below I have put together a list of Distributor/Brand agents to highlight how many beer brands are battling for those taps within the limited license premises available in NI. This is not an exhaustive list, and all information is taken from the company’s official websites, price lists etc. This information is likely to change over time, will try and maintain as the blog stays active.
Therefore, it is very common to see 7 lagers, yes 7 lagers on a tap list, normally complimented by Guinness, Smithwicks, Magners or a ‘Craft brand’ invented by the Macro’s or an acquisition purchase of a previously independent brewery. For example, Beavertown has now been completely taken over by Heineken, they use this as a route to link Heineken in or to increase their strength within a licenced premises by taking over another tap.
Taking a closer look, if there are a limited number of taps and routes to market within NI then how does it function and how is it profitable?
The pub is a social spot, where alcohol is meant to be secondary to the experience of socialising with friends, family etc. How we consume alcohol has changed over the years, with accessibility to products now ever closer via online channels, supermarket placements and so on. The event of going to the pub isn’t always the only option as consumers are likely to drink at home, in their own comfort with friends etc in addition many rural pubs/licensing are being sold off and moved away from one area to another, or even changed from a pub to be used for a supermarket. We have highly populated licenses within areas but is that a false narrative as we do not know what exactly they’re used for? Is it a hotel? A Restaurant? A supermarket? Pub? and so on.
Within Tilt & Pour: An Open Discussion I highlighted how the macros (the likes of Diageo, Tennents, Coors etc) throw their weight around and essentially tie up lines. Basically if a pub is looking to update or rebrand as a new entity, take over new premises or just want better priced kegs/products etc.(all of which could have serious financial costs associated with it for the licence holder) they reach an agreement, whether it’s money towards the rebuild, rebrand, lines or even a lower price on their products/kegs but that comes with a catch.
This normally restricts the number of brands or products that the bar can serve outside of their portfolio and this can affect what’s on tap or stocked in the fridges.
Within Northern Ireland, draught has always been key, and this is normally where the stipulation falls under for the licence owner(s)/macro owner/distributor.
This process allows the owner(s) to do what their intended desire was but leaves a lot to be said for new entrants into the market.
These big global companies can essentially offer cash flow for license holders, which may be easier to obtain than more traditional financing methods.
Free houses are not necessarily uncommon, but some are reluctant to move away from the previous model, as it is consistent income for their business. Some could argue that some publicans use the free house concept to generate additional points of sale, upkeep of premises and so on.
For reference Guinness (also known as Diageo) produced 82.9 million or 8.29 Billion hectolitres of beer last year across their brands, comparing that to some outputs of NI which can be as low as 40 Hectolitres.
Shows that the economies of scale contrast significantly how can they compete with these barriers? Who acts as the voice for the sector?
Hospitality Ulster is a trade body that offers a voice for the hospitality industry in Northern Ireland, providing its members with support and guidance in a variety of services. This highly influential organisation has been noted for pushing for change within the licensing realm for over 10 years. Licence owners can opt in to pay Hospitality Ulster for their services, this is done on a per establishment basis. In theory, it could be argued that those with the highest number of licenses can have more influence on how the market should react, develop and so on.
If a brewery has a licence, albeit a new producer’s licence compared to that of traditional licensed premises surely this falls within the remit of Hospitality Ulster’s interest, as it states on their website: (accessed on 21/10/2022 at 21:00)
“… We promote and protect the interests of licensed premises throughout Northern Ireland”
Hospitality Ulster seem to see taprooms differently compared to that of more traditional pubs. Hospitality Ulster’s Colin Neil was quoted for a BBC article as saying:
“We were supportive of taprooms, but what you don’t want is to create something under a different format that competes directly [with pubs].”
I can appreciate that aspects of deregulation has trade-offs, but with the current state of taps being tied within NI how can progression, innovation and customer awareness be achieved in such a restrictive market for small independent producers?
I do find it difficult to digest that a small producer can stagnate or restrict its growth due to its inability to innovate and access routes to market, but a licensed premises or licence holder can essentially recreate the supply chain by establishing a brewery, produce its own wares and share it within its own bar(s) – seems a little like a double standard right?
For example, we can analyse two of Belfast’s latest ventures The Deer’s Head/Bell’s Brewery and Out of Office Brewing/Ulster Sports Club. These ventures are by two different companies.
Out of Office Brewing is established within Ulster Sports Club which is owned/run by Beannchor (associated with Wolsely companies). They brew beer for the third-floor space, as well as downstairs, which allows maximum profit and efficiency from creation to consumption. In addition, it has been spotted at another location owned by the same group, essentially removing the opportunity for other breweries to find a route to market.
The Deers Head (Bells Brewery) is almost identical to the above, they focus on maximising their output to ensure profitability etc. Initially Deer’s Head launched with a big selection of local brands in packaging with some kegs etc, but it has tapered off over time. I hope this will change and allows collaboration in giving new opportunities to breweries to showcase their wares. - to note this week they announced via their social media a Lacada tap takeover for two weeks!
From a business point of view, I can see the rationale, but it feels like now they’re more at risk of becoming siloed, insular, and not looking at the bigger picture. The craft scene is all about collaborating and growing together as, after all, this was always a key difference between them and the macros. This is not a pop at the two ventures and I look forward to visiting them again soon, but I am highlighting how the current legislation can be utilised for those with the capital and licenses behind them.
I have laboured on the point for 2000 words, to put across a point in monetary terms, where are all the macro beers produced? Packaged? Who provides their raw ingredients or variable resources? Or where is it even sold? Where does the beer taxes go?
Yes, there are several fulfilment/packaging outlets for these macro brands here, but only a fraction of what is produced or packaged in NI is sold here. A lot of the industry can get a lot of stock from outside of NI, whereas the NI breweries utilise local suppliers where possible and develop working relationships across the supply chain to ensure that the local economy is continuously reinvested in.
This is only part of the conversation to considered as we all have a part to play. In Northern Ireland, we now have a choice; to accept to the way things are within the sector, or to push for something more fair, competitive, and transparent. This is where you make your own decision, but I will be pushing hard for voices to be heard and hope that, in time, we can see reform for the better within the sector.
What will you be having?