Post on 16-Jan-2016
Conference 2011
Nick StaffordCommercial Director
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
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and deleted when no longer important
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
SIBA MEMBERS’ INTERFACE:
‘SMI’
• And access your orders from the SIBA Direct Delivery Scheme!
Chairman of CouncilTrusteeTrustee
Chief ExecutiveCommercial Director
Non – ExecNon – ExecNon - Exec
SIBA DDS SIBA MS SIBA TS
KEITH BOTT
STEPHEN GOULD
FRANCIS PATTON
JOHN HART
GUY SHEPPARD
CARL BEESON
JULIAN GROCOCKNICK STAFFORD
Brewing Business AwardsPresented during the SIBA Retail Conference in Nov 2010, the Brewing Business Awards are an important vehicle for recognising particular effort and success.
Beer CompetitionsSIBA’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.
Support for the GBBFSIBA 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.
Joint purchase schemesSIBA 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.
Supplier AssociatesSIBA 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.
SIBA Technical ServicesMost 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.
CyclopsA 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.
Off TradeMuch 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.
SIBA DDSSIBA’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.
10,750
6
FOUR
Barrels by Pubco
0
5000
10000
15000
20000
25000
30000
2010
Enterprise Inns
Admiral Taverns
Orchid Pub Co
Punch Taverns
WELLS & YOUNGS
Oxford Hotels & Inns Ltd
TCG (Tattershall CastleGroup)
Town & City Pub Co
Foundation Inns
Outlet buying analysis July – September 2010
47%
84%
61%67%
59%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
% of Pubs Buying
Pubs ordering morethan in previousquarter
Deliveries travellingless than 40 miles
Pubs ordering ineach of the last fourquarters
Pubs orderingfortnightly or morefrequently
Pubs buying from 1or 2 brewers only
On Trade Barrels
2826631628
35623
0
5000
10000
15000
20000
25000
30000
35000
40000
2008 2009 2010
On Tradevolume(barrels)
No. of pubs ordering in a year
17341869
2127
0
500
1000
1500
2000
2500
2008 2009 2010
No of pubsordering
Average firkins per pub
65.2
67.69
66.99
63.5
64
64.5
65
65.5
66
66.5
67
67.5
68
2008 2009 2010
Throughput perpub (firkins)
Increasing participation
324
356
373
290
300
310
320
330
340
350
360
370
380
2008 2009 2010
No of Brewers
Top 30 brewers have less share
44.41%
43.31%
40.97%
39.00%
40.00%
41.00%
42.00%
43.00%
44.00%
45.00%
2008 2009 2010
% share of totalDDS sales
Differing fortunes in DDS
18
146
7
177
0
20
40
60
80
100
120
140
160
180
2010
Ceased tradingwith DDSVolumes fell
No change
Volumesincreased
WORLD ECONOMYInflation 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?
GOLD is still the best investment
560 BC 2011 AD
ONE OUNCE OF GOLD STILL BUYS 350 LOAVES OF BREAD
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.”
.
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
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
Is this your brewery?
PRODUCTION
DUTY 104,418 31%
MATERIALS 51,068 15%
DIRECT COSTS
LABOUR 91,536 27%
ENERGY & CLEANING
15,941 5%
ROAD FUEL 9,778 3%
OVERHEADS RENT 17,500 5%
…EVERYTHING ELSE
44,206 13%
TOTAL COSTS
334,452 100%
1820 BARRELS
PER BARREL 183.76
Costs per barrel 183.76
Loans: Capital 5,000
Vehicles (£15k for two, over three years)
Brewing plant (£30k over 10 years)
3,000
Office Equipment (£2k over four years)
500
1000 Casks (@ £16.20 Close Rentals)
16,200
Loans: Interest 2,000
Depreciation (10%) 2,500
Total 29,200
REAL COSTS per barrel
199.80Tax????
FUNDING REQUIREMENT
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!
Is this your brewery?• Enterprise costs are £363,352• Profit is £20,000• Turnover is therefore £383,352• Sales per barrel = £210
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
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
Price Increases 1991 - 2011
64%
193%
138%
333%
92%
124%
0%
50%
100%
150%
200%
250%
300%
350%
20 year increase
Retail Price Inflation
Price of Pint (IncludingVAT)
Wholesale Price BBL
Discount toDistributor/Pubco
Price brewer receives
Excise Duty
Price Increases 2001 - 2011
25%
66%
58%
63%
56%40%
0%
10%
20%
30%
40%
50%
60%
70%
10 Year increase
Retail Price Inflation
Price of Pint (IncludingVAT)
Wholesale Price BBL
Discount toDistributor/Pubco
Price Brewer receives
Excise Duty
DDS 2001 - 2011
25%
66%
58%
63%
56%40%
49%
38%
53%
0%
10%
20%
30%
40%
50%
60%
70%
10 Year increase
Retail Price Inflation
Price of Pint (Including VAT)
Wholesale Price BBL
Discount
Price brewer receives
Excise Duty
SIBA Wholesale Price 4%
Enterprise DDS Discount
Enterprise Inns Price toBrewer
DDS has maintained brewers’ price comparison with industry increases
DDS Wholesale Prices are equivalent to other
brands
240270
£0£50
£100£150£200£250£300£350£400£450
DDS BREWER CENTRALDIST'N
BREWER
Enterprise DDS Discount
Enterprise Inns Price toBrewer
£270 per barrel should be your target minimum price to receive from any customer. Why?
Price maintenance
150
170
190
210
230
250
270
290
2001 2011
SIBA DDS
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.
Price maintenance
150
170
190
210
230
250
270
290
2001 2011
SIBA DDS
LOCALBREWERS
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.
BREWERS’ MINIMUM IN 2001
2011 SIBA SURVEY £244
Price maintenance
150
170
190
210
230
250
270
290
2001 2011
SIBA DDS
LOCALBREWERS
£15
£26
TOTAL REDUCTION IN “MINIMUM ACCEPTABLE” PRICE = £41 PER BARREL
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.
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
150
170
190
210
230
250
270
290
2001 2011
SIBA DDS
LOCALBREWERS
• 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
150
170
190
210
230
250
270
290
2001 2011
SIBA DDS
LOCALBREWERS
£41
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.
Price Increases 1991 - 2011
64%
193%
138%
333%
92%
124%
0%
50%
100%
150%
200%
250%
300%
350%
20 year increase
Retail Price Inflation
Price of Pint (IncludingVAT)
Wholesale Price BBL
Discount toDistributor/Pubco
Price to Brewer
Excise Duty
How many brewers are under pricing their beer in the market?
0
50
100
150
200
250
1991 2001 2011
Price toBrewer
Are youselling at£50 perfirkin?
92%
54% !!!!!!!
Pre PBD Post PBD
Not even keeping up with Retail Price inflation – madness??????
64%
193%
138%
333%
54%
124%
0%
50%
100%
150%
200%
250%
300%
350%
20 year increase
Retail Price Inflation
Price of Pint (IncludingVAT)
Wholesale Price BBL
Discount toDistributor/Pubco
Price to Brewer
Excise Duty
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!
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?
Summary of thoughts
• If my cost assumptions are correct, you can not afford to sell for less than £221
Summary of thoughts
• If my cost assumptions are correct, you can not afford to sell for less than £221
• Brewer’s Survey 2010 shows brewers admitting to selling at £244
Summary of thoughts
• If my cost assumptions are correct, you can not afford to sell for less than £221
• Brewer’s Survey 2010 shows brewers admitting to selling at £244
• We know brewers are selling at £200 or less!
Summary of thoughts
• If my cost assumptions are correct, you can not afford to sell for less than £221
• Brewer’s Survey 2010 shows brewers admitting to selling at £244
• We know brewers are selling at £200 or less!
• If brewers before PBD knew what they were doing, then they, today, would be selling at £278
Summary of thoughts
• If my cost assumptions are correct, you can not afford to sell for less than £221
• Brewer’s Survey 2010 shows brewers admitting to selling at £244
• We know brewers are selling at £200 or less!
• If brewers before PBD knew what they were doing, then they, today, would be selling at £278
• The whole industry wholesale price is £270 minimum to the brewer
Summary of thoughts
• If my cost assumptions are correct, you can not afford to sell for less than £221
• Brewer’s Survey 2010 shows brewers admitting to selling at £244
• We know brewers are selling at £200 or less!
• If brewers before PBD knew what they were doing, then they, today, would be selling at £278
• The whole industry wholesale price is £270 minimum to the brewer
• EVERY £1 BELOW £278 IS GIVING AWAY “SMALL BREWERS EXCISE RELIEF”
Inflation and…..…saturation
• Diversify to protect your margins
• Buy a pub or two• Everards, Enterprise,
Punch, Admiral
FEB 2011
SIBA DDS and TS
Frequently Asked Questions (and Answers!)
Where can I find an up-to-date list of Enterprise (or any other pubco) pubs on
the DDS scheme?
Where can I find an up-to-date list of Enterprise (or any other pubco) pubs on
the DDS scheme?
Pub lists for each customer can be found under “Documents” on the SMI –
SIBA Members’ Interface.
What happens if I am unable to log in to the SMI?
What happens if I am unable to log in to the SMI?
Should your details not be accepted it may be that we need to reset them. All you need to do is send us an email and
request that we reset your log in details.
When are the available product lists updated and sent to the pubs?
When are the available product lists updated and sent to the pubs?
Products and postcodes are updated monthly. Any amendments must be in by 15th of the
month (unless otherwise informed) to ensure they are active for the following month.
The updated sheets are issued to all pubcos (other than Enterprise) at the end of each
month – Enterprise issue their own mail shots to pubs.
How many beers can I list with the various pubcos?
How many beers can I list with the various pubcos?
You can list as many ales as you wish with all pubcos other than Enterprise Inns. Enterprise
Inns restrict brewers to listing 3 ales per brewer. (Please note that there are some brewers with more than 3 beers listed, due to the fact that they were DDS members before Enterprise
brought in this restriction).
Why can’t I ring SIBA DDS and have to send an email?
Why can’t I ring SIBA DDS and have to send an email?
DDS comprises a small team of 3 office-based staff, dealing with over 1000 pubs weekly, whose main priority is to take calls from
customers and pubcos with queries and or orders they wish to place.
Please e-mail us in the first instance – we check emails every 10 minutes throughout the day.
If we can better answer your query by speaking to you directly, we’ll call you back.
Can brewers contact pubs directly to inform them that their ales are available
through SIBA DDS?
Can brewers contact pubs directly to inform them that their ales are available
through SIBA DDS?
Brewers can contact those pubs that are listed under the “Documents” section on the SMI.
Brewers must not offer licensees free beer or any other incentive, and must ensure that they
do not mislead the licensee on the terms of his/her agreement with their pubco. Please
contact SIBA DDS if in doubt.
Why does DDS allow brewers to use third parties or wholesalers to deliver beer on their behalf?
Why does DDS allow brewers to use third parties or wholesalers to deliver beer on their behalf?
DDS customers choose to limit the radius of deliveries from breweries or not. For example, Punch does,
Enterprise does not. Enterprise specifically requires freedom of movement of beers and, additionally, wish
third party deliveries as it increases choice in areas where there a few breweries.
Enterprise do not allow general wholesalers to act as a haulier - they only wish cask ale specialist wholesalers to do the job. Other pub cos give us their instructions and
DDS applies them. SIBA DDS policy has always been to encourage pubcos to
promote local beers first and foremost, but we can not enforce a restriction on trade on a DDS Customer
Who can report a TS problem or query?
Who can report a TS problem or query?
If the pub is owned by a pub company and receiving supplies via DDS, then the pub must ring SIBA TS directly. In this case, maintenance
costs will be paid by SIBA TS.Where a pub is free trade, a SIBA brewer can nominate them as a customer, by ringing TS
direct on 01765 640950. Costs will need to be paid by the brewer.
Do SIBA TS have to provide Technical Services for every pubco DDS deals with?
Do SIBA TS have to provide Technical Services for every pubco DDS deals with?
No, not all, but if the pubco doesn’t require us to provide dispense equipment support, then we
have to pay a contribution to the pubco or brand owner's costs of that service.