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Budget Report: “No changes to duty rates”

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In his latest budget, the chancellor of the exchequer George Osborne, has reported that there would be no change to the current rates of duty on alcohol.

But what will the budget mean for the trade?

The duty escalator will remain in place but no further changes to the current rates will be made, meaning that taxation will continue to rise by 2% above inflation.

He made reference to the government’s impending alcohol strategy, which he said would tackle “the growing problem of alcohol misuse”.

Introducing his tax changes he said: “The first goal is a much simpler tax system – we will radically change administration of tax for smallest firms.

We’re pressing forward for ambition to integrate NI and income tax administration. We’ll also address loopholes and anomalies in VAT on food and drink.”

In a move that was expected he also lowered the 50 pence top rate of tax to 45p saying: “The 50p tax rate is highest in the G20 – it is widely acknowledged as harming the British economy.

“I’ve always said it was temporary. A 50p tax rate can only be justified if it raises significant sums of money. What the HMRC report reveals is that 50pc rate has caused massive distortions. £16bn was shifted into previous year, costing the taxpayer £1bn.”

Reaction from the trade was swift. Henry Chevallier, chairman of the National Association of Cider Makers (NACM), said:

“Though not entirely unexpected this decision puts at risk the progress the industry has made in recent years to be more sustainable, to increase consumer choice, to address misuse and grow government revenues.

“The industry has just renewed its commitment to be even more sustainable and to invest in the rural areas where we are based and this move makes that much tougher. This comes at a time when consumers are already reducing their spending – the chance to enjoy a glass of cider just got more expensive.

“There is a budget deficit to address and that is understood. However, for an industry with an investment cycle measured in decades it is vital that we quickly return to a stable and sensible duty regime.

The duty escalator will stay in place

“Stability will ensure that the cider industry can continue to invest at a level that supports the rural economy and help improve the prospects for a very British success story – we don’t have that with this decision.”

The British Beer and Pub Association’s (BBPA) chief executive, Brigid Simmons, said: “This is a huge lost opportunity to put British jobs and pubs first. Beer tax has now risen by 42% since the misguided ‘escalator’ policy was introduced just four years ago. It means the loss of over 5,000 jobs this year, and hundreds of pub closures.

“We need a full debate in Parliament about the wider impact the duty escalator is having on Britain’s brewers and pubs, and the hard-pressed British beer-drinker. The UK already has the second highest beer duty rate in Europe and British consumers pay 40% of the EU’s beer tax bill, despite only drinking 13% of its beer.”

Molson Coors’ CEO and chairman of the BBPA, Mark Hunter, added: “There are no winners from the beer duty escalator. Ordinary British drinkers are paying more tax to drink less beer, reducing overall government tax revenues and forcing British brewing into a deeper, duty-fuelled decline.”

Traditionally, during the budget the chancellor is the only member of parliament allowed to drink alcohol. In the past, chancellor’s have opted for whisky (Kenneth Clarke), gin and tonic (Geoffrey Howe), brandy and water (Benjamin Disraeli) and William Gladstone, who’s budgets were famed for their length (five hours on 18 April 1852) favoured Sherry and beaten egg.

Osborne stuck with a glass of water in his 58 minute speech.

Full analysis of the new budget and its impact on the drinks industry will appear online and in the April issue of db.


Caffrey’s gets £1 million revamp

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Molson Coors has unveiled a £1 million advertising campaign for Caffrey’s.

The campaign, the first for the Irish ale in several years, has a tagline of “Redefining Smooth”.

The adverts support a redesign of Caffrey’s which has taken place over the last six months, including new packaging, rebranded pump clips and new glassware in the on-trade.

The new glassware and pump branding has resulted in a 7% uplift in sales.

Duncan Emmerson, Senior Brand Manager, Molson Coors (UK & Ireland) said, “Caffrey’s has a place in many consumers’ eyes as an iconic, Irish ale. With this rebrand and new advertising campaign, we’re hoping to attract a lost generation of smooth ale drinkers, with an innovative, refreshingly smooth, premium product.”

The new campaign also includes a Spotify digital exclusive that offers listeners the opportunity to vote online for their favourite ‘redefined classics’ – the best covers of classic songs.

New BBPA chairman announced

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Jonathan Neame, Chief Executive of Kent-based family brewer Shepherd Neame, is to be the new Chairman of the BBPA.

Jonathan Neame

This follows the departure of Molson Coors Chief Executive Mark Hunter, who is taking up a role as head of a new, Europe-based business unit following Molson Coors’ acquisition of StarBev.

A handover will take place before the end of June.

Neame is currently a BBPA Vice Chairman and Executive Board member, he moves from his current role as Chairman of the BBPA’s future Beer Group, where he has been involved with BBPA’s campaigning against excessive beer tax rises, and it’s championing of beer as a category.

He said, “In Britain we should all cherish and celebrate the role of beer and pubs. They are vital to the country’s economic, social and cultural life and with the right support should be a driver of growth, investment and job creation. I am passionate about the industry and honoured to step into the role at this time.”

BBPA Chief Executive Brigid Simmonds added, “I am delighted to welcome Jonathan as our new Chairman, who brings huge experience of brewing and pubs. He is already a great champion of British beer, and also of the need for the industry to work closely together to ensure our voice carries weight with Government.”

Stefan Orlowski (Heineken UK Managing Director) is to become BBPA Vice Chairman and Paul Wells (Chief Executive, Charles Wells) a BBPA Director.

 

 

 

Molson Coors and Sky collaborate on sport discount for on-trade

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Brewer Molson Coors and Sky TV have announced a cut on Sky subscription and a freeze on beer prices for up to 70,000 venues.

The deal is aimed to “boost footfall” and “reduce costs” as it promises a third off a venue’s Sky Ultimate subscription and a Carling price freeze until December 2013 for licensees that sign up to the deal.

Sport is often seen as a major driver of on-trade revenue, with 1.7 million people watching Manchester United’s last game of the season in pubs earlier this year and a great part of the £150m boost from England’s Euro 2012 match against the Ukraine will have gone to on-trade premises as well as supermarkets.

Simon Cox, wholesale business managing director at Molson Coors, said: “We all know the difficulties that the independent on-trade is facing and Molson Coors and Sky are committed to supporting the industry by helping to drive people into their local.

“Nothing does that better than the mix of great drinks and top class sport. We have joined forces to offer significant savings at a time when we know our customers are particularly price sensitive.”

Molson money sees Doom Bar boom

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Sharp’s Brewery has reported a 22% leap in volume sales for its Doom Bar flagship beer, following the Cornish firm’s acquisition last year by Molson Coors.

With Doom Bar now available in 6,000 outlets across the UK, Sharp’s increased production from 81,199 barrels in 2010 to 117,517 barrels last year.

Reporting strong sales from the rest of its beer portfolio as well, which this year saw the addition of its premium bottled range, Connoisseurs Choice, the brewer also flagged up an 18% year-on-year rise in employee numbers.

Outlining the company’s plans to build on this growth, Emma Bebbington, general manager at Sharp’s Brewery, remarked: “The sales growth of our core brands such as Doom Bar means we are able to invest back into the brewery and expand and improve our brewing operations

“In turn we have been able to take on more employees which has had a really positive knock on effect for the local economy. We are determined to build on our recent successes and keep developing new, innovative products”.

Understood to have paid around £20 million for the Sharp’s Brewery, Molson Coors injected £5m investment capital last year. Future developments at the brewery include a new water treatment plant, extra fermentation vessels, an upgraded packaging area and extended cellar storage space.

Van Damme is back in Coors Light ads

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Molson Coors is to launch the next instalment of its cult Coors Light ads starring Jean Claude Van Damme, as part of a £6m integrated campaign.

Coors Light’s “Closest to Cold” UK advertising campaign launched on Facebook and YouTube and will make its TV debut on 13 July, running for nine weeks.

The 30 and 10 second spots titled “Imprints”, depict the continuation of Jean Claude Van Damme’s quest in the Rockies, trying to get “close to the ice cold refreshment of a Coors Light.”

In the latest ad, created by VCCP Blue, Van Damme makes snow angels while singing classic ’80s tune “Take my breath away”.

The first execution of the campaign racked up millions of online views when in launched in July last year and went on to become the UK’s most-shared beer ad.

Ali Pickering, brand director for Coors Light UK, said: “Coors Light sales have been very strong coming into the traditionally busy summer period in the UK. The strong marketing campaign, in which the Van Damme adverts have played a vital role, has really driven the brand’s growth over the last year. This confirms that now is the ideal time to launch the new instalment of adverts to push sales even further.”

According to Molson Coors, Coors Light has grown over 40% in the off-trade this year, outperforming the overall lager market which has seen a 2.8% decline. On-trade performance over the same period was 14% growth, again in a declining market.

Watch a video of the advert:

Is unit reduction growing or shrinking the market?

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The Responsibility Deal Low Alcohol Group’s pledge to lower alcoholic units could be of great benefit to the trade as well as the fight against alcohol abuse said the group’s co-chair, Scott Wilson.

Speaking at the Alcohol in Moderation conference, Wilson, who is also director of public affairs at Molson Coors, was explaining the “big, hairy, ambitious goal” the group has set and how it is being applied.

The group and its members have pledged to take 1 billion units out of production by 2015 but will this help grow or shrink the market asked Wilson?

He argued that the pledge was a chance for the industry to embrace smaller measures such as the 2/3 pint schooner and also to “build a market for low alcohol products.”

He said that there has “been some angst in the industry that the pledge hasn’t been widely reported.

“But the idea of watered down drinks does nothing to build a positive image or attitude towards low alcohol drinks.

“Making these drinks can present a real challenge,” he continued, “if you stop the ferment they can be too sweet and too much reverse osmosis makes them too  weak.”

He added that the Portman Group would be announcing new rules and guidelines regarding low alcohol drinks this November.

Finally, he noted that it was worth remembering that, in general, “UK consumption is falling and drinking is, generally, within government guidelines.”

Furthermore, “over the pledge’s lifetime, beer alone would take out 3bn units through a shrinking market.”

As Wilson admitted, however, another “motivating” factor in the development of low alcohol drinks is the fact that it is quite easy to make more money from low alcohol drinks compared to full strength ones.

Brewer ready to ship 50 million beers

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Molson Coors is preparing for its Christmas rush and has over 50 million cans and bottles to distribute to a thirsty nation.

Coors beers ready for distributionThere are currently 54.6 million cans and bottles at the brewer’s national distribution centre in Burton-on-Trent. The site is packed with 27,000 pallets of beer covering an area the size of six football pitches.

Workers at the site are preparing for their Christmas rush as they will ship the pallets and crates to supermarkets and off-licences all over the UK.

A Molson Coors spokesman said: “Along with summer, Christmas is a crucial trading period for us.

“In the run-up to the big day itself, there are plenty of people who are stocking up for parties.

“As a result, everyone from the brewery, warehouse and delivery teams has been working flat out to make sure we’ve got the right stock so that our customers have everything they need to keep the tills ringing.”

It is estimate that if all the cans and bottles currently occupying the warehouse were laid end to end they would stretch from London to Beijing, with a few left over for drinking.


Carling to unveil its first cider in the UK

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Britain’s biggest brewer Molson Coors is launching Carling’s first move into the UK cider market.

Carling ciderThe new 4.5% abv “modern premium cider” comes from Herefordshire and is the latest addition to Carling’s stable of products.

Carling British Cider will launch exclusively in the off-trade in March 2013 and will be available in 500ml and 275ml bottles.

In a statement the company said that after a year of “refining and perfecting the cider”, consumer tests carried out by MCBC Consumer Research put the new cider ahead of the current market-leading brands on “taste, refreshment and likelihood to buy”.

Jeremy Gibson – brand director for Carling at Molson Coors UK said: “Our aim was to make a product that beats the competition on taste and refreshment and Carling British Cider has done just that. The consumer response has been overwhelmingly positive, proof that the time and investment we’ve made to ensure it is a fantastic product has paid off.

“Carling British Cider adds to the diverse portfolio of drinks we already offer to our off-trade customers and their shoppers. Following 30 years of success for Carling, we are entering a growing cider market using the strongest brand name in the industry.”

Molson Coors has said it will be investing around £4.5 million in a marketing campaign for the launch of Carling British Cider, which will be taking aim at an off-trade market that was worth £869m last year.

Unite union to ballot Carling workers

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Unite, the country’s largest union, is to ballot employees at Molson-Coors in Burton-on-Trent over possible strike action.

Carling breweryThe union claims that its members will be asked to vote for strike action in a dispute over a package of “management proposals”.

Unite regional officer Rick Coyle said: “Our members, the vast majority of the workforce, are very angry at the hardline attitude of the management which could mean they are sacked and then re-employed on inferior contracts.

“The 90-day consultation period on these proposals ends on 14 June. Members will then be subject to individual consultations and face being sacked and re-engaged. This could be done between then and the end of the year.

“Unite wants an equable and fair settlement with the management of this very profitable company and is ready for constructive negotiations. However, the management’s stance has meant our members voting on strike action, given the atmosphere of duress and threat to their livelihoods.”

In response to Unite’s balloting action a spokesman for Molson Coors said: “Since July 2012, Molson Coors has been engaged in discussions with Unite representatives with the purpose of identifying opportunities to save costs and increase flexibility to enable Burton Brewery and Shobnall Maltings to compete in a declining beer industry and challenging economic environment.

“Proposals we recently put to our employees cover potential changes to organisational structures, terms and conditions of employment as well as flexible ways of working. This, alongside the investment we are making in the brewery itself, will build a sustainable future for brewing in Burton.

“Following a recent statement from Unite, we wanted to clear up some confusion about the proposals we recently put to employees: 1. All salaries will be protected at their current level for two years. 2. All brewery employees will be entitled to annual leave during which they will not be contacted and cannot be called into work.

“While the changes to shifts we have proposed are significant for our employees, they are common practice for British manufacturers. We appreciate the impact these changes will have on some of our Burton Brewery and Shobnall Maltings employees and we remain committed to working with Unite to find a solution for all parties.

“This is the spirit in which we will continue our discussions with Unite and our employees.”

Unite claimed the new shift system will mean that not everyone will be able to have an annual two-week holiday, “because workers will be rung up and asked to come even when they are on leave.”

The Burton plant produces Carling, Grolsch, Coors Lite and Cobra lagers, as well as beers including Worthington, White Shield and Stones.

Carling workers vote in favour of strikes

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Employees at the Molson Coors brewery in Burton-on-Trent have voted in favour of strike action, in a dispute over pay and conditions.

Carling breweryThe Unite union said its members at the brewery voted by a margin of 97% in favour of strike action, although no dates have yet been set for the strikes, to allow talks to continue.

Unite said that the dispute “centres on the 455-strong workforce at the brewery being sacked after 10 June and reemployed on inferior pay and conditions.”

Unite regional officer Rick Coyle said: “The overwhelming vote in favour of strike action shows the strength of feeling at the way the company has behaved towards its loyal workforce.

“Talks are carrying on today (Wednesday). The management has engaged in a constructive dialogue and Unite is seeking a settlement that is fair to our members – and we are working very hard to achieve that end.

”Until these talks have concluded – and depending on the outcome – the union won’t be announcing any strike dates.”

A Molson Coors spokesman said: “Clearly we are disappointed by today’s announcement. However, this vote does not make strike action a certainty given that negotiations are ongoing.

“We continue our engagement in meaningful consultation with Unite and its members so that we come to a solution that supports a competitive future for Burton brewery and is fair to our employees.

“As a company we have strong contingency plans in place to ensure that we can fulfil our customers’ orders.

“The proposals we put to workers are part of tough decisions that we have taken across the whole business, which are necessary to ensure a sustainable future for Molson Coors in Burton.”

Unite has argued that Molson Coors is a profitable company, which benefited from George Osborne’s recent reduction in beer duty, and that there was no financial imperative for the proposed cuts.

The Burton plant produces Carling, Grolsch, Coors Lite and Cobra lagers, as well as beers including Worthington, White Shield and Stones.

Brewers join forces to halt falling sales

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Brewing industry giants have today joined forces in a major campaign called “Let there be beer”, which is aimed at trying to change the image of beer and arrest falling sales in the UK.

Let there be beerAB InBev, Heineken, Carlsberg, Molson Coors and SABMiller and dozens of other breweries have all invested in the multimillion pound campaign, which kicks off with new TV advertising on 29 June.

The alliance behind the Let there be beer campaign also includes pub businesses, retailers and organisations such as the British Beer & Pub Association (BBPA) and Campaign for Real Ale.

The campaign aims to reignite the public’s love of beer and restore lagers, ales, bitters, pilsners and stouts firmly in the nation’s hearts whilst highlighting the significant role brewing plays in supporting the economy.

A spokesperson for Let there be beer said: “This coalition is a first for the brewing industry and we are united in our passion for beer. Let there be beer is a rallying cry to the nation to remember just how good it is to have a beer, getting Brits rediscovering beer all over again and giving it whirl on occasions which they might not have considered before.

“Let there be beer is on a mission to encourage a reappraisal of beer and will be focussing on demonstrating the diversity of the category, with a big focus on pairing beer with food.”

As well as the TV advertising the campaign will include a social media content programme, celebrity associations and broadcast partnerships, which includes sponsoring the Sunday Brunch programme on Channel 4.

Simon Cox, managing director of Molson Coors, said: “There is an ever more diverse selection of beers available in our pubs and supermarket shelves. We’ve seen the emergence of a more discerning beer drinker, a growth in micro-breweries, as well as increased availability of beer brands from all around the UK and the world. Two decades ago there were around 2,000 brands of beer on sale in the UK compared to more than 5,000 on sale today.

“Let there be beer is about instilling a passion for beer in the nation’s hearts and remind the nation why beer is the nation’s best-loved drink. But for many, beer simply means pints of warm, flat lager. That couldn’t be further from reality.”

The new campaign hopes to “bring lapsed drinkers back to beer” and comes in the wake of falling beer sales in UK pubs, which were down by almost 50 million pints in the first quarter of 2013, compared to the same period last year.

Brewery workers agree new pay deal

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Molson Coors brewery workers in Burton-on-Trent have ended a long-running dispute over pay and conditions by voting to accept a revised package which will lead to wage cuts.

Carling breweryUnite said its members at the Molson Coors brewery had “voted to accept a second revised package put forward by the management.

The deal includes a pay reduction of £862 from next January and £862 from January 2015 for all workers previously facing cuts of up to £9,000 a year. Shift proposals, which the union said could have led to workers being called in while on holiday, have been withdrawn.

The deal also see severance and redundancy payments available for all workers facing a pay cut and pay protection not only fully retained, but temporarily improved until 2017. This will mean workers earnings’ will now contractually guaranteed for at least the next five years.

Unite regional officer Rick Coyle said: “This workforce stunned Molson Coors by the strength, determination and scale of the solidarity they displayed.

“The 97% vote in favour of strike action will never be forgotten. Unite is proud to have delivered an honourable outcome for members in a dire situation that originally saw some workers face losing their homes.”

A spokesperson for Molson Coors said: “We are pleased with the result of Friday’s vote, which will allow us to continue with our plans to build a sustainable future for brewing in Burton so that we can compete in a challenging marketplace.

“We would like to thank our employees for their patience and support over the consultation period and Unite for the positive contribution it has made to these vital negotiations.”

The Burton brewery produces Carling, Grolsch, Coors Lite and Cobra lagers, as well as beers including Worthington, White Shield and Stones.

Price of pint set to rise by 6p

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Carlsberg and Molson Coors have announced a hike in wholesale prices meaning it could cost pubs that buy draught beer by the barrel an extra 6p per pint.

As reported by The Metro, the new prices, which don’t include VAT, will come into effect in January, with other brands expected to follow suit.

“It’s putting pubs in a really difficult situation because they just can’t afford to increase their prices that much,” Simon Clarke, landlord at the Eagle Ale House in Battersea told The Metro.

The Morning Advertiser reports that the decision was blamed on rising production, energy and fuel costs.

“We have regretfully informed our on-trade customers that we will be increasing prices on own produced and wholesales products will effect from 6 January 2014.

“The price increase reflects the rising costs of production, energy and fuel.

“We are fully aware of the challenging market for our customers and have absorbed as much cost as possible to ensure impact is kept to a minimum,” a Carlsberg UK spokesperson said.

Molson Coors meanwhile, blamed the increase on “rising input prices that affect all brewers.”

According to The Campaign for Real Ale, 18 pubs close every week in the UK.

Molson Coors chases flavoured cider trend

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Molson Coors UK is set to launch a new cherry flavoured Carling cider marking the brewer’s first foray into the ever-growing flavoured cider category.

Carling Cider Cherry

Building on its original flavoured cider which launched last year, Carling British Cider Cherry will be available in the UK off-trade only available in 500ml bottles or packs of sic.

Jim Shearer, brand director of Carling at Molson Coors UK said: “The success of Carling British Cider among retailers has been fantastic. In response to customer demand, we are excited to launch Carling British Cider – Cherry to our off trade customers.

“We researched several different new flavours and Cherry got a unanimous thumbs-up for its vibrant colour and fresh crisp taste with a burst of sweetness, perfect for summer. We look forward to continuing to innovate in the cider market, which we believe offers superb opportunity for growth.”

The brewer, whose brands include Carling, Cobra and Grolsch, will support the launch of its new flavour with a £4 million advertising campaign from 4 April, as well as a national sampling campaign.

Carling joins a number of other UK brands to have launched flavoured cider ranges in recent years – a category which has seen enormous growth in the UK.

Magners launched its own flavoured range in 2011, while Stella Artois’s Cidre Pear launched in 2012.

Bulmers followed in 2013 launching a range of flavoured ciders, while supermarket chain Asda rushed to capitalised on the category’s popularity by adding 19 new lines and dedicated fruit cider bays in 2012.


Molson Coors in 500K pint glass giveaway

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Molson Coors is to give away 500,000 free Carling pint glasses as part of a UK promotion spanning the summer.

Molson Coors invests £75m in UK brewery

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Molson Coors UK is to invest a further £28m in its Burton Brewery taking its total to £75m - one of the biggest investments in British Brewing for decades.

Sochi beer fridge returns to Canada

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The Molson Coors beer fridge that only opened for holders of a Canadian passport has returned to the country in time for its national holiday – with a twist.

Craft breweries ‘overvalued’ says Molson CEO

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The CEO of Molson Coors, Peter Swinburn, has said that craft breweries are “massively overvalued” which prevents their acquisition by larger breweries.

Molson Coors strong second quarter

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US brewer Molson Coors has grown beyond expectation in the second quarter, with revenues rising despite a global downturn in the beer market.
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