Have your say on shaping the future of NI
One of the most important changes to licensing in Northern Ireland for over a century happened in 2021, when we successfully got an Amendment passed (proposed by Matthew O’Toole from the SDLP) which committed the Department for Communities to conduct an independent review into the archaic, anti-competitive, cartel supporting NI licensing laws.
Who knew beer could bring people together so well?
Of the 5 Executive parties, the SDLP, DUP, UUP and Alliance all supported the amendment, with only Sinn Féin voting against.
One of the difficulties we faced during our lobbying campaign were the policy advisors at the Department for Communities. When we met them in April 2019, they told us in no uncertain terms that breweries would not be allowed to operate taprooms 'in a million years as the pubs would never allow it.'
So to get this amendment added to the Bill in 2021 was a huge achievement, despite the best efforts of the Department and Hospitality Ulster to scupper it.
The University of Stirling were appointed as the body to conduct the research, and they are currently doing focus groups around NI.
If you live in the Ballycastle or Ballymena areas, they are looking for your views this week! More info available at the form below:
This coincides quite timely with a press release I saw recently on the back of Hospitality Ulster's AGM, which was picked up by the Belfast Telegraph and the Newsletter.
https://hospitalityulster.org/news/voice/HIGH-RATES-REMAIN-A-WRECKING-BALL-FOR-HOSPITALITY-SECTOR-SAYS-NEW-CHAIR-OF-HOSPITALITY-ULSTER
Hospitality Ulster does an exceptional job for their membership, and we agree with the vast majority of the issues raised in the press release.
However, we fundamentally disagree with their statement regarding the ongoing review into NI's licensing legislation which is as follows.
“The situation in our pub sector has been made even worse by the instability caused due to the ongoing review of the licensing structure which is being undertaken by the Department for Communities at a cost of £478,000. Following an amendment by the SDLP MLA Matthew O’Toole, the ongoing replaced a legal requirement on the DfC to undertake the review, which has now left the industry facing difficulties in financing as it leaves uncertainty and removes confidence for funders. These were difficulties which we highlighted at the time but were ignored”.
“If elected representatives want to support our rural and community pubs, they should start by recognising their social value and make them more sustainable by exempting them from crippling business rates rather than wasting time and money on an expensive review. it is important that they also understand how different our market is compared to Great Britain; we have a pub industry built on independent publicans who are part of the community they serve and provide products driven by consumer demand”.
What’s the problem?
Nearly every day, we see a new scandal leading to a huge funding shortfall here in NI. Billions needed for new sewage infrastructure, the Lough Neagh disaster, hundreds of millions on PSNI data breaches.
One of the best ways to fix these problems is to make NI a better place to live and work, and for tourists to visit and in doing so to grow the economy to a more sustainable position.
To a sector which contributes over £2bn to the NI economy every year, spending less than half a million to conduct the first major review into licensing in over 100 years seems like a no-brainer. The hospitality sector contributes £2bn every year despite having a 121 year old licensing regime which has never had a meaningful review to see whether it’s actually fit for purpose.
There are some stark realities facing the pub sector and consumers in NI:
- Northern Ireland has the lowest number of pubs per capita out of any region in the UK, decreasing every year as more supermarkets buy up licenses
- Belfast has the most expensive pints out of any city in the UK
Without the ability to create new venues, pubs have become increasingly large over the years.
This has a knock on impact in terms of business rates, as the rates multiplier increases with turnover (ie busier pubs pay a higher % of rates than quiet pubs).
The majority of countryside pubs are family owned and operated, where the family also owns the premises. As these venues have become so big over the years, if the family running the pub ever wants to sell, they are not really viable anymore for a new owner to come in and operate, by the time they take out a mortgage on the property. A lot of the time, the licenses get sold to an out of town supermarket, the pub gets redeveloped and the community loses a vital asset.
The majority of pubs in Belfast city centre are owned by a handful of very large local pub groups.
These groups lease many of their venues to tenants, but for these tenants, their hands are tied. The groups have deals with the multinational suppliers so the tenant has no choice what goes on the draught lines.
For example, the list price of a 50L keg of mainstream macro lager is usually around £170 Ex VAT (£3.40 + VAT per Litre). Normally, the multinational will offer a volume discount which starts at around £20 per keg in exchange for agreeing to a permanent tap. In the case of a leasehold pub, this volume discount goes straight to the landlord rather than the tenant. A lot of the time the funds for the group to purchase the property also came from the multinational brewery, which has a mortgage over the property.
This also means the tenant has no choice as to what products they are able to sell, essentially acting like the brewery tie in GB. One positive is that it was actually the brewery tie that eventually led to the loosening of licensing restrictions in England and Wales to increase competition.
This all contributes to the average price of a pint of mainstream Macro lager costing £6.10 in Belfast.
What's the solution?
Local beer isn’t actually any more expensive for pubs to buy than beer produced by a multinational. We see in Bullhouse East there’s a huge demand for locally produced beer. Consumer demand is there. We just can’t access the taps.
We sell 35% of our beer through Bullhouse East. We sell 5% of our beer in the rest of Northern Ireland.
If the hospitality sector wants to continue to grow and contribute more than £2bn to the economy going forward, we need to embrace the review into the current archaic system and we should welcome the competition. There's more than enough room for everyone!
Willy Mayne
MD
Bullhouse Brew Co Ltd
