Cloudwater owner: UK government’s loan package not enough to save small brewers

Paul Jones, the owner of leading UK independent brewery Cloudwater, said the government should have asked pubs and bars to close “weeks ago” to save lives as coronavirus spreads and NHS services are stretched.

(Photo: iStock)

The UK’s coronavirus policy took a drastic turn last weekend when Boris Johnson ordered pubs, bars and restaurants to close “as soon as they reasonably can” on Friday (20 March) and not re-open to prevent further spreading.

As of Sunday morning, 5,683 were confirmed positive in the UK after being tested for coronavirus, while 281 patients in the UK who tested positive for coronavirus have died.

Now on-trade premises have shuttered across the UK. Many are still allowed to operate as takeaways, and the government announced a string of concessions for businesses including halting VAT payments, and offering to pay pay 80% of wages for employees who are not working, up to £2,500 (US$2,900) a month.

“Boris should’ve done this weeks ago,” Jones told the drinks business, adding that there was far too much uncertainty around how small businesses will subsidise their staff while they’re in limbo.

Last week, Chancellor Rishi Sunak said the government is taking “unprecedented steps” to protect the wider public from a mass outbreak, and plans to inject

“We’re weeks past the suggestion of £30 billion for government-backed loans,” Jones said, “and the only further detail I’ve had from any reliable source is from our business account manager.”

Cloudwater is one of the UK’s most beloved independent breweries right now. It is the highest-ranking non-US brewery on consumer review site RateBeer, and has stayed in the top 20 for the past three years. 

But it is a young business, having launched just six years ago. Adding to the stress, the company has taken steps in recent years that, while normal for a fast-growing brand, mean it is more vulnerable than more established brewers.

Jones opened a taproom in south London’s lauded Bermondsey Beer Mile at the end of 2018, for example. This, along with the taproom in Manchester and much of the brewing facility, has now shut down as per government guidelines.

“We as a brewery only made a profit for the first year last time,” Jones said, “we’re not going to qualify for anything meaningful.”

Jones said he will “struggle to qualify for anything as businesses can only qualify for a loan they can afford to pay back”, and added that the guidance given to the hospitality sector was “lacklustre”.

“We just have no idea what position we are actually in.”

Brewers nationwide face another challenge, as they are about to have money drawn from their accounts to pay for a monthly beer tax bill.

Some claim small brewers have just days left before they go out of business. James Calder, the chief executive of the Society of Independent Brewers (SIBA) believes “cancelling this Wednesday’s beer duty payment is now critical to give a lifeline to small, independent brewing businesses.”

The average amount brewers will pay on Wednesday (25 March) is around £5,000 for smaller businesses, but could be up to £500,000 for those operating on a larger scale, SIBA said.

Calder said brewers are “struggling to get through to HMRC’s time to pay arrangement helpline, so are left in limbo.

“Cancelling beer duty outright for the UK’s small independent brewers would give them a buffer of cashflow they desperately need.”

Calder said some brewers may choose to borrow money from the government-backed loan scheme today to give it to HMRC on Wednesday, “but what would be the point?”

“Most of our members are amongst the smallest brewing businesses in the UK, and it is these small independent breweries that are at greatest risk during this period of uncertainty as the vast majority of their beer would usually supply pubs – which as we all know are now closed for the foreseeable future.

“Cancelling this beer duty payment could be the lifeline these breweries need in order to stay afloat during such turbulent times.”