Written evidence submitted by Molson Coors Brewing Company – UK&I (RIG0015)

About Molson Coors

1. Molson Coors is one of the world’s largest brewers and has a significant presence in the UK with over 2,285 employees and breweries in Burton-on-Trent, Tadcaster, Burtonwood, Sharp’s brewery in Cornwall, and Aspall cyder house in Suffolk. Our UK & Ireland Head Office is in Burton-on-Trent and we have regional offices in Edinburgh, London and Belfast. Our National Contact Centre is in Cardiff.

2. Molson Coors has a market share of around 19% of the UK beer market and a portfolio that includes Carling, Coors Light, Doom Bar, Pravha, Staropramen, Worthington's, Cobra, Rekorderlig and Aspall. Our range of low- and no-alcohol products includes Cobra Zero, Bavaria 0.0% and Rekorderlig no alcohol.

3. Our operations form a significant contribution to the UK pubs and brewing sector which contributes £23 billion per annum to the UK economy in economic activity[1]. We have over 1,000 suppliers across the UK.

4. Molson Coors welcomes the opportunity to respond to this inquiry and are proud to support regions and local communities across the UK.

Summary

5. Global businesses based in the regions have a unique perspective on the policy landscape that is necessary in order to drive largescale growth and investment outside more traditional business and economic areas.

6. Molson Coors has invested significantly in regional communities, as evidenced by our investments in flood defences and bridges. However, support is still required to global businesses as they make investment decisions. For Molson Coors a more coherent and integrated approach to policy is required, including an assessment of the current approach to beer duty, emissions trading and business rates.

Regional Investment

7. We are proud to support the communities within and beyond the different regions we operate in and our wider contribution to UK plc. This commitment is reflected in our investment which has seen over £100m spent to increase productivity, ensure resource efficiency and reduce our environmental footprint. Our Burton-on-Trent brewery is the largest brewery in the UK and we have invested in an Energy Centre, new bottling line which has increased volume capacity and enabled packaging improvements and a new beer processing area which provides modern brewing technology. Our other sites have also received wide-ranging investment, driving jobs and improving productivity at our breweries across the UK.

8. As a summary of our key investments:

8.1.            Burton Brewery in the West Midlands is the largest brewery in the UK and has received a £100 million investment programme to increase capacity and deliver a number of sustainability initiatives. These include a new Energy Centre to support Molson Coors’ global ambition of reducing energy and carbon usage, a new bottling line which has increased volume capacity and enabled packaging innovation, as well as a new beer processing area which provides modern brewing technology. Our investments in the local community include a flood wall to mitigate against the risks of being situated on a flood plain.

8.2.            Burtonwood Brewery in North West England was acquired by Molson Coors in 2015 and has benefitted from over £4 million of investment since its acquisition. This has enabled us to deliver year-on-year volume growth in 2018 across the many brands brewed on site.

8.3.            Aspall in Suffolk was acquired by Molson Coors last year and we have already begun a planned investment programme of up to £10 million including a weigh station, new effluent treatment facility, and upgraded site buildings that are all designed to support future, long-term growth in Suffolk while staying within the site’s current footprint.

8.4.            Tadcaster Brewery in Yorkshire received £1.8m of investment in 2017 as part of a five-year programme that included installing new beer tanks and fermentation vessels. As a result of these investments, several new brands are now brewed on site. Our investments in the local community include funding to assist with the rebuild of a key bridge in the town.

8.5.            Sharp’s in Cornwall was acquired by Molson Coors in 2011 and has benefited from recent capital investment totalling just under £1 million.

8.6.            Franciscan Well in Cork, Ireland was acquired by Molson Coors in 2013. Our investments have enabled a new brewery facility to be opened on the site, allowing us to significantly increase capacity whilst allowing brewers to maintain a creative micro-brewery to create new ideas and products.

9. We are pleased that our investments are making a significant contribution to the UK regional economy, with British Beer and Pub Association highlighting that every single job in brewing creates 21 jobs elsewhere in the economy.

Supporting Regional Growth

10. We support further opportunities that allow for greater growth and investment opportunities at the regional level, including the devolution of powers and funding to local areas.

11. We welcome the West Midlands Industrial Strategy which we hope will play an integral role in further delivering investment in the Midlands, driving jobs and improving productivity. 

12. We would also advocate forums where businesses can come together at a regional level to further promote innovation, investment and growth in the area. For example, our Managing Director Philip Whitehead has recently been appointed to the CBI’s West Midlands Board, working closely with other businesses from the region.

Skills and Talent

13. There is an opportunity to give local stakeholders more powers to address skills and employment requirements that respond to specific local needs. However, we also recognise the importance of central Government’s role and the ability to anticipate and support the skills and training that will be needed in the future workforce. 

Transport

14. The importance of transport links to regional businesses cannot be overstated. Good transport infrastructure and regional connectivity enable easy access to consumer markets and the supply chain. Whereas poor transport links are a significant detriment to industry, limiting productivity due to the difficulties in accessing vital elements of the supply chain.

15. We are committed to our sites and many of them have operated as breweries for generations. Our commitment to our sites has led us to make key infrastructure investments in local areas e.g. funding to assist with the repair of a bridge near our Tadcaster site and flood defenses in Burton.

Business pressures

16. Global businesses located outside key economic centres have a unique perspective on how their communities operate and the policy landscape that is necessary to drive investment and growth in their area. The importance of businesses like ours in regional areas is significant. However, with investment decisions often made at a macro level the UK must ensure it maintains an attractive business environment in order to receive continued investment.

Beer Duty

17. Increases in alcohol duty since 2008 have made a pint in a pub less affordable for hard working people. Even taking into account support for alcohol duty since 2013, the larger increases between 2008 and 2012 mean the net effect is that consumers have contributed £5.4 billion more in excise duty over the last six years than if there had been inflation increases. Indeed, currently one in every three pounds spent in a pub goes to the Treasury. This increase in beer duty is one of the factors that has led to the price of a pint increasing by 36% between 2010 and 2017[2].

18. Three pubs are closing every day in the UK, with the total number of pubs in the UK now below 50,000. This represents a 17% fall since 2000, with over 10,500 pubs closing their doors[3].

19. The UK has one of the highest Beer Duty rates in Europe. In fact, Beer Duty in the UK is three times higher than the EU average, and 12 times higher than that of Germany or Spain. This has been the result of decades of steady increases. The result of this disproportionate rate is that the UK pays 40% of the Beer Duty in Europe, whilst drinking only 12% of the beer.

On a 5% ABV pint of beer:

•          Finland pays the most Beer Duty in Europe at 81 pence

•          The UK pays the 3rd most at 54 pence

•          Italy pay around the average at 18 pence

•          Germany only pays 5 pence – the 26th lowest in Europe[4]

20. Other leading brewing nations like, Germany and Belgium have worked to protect their industries and have far lower Beer duties than the UK. Similarly, other countries have invested in the pub, brewing and wider hospitality sectors by reducing various taxes to ensure the industries thrive and can continue to invest.

Business rates

21. The current Business Rates system is complicated and disproportionately impacts pubs, which pay 2.8% of the total rates bill yet contribute only 0.5% of rate-paying business turnover[5]. Pubs also pay 4% of turnover in rates, which is the highest of any sector[6]. Business Rates have been identified by pub managers as one of the biggest threats to their business and are a leading factor in pubs closing, with 8% of businesses becoming unviable after Business Rate revaluations[7].

Environmental Issues

22. Protecting the environment is an integral part of our sustainability strategy - Our Beer Print. With Molson Coors’ 2025 global sustainability targets set in 2017, we are proud that our UK and Ireland business has already made significant progress by lowering our carbon footprint as well as achieving zero waste to landfill in one-third of our sites.

23. We recognise that reducing single-use plastics is a vital part of protecting the environment. That is why we are already exploring and investing in the development of consumer-friendly alternatives to the plastic elements in our packaging for all our brands. At the same time, we are being careful to avoid packaging options that might inadvertently create other environmental challenges. With the scale of our operations and the millions of products we make every month, we want to make sure we get the solution right and more details of our plastics strategy will be announced in the coming months. 

24. We are committed to doing our part for the environment and have continually invested in environmental improvement such as our state-of-the-art energy centre which opened in 2014 at a cost of £12.6m and saves 8.25 million kWh of gas and 4.5 million kWh of electricity per year and our CO2 recovery system which will save approximately 4,800 tonnes of CO2 per year. However, despite significant investment in the environmental performance of our Burton-on-Trent site we will have considerable additional costs due to the site, the largest brewery in the UK, participating in the European Union Emissions Trading Scheme.

May 2019