Heineken UK managing director David Forde was appointed the new chairman of the British Beer & Pub Association at the end of last year. He tells James Wallin why the sector deserves the Government’s support and explains why he thinks the great British pub is well-placed to see off competition from any corner
When you think of the term ‘craft beer’, the first name that comes into your head probably wouldn’t be Heineken.
But in a wide-ranging chat with the Dutch brewer and pub operator’s UK managing director – and newly appointed chairman of the British Beer & Pub Association – David Forde, the term comes up a lot.
Big brewers have had a chequered relationship with craft beer – often pilloried for attempts to appropriate the term for mass-produced products but Forde is not afraid of the moniker.
He says: “We are enjoying a moment in time where people are re-evaluating their relationship with beer. The term ‘craft’ has been used a lot and I think it’s been incredibly positive to have that label associated with brewing. I would not want to be where soft drinks are because you do not see the term ‘craft’ applied there.
“There is certainly a tendency to misinterpret craft as simply small – the two do not automatically go together.”
We are here to discuss the future for beer and pubs in a climate that is increasingly challenging. The Government is now well-versed in promoting its pro-pub credentials but Forde – who is leading the charge for a further 1p beer duty cut in next month’s Budget – insists recent good news for the sector must be seen in context.
He says: “We need to be careful we don’t over-celebrate the three 1ps. We have to take a longer term perspective because this a long-term industry. The Government also needs to take a long-term view on the 900,000 jobs this industry provides.
“The debate for a further cut is stronger than ever because a number of things have happened over the past 12 months that are having a huge impact on pubs. The elimination of rates relief has hit pubs hard. The national living wage is an issue for everyone but, for the employment profile in our sector, it’s going to have a disproportionate effect. The apprenticeship levy will hit some pub companies and there’s also auto-enrolment for pensions.
“We’re at the point where if there isn’t a further reduction in beer duty then the good work of the previous years will be cancelled out by new cost pressures.”
For Forde, a duty cut is just one way in which the Government should be supporting the industry. He highlights the VAT disparity between pubs and supermarkets and rates still being based on 2008 valuations as two other barriers to success.
He contrasts the situation with that of colleagues in other countries, saying: “If you think about France or Spain – they have strong indigenous wine industries, which their Governments disproportionately support. When I talk to my colleagues on the Continent, they find it truly bizarre that the Government here taxes our domestic industry so heavily.”
But not all challenges are dictated by Government and Forde accepts that in-creasing competition is forcing both brewers and pub operators to up their game.
He says: “The level of investment in the eating and drinking-out sector at the moment is frightening. On one hand, that’s inspiring, but you can’t help but believe that there will be tremendous casualties in the next five to 10 years because the rate of growth of investment far outweighs the growth in consumption.
“But if you ask me, ‘do I feel threatened by coffee shops and casual dining brands?’ No, not at all, because the British pub has proven time and time again its ability to adapt and evolve. We have been doing it for generations and we will continue to do so.”
Reinvention in the pub market brings us to the topic of Star Pubs & Bars – Heineken UK’s pub arm. A few weeks before our interview, Forde unveiled a new structure, with Lawson Mountstevens moving from managing director on-trade to become Star’s inaugural managing director.
Forde says: “We are unique in the global Heineken business in having an extensive pub estate.
“It took us a little period to demonstrate to ourselves that not only could we run a beer and cider business in the UK, but that we could also successfully run and grow a leased and tenanted pub estate.
“We’ve watched through the whole MRO (market rent-only option) debate and I think we got to a point where we really believe in the model and the fit of pubs in our beer and cider business. Therefore, we have an appetite to further invest in the business into the future. What the extent of that will be I can’t say at the moment. Given the scale of the business, we thought that elevating that dedicated role to the management team made sense. Lawson was best positioned to take on that mantle and drive continuous growth in Star Pubs & Bars.”
“It’s a symptom of us growing to love pubs in the UK more than we thought we ever would and being excited about the opportunity it presents us.”
Star recently revealed the location of its first managed pub, the Eagles Corner in Arnold, Nottingham. Asked if the company was keen to open more pubs under alternative models, Forde says “never say never” but stressed the company did not have the structures in place to roll out a managed estate.
He insisted the company continued to have a strong appetite for the leased and tenanted model. In outlining its strengths, he returned to the topic of the day.
“If you look at the way craft beer has caught on and ask what is happening in society – people are looking for greater individuality, they want to be connected with something that is local to them and a part of their community. If you believe that’s a big societal trend then that is a tremendous opportunity for the leased and tenanted model. The individual operator in his individual pub in his individual community seems to fit nicely in terms of what UK consumers are looking for.”
