Skip to main content
Part of complete coverage on

UK tax no small beer for London brewer

By Isa Soares, CNN
updated 6:20 AM EDT, Fri May 3, 2013
STORY HIGHLIGHTS
  • Fuller, Smith & Turner demand that has seen volumes increase by 200% in the last five years
  • The company has had success in selling a wide variety of drinks with different alcohol levels.
  • Fuller, Smith & Turner exports to 68 countries around the world, roughly the equivalent of twelve million pints per year

(CNN) -- In these days of austerity, thin profit margins, low competitiveness and high unemployment, we often hear of companies braving the economic storm with innovation and ingenuity.

For niche businesses, this can work. Others, however, need to think carefully about a plan of attack.

It's not just a question of turning your attention to international markets in the hope of making up the bleak numbers at home.

Advice from chief executives suggests you need to know your markets, tweak your products and then push your brand.

Fuller, Smith & Turner have been doing just that. And it's led to them exporting around 12 million pints of beer a year.

Founded in 1654, the brewery has seen its fair share of economic difficulties. But this time the crisis is twofold: The economic crisis facing Europe and the impact of beer duty at home.

Despite the deepening crisis in Western Europe, Michael Turner, chairman of Fuller, Smith & Turner, told me the latter crisis was his bigger concern.

The British government introduced a 2% duty on beer and wine back in 2008, but since then it has reportedly increased 42%.

That, Turner tells me, is crippling the industry and sapping demand for its product in the UK. According to Turner: "We pay, in this country, 40% of all the beer duty for the whole of the EU and we have something like twelve times the amount of tax that the Germans do."

That tax burden forced Fuller, Smith & Turner to seek out new sources of income. And so the company turned its attention to exports.

It now exports to 68 countries around the world, roughly the equivalent of twelve million pints per year. The company increased volumes by 200% in the last five years.

Traditional beers such as London Pride and London Black Cab have also benefited from what's been dubbed "the London-effect," that came with hosting the Olympics, celebrating the Jubilee and the royal wedding.

But Fuller, Smith & Turner has also adjusted its product to suit each market. The U.S. has become one of their biggest export markets. Tax in the U.S. is per bottle rather than then by alcohol level, and Fuller, Smith & Turner has successfully tapped the market by selling a wide variety of drinks with different alcohol levels.

It has adapted the aesthetic slightly by selling them in cardboard baskets rather than in plastic packs. Scandinavia and Italy, meanwhile, prefer draft beer, even if that's 8.5% alcohol content.

To keep up with such international demands, the company, which has always been based in London, has had to invest in its facility.

Turner told me the company had spent $9 million extending the already crammed brewery. Robots were brought in to maximize space and allow for the quick loading and unloading of kegs and beer pallets.

A new production line that cleans, sterilizes and fills beer kegs has also been introduced, allowing for greater capacity. Jeff Hack-Davies, the company's packaging operations manager, tells me this line alone has enabled them to produce 60 to 70 thousand kegs per week compared to 3,000 eight years ago.

It's an investment that has enabled them to keep up with international thirst for its beers and in turn beat the gloom in the UK.

If that weren't enough, this London brewery is also overturning the common perception abroad that British beer is warm, weak and undrinkable.

ADVERTISEMENT
Part of complete coverage on
Marketplace Europe
updated 11:31 AM EST, Thu January 16, 2014
Marketplace Europe visits Latvia to see how the Baltic country has made its transition to the Euro from the Lat.
updated 11:30 AM EST, Thu January 16, 2014
CNN's Nina Dos Santos visits Latvia to speak to the country's outgoing Prime Minister and the prospects for the eurozone's 18th member.
updated 11:40 AM EST, Thu January 2, 2014
Malta is the gateway to Europe and on the frontline of the immigration flows. Isa Soares reports from a detention center on the Mediterranean island.
updated 11:41 AM EST, Thu January 2, 2014
CNN's Isa Soares speaks with people on the streets of Valletta who say their country can't cope with more migrants from Africa and the Middle East.
updated 5:06 AM EST, Thu January 9, 2014
Malta cannot afford to continue supporting migrants from war-torn countries in its over-crowded detention camps, the country's foreign minister has told CNN.
updated 4:23 PM EST, Thu December 26, 2013
Slow recoveries, bailouts, and youth unemployment. Richard Quest speaks to Europe's top CEOs about the issues of 2013.
updated 4:14 PM EST, Thu December 26, 2013
CNN's Richard Quest speaks to economist Bob Parker about defining moments of 2013 and about what to expect in 2014.
updated 1:15 PM EST, Thu December 5, 2013
Estonia is setting the pace for other European nations with a thriving economy and its tech industry, according to the Baltic nation's leader.
updated 2:03 PM EST, Thu December 5, 2013
The Baltic nation of Estonia is developing its oil shale energy reserves in a bid to become energy self-sufficient.
updated 4:25 AM EST, Fri November 29, 2013
Europe must stop being nationalistic if it wants to help a lost generation of workers, the regional boss of U.S. conglomerate General Electric says.
updated 12:06 PM EST, Thu November 14, 2013
Peer at the windows and you'll spot big colorful chairs, plastic plants and a huge bed, but this is no department store.
updated 5:06 AM EST, Tue November 19, 2013
There once was a time, many years ago, when the sounds of bagpipes struck fear into the stomachs of Englishmen.
updated 6:16 AM EST, Mon November 11, 2013
Greece is on the way to economic recovery as investor faith returns to the recession-ridden eurozone nation, an executive at Greece's largest bank has told CNN.
updated 7:00 AM EST, Fri November 8, 2013
Could Greece's famous spice help the country's farmers through a four-year long economic crisis.
updated 9:07 AM EDT, Fri November 1, 2013
One of the masterminds behind the euro says Europe would have suffered a far worse fate if the single currency had never been created.
updated 1:41 PM EDT, Thu October 31, 2013
Nina Dos Santos visits the Dutch city where the European treaty carrying the city's name came into force 20 years ago.
updated 11:10 AM EDT, Fri October 25, 2013
As Spain continues its drive to slash budgets and cut spending, one of the nation's favorite pastimes is under threat as ministers look for ways to boost productivity.
updated 12:17 PM EDT, Thu October 24, 2013
The high commissioner of Brand Spain talks about getting the country back on its fee and attracting business.
ADVERTISEMENT