Select Committee on Scottish Affairs Appendices to the Minutes of Evidence


Memorandum from the Scottish Tourist Board


(Kingdom of Fife Tourist Board)

  I think there is definitely potential for tourism related business to be generated by the smaller traditional type of brewery such as Inveralmond. Unfortunately, I cannot and don't have access to facts or figures indicating that specifically any spend from tourism actually helps existing breweries. However, I have anecdotal evidence from trade contacts that their business is significantly increased by tourism. For example I know that one brewery is in the difficult but happy position of struggling to meet demand during the main tourist season albeit the season is not particularly long. I am thinking of breweries such as the Isle of Skye Brewing Co, Orkney Brewery, Black Isle Brewery etc.

  Having established that there is a potential to exploit the tourist market how could this best be done for small brewers? A typical brewery output can be split into two distinct lines—draught and bottle sales. Within each line there is further scope for product lines such as gift packs for bottles.

  The draught market is extremely tight in Scotland with large discounts being demanded by the large pub groups eg Wetherspoons or brewers such as Belhaven which in turn leads to reduced margin on this type of product and a lack of control over sales. The smaller producers are therefore in a bit of a vicious cycle with low margins leading to low levels of marketing support and so on. That is not to say it is all doom and gloom as sales are still achieved in the free trade but it is evident that a lot of our free trade Customers are very tourist driven themselves with distinct increases of sales at peak tourist visiting times. Some form of improved/supported marketing may be one way of overcoming some of the above problems with the larger customers whilst also allowing us to present products in a more professional manner at the bar of free trade outlets. We know that awareness of our product is poor amongst the general public unless they have a specific interest such as CAMRA members. Anything to aid awareness would be good.

  With regard to bottles this is potentially a very good opportunity but again that depends on public awareness of the brewery and its products. We have certainly found that if tourists manage to find us then they will invariably buy some bottles direct from us which is a good margin. However, I am sure you appreciate that having a brewery on an industrial estate is not ideal for that type of business. Some breweries do make a feature of their premises but this depends on individual circumstances eg Houston Brewery is tacked onto the side of The Fox & Hounds in Houston and it is built to look "quaint" and Isle of Skye have a wonderful position at a ferry terminal—captive audience!

  One angle we have adopted is becoming a licensee of Scotland the Brand and we are very keen to promote this as much as possible. General public perception of this initiative is not very good but in time I believe it will prove itself so we are going to stick with it. Some way of exploiting this with regard to tourism may be beneficial.

  One further aspect which I touched on before is economies of scale of large breweries. This is also complicated by the soft loan or tie system that operates within this industry. As a result the small brewery main trade association which is SIBA (Society of Independent Brewers) has been behind a long running campaign to reduce the burden of beer excise duty on smaller producers. They have been lobbying parliament for some time now. The basic idea is that all breweries would pay 50 per cent of the excise bill up to a certain annual sales volume and then say 75 per cent up to another threshold and so on. The benefit from this would be used to help reduce prices, increase marketing spend, create jobs etc, etc. I think it needs to be thought through really carefully though as I think it could lead to the influx of a lot of cowboys into the market intent on making a fast buck on the back of low beer prices and giving us all a bad name.

(Argyll, the Isles, Loch Lomond, Stirling & Trossachs Tourist Board)

  (i)  The scale and significance of the whisky industry to tourism is very evident in fragile island areas such as Islay and Jura where there is a major concentration of distillery activity. A number of the well known distilleries eg Bowmore, Laphroaig and Ardbeg have spent millions developing visitor centres in locations which would otherwise be bereft of formal visitor attractions. There are many other spin-off tourism benefits in addition to this in terms of contributions to local festivals, international promotion of specific brands/destination and contributions to ferry transport operating costs through heavy usage of ferries.

  (ii)  There is a strong case for lower duty levels but I suspect there is little sympathy at Government level for this. A number of factors have led to producers trying to minimise production costs which, in turn, has reduced the numbers employed in distilleries in recent years. The drive for more efficiency has been partly due to distillers trying to compensate for tightening margins.

  (iii)  I agree more could be done to develop the tourism potential of traditional Scottish beer-makers. Locally we have worked with a brewer to capitalise on the success of Braveheart. At the National Wallace Monument and other attractions around Stirling substantial quantities of the Wallace bottled beer are now sold as souvenirs. Strong branding and merchandising of beers based on famous historical characters have proved to be popular and have added to the diversity of the local tourism product. Also there has been growing interest in local beer festivals which again add to the appeal and vibrancy of the local tourism product.

(Greater Glasgow & Clyde Valley Tourist Board)

  I have been a licensee for ten years in Glasgow, have managed four City Centre Hotels and I am a Fellow of the British Institute of Inn Keeping. I would like to tender the following points that you may wish to consider.

  The current licensing laws in Scotland require pubs to close at midnight in Scotland, whilst in England, it is one hour earlier. The Prime Minister has indicated that he would like the licensing laws for the UK to be consistent in England, Scotland and Wales. It would not be desirable for the licensing hours in Scotland to be reduced to those hours in England. Tourists coming to Scotland are already disadvantaged if they wish to drink after midnight. Compared to our European competitors, the licensing laws are too strict, and impose a time limit which is not the case in Amsterdam for instance.

  There is disparity in the hours of licensing laws which penalises certain groups of tourists. For instance, Clubs in Glasgow can be licensed until 3 or 4 am serving a younger tourist market from 18 years of age upwards.

  Generally, older tourists frequenting the pubs and restaurants have their enjoyment and opportunity to stay out curtailed at midnight. The licensing laws regarding opening hours should be relaxed to prevent what happens in England at 11pm when all the pub clientele exit onto the streets.

  This causes problems that have been well documented. Allowing pubs to close when they want to prevent the types of heavy drinking to beat the clock, and exodus onto the street.

  Bars have applied for a breakfast licenses in Glasgow allowing to serve alcohol at 8am. Due to lack of demand, all but one has continued the service. This demonstrates that where there is no demand for pubs to open, they will open. Pubs should be left to open when they want to, and will subsequently find their own market level of hours. Demand will effectively define the opening hours. During the peak tourist months, pubs would stay open later due to demand, but would shut earlier in downtime demand periods.

  No radical change in licensing hours in Scotland are expected for at least a year. However, the industry is in complete turmoil in both England and Scotland. A pub closes every week in Kent for instance, as cheap drink is brought across the channel and sold from unlicensed premises. The industry in Scotland wants regulation, and tighter restrictions to prevent it being similarly wrecked.

  In Scotland, the Channel Tunnel is less accessible, and the problem is seen to be less acute. However, huge changes in the industry in Scotland are happening as the brewers desperately try to unload their pubs. For instance, Bass sold 990 pubs last week to the Japanese property company Nymura—which now owns a large number in Glasgow. Whitbread sold 3,000 pubs to the Royal Bank of Scotland. Scottish and Newcastle are offloading a significant number of their pubs at the moment.

  Whilst pubs being taken over for their property value (and for the return on investment, particularly whilst interest rates are low), their mid term future is questionable. City pubs serving city tourists are being bought for their site value. Rural pubs are being sold because of low returns, and purchased for property value alone. Poor return properties previously propped up by the brewers will be closed. Tourists could face closed pub after closed pub as they travel round Scotland.

Director, Tourism Futures, STB

  1.  Whisky is an important Scottish icon esp in overseas market ie people recognise whisky (quality product) comes from Scotland and vice versa. Does it make them visit? A small number only but it does help keep Scotland front of mind. So it does more of an awareness job than anything concrete. Of the Glenmorangie ads that were shown on UK TV with fabulous scenery in them talking about "Glen of Tranquillity".

  2.  The whisky companies have not been particularly interested in working with us on joint activity (but note Famous Grouse did sponsor our golf brochure). Often in their marketing they do not promote the Scottishness of their product as this is not what differentiates it particularly in European markets where it is more "fashionable".

  3.  The whisky festival in Moray has been reasonably successful (CID will be able to provide more detailed information on the product if you require) and distilleries are always important as visitor attractions. So there are synergies and benefits here.

  4.  Not sure of potential for beer. Again quite a niche but in the USA micro breweries are seeing big growth. Not anything we have promoted as yet though.

Highlands of Scotland Tourist Board

  We use the iconic element of whisky in images and text, for example using a list of whiskies in the download sequence for our web site We have good local relationships with distillers for providing hospitality gifts etc, and are in partnership with UDV in promoting the Talisker Quality Awards for tourism on Skye.

  There is strong interest from visitors, particularly from overseas, in sampling whisky at point of origin. This is evidenced by the visitor numbers at distillery visitor centres (available from the Glasgow Caledonian University survey). We have had anecdotal feedback that they are surprised to find that the cost at the Distillery shop is much higher than in a supermarket at home in Europe. Despite this, sales at distilleries and through specialist tourism outlets such as the Hector Russell Group's Whisky Shops indicate buoyancy in tourism related retail. Availability of a good range of malt whiskies is an important selling point for hotels and restaurants. This feature appears regularly in establishments' advertising.

  A change in the tax regime to reduce price barriers would be welcome, but it is difficult to quantify the value. The Committee may wish to take evidence from other linked tourism and drink producing areas in the world to ascertain whether there is a link between product price competitiveness, on site retail sales and visitor numbers.

  Whisky and tourism are both lifestyle products, and there is potential to align marketing for the two products more closely. While there are examples of good practice individually, there is not as strong a link as might be expected between Scotland's two great consumer products.

  Beer production does not have such strong links with tourism in the Highlands, although there has been a growth in small micro breweries who depend heavily on tourist curiosity for sales. I am not aware of any data on the tourism impact on this sector—another topic which would benefit from research. Beer sales are less sensitive to excise duty levels as it is much less of a carry home product.

Parliamentary Liaison Officer

Scottish Tourist Board

February 2001

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