Digital Markets, Competition and Consumers Bill

Written evidence submitted by Beer52 Limited (DMCCB43)

Digital Markets, Competition and Consumers Bill

1. Subject matter:

We refer to Chapter 2 (Subscription Contracts) of Part 4 (Consumer Rights and Disputes) of the Bill (being Sections 245 to 273).

2. Introduction:

Established in 2013, Beer52 Ltd operates what is now the UK’s largest craft beer subscription club. In 2021 the company also launched a wine subscription club, Wine52. We have approximately 100,000 subscribers and in our last filed accounts (to June 2022) reported turnover of £40m and a team of 98 employees, mostly Edinburgh-based.

Our business model is that of a ‘rolling flexible subscription’, one that provides convenient monthly product deliveries, involves no minimum period of commitment and that can be paused or cancelled at any time.

We believe our offering to be innovative and attuned to consumer benefit. We are aware of several peer companies that have successfully adopted this popular model, particularly for the supply of food and beverages.

3. The Bill:

The intent of this Chapter of Bill is stated by the DBT to eliminate ‘subscription traps’. However, it is our contention that the drafting is such that it imposes regulatory and administrative burden on a section of the market where there is little evidence of subscription traps and related consumer detriment.

We believe that rolling flexible subscriptions, i.e.

· subscriptions involving the regular delivery of goods, which,

· have no minimum commitment period,

· can be paused or cancelled at any time, and,

· have no extended introductory offer period,

should be Excluded Contracts under the legislation (section 247) or at least be excluded from the requirement to give Reminder Notices (section 250) and Cooling-off Notices (section 258).

4. Evidence:

We believe that for subscriptions involving the frequent provision of physical goods, it is not possible to forget the existence of the subscription. Arrival of the product itself serves as a reminder that the consumer has an active subscription – as does the subsequent daily / weekly consumption of the product, for example in food and drink subscriptions.

It is difficult to see how a ‘trap’ can close where:

· the time period between deliveries is relatively short (typically monthly with our subscriptions)

· there is no minimum commitment period, with the subscription capable of being paused or cancelled at any time.

We note that the DBT’s Impact Assessment BEIS 030(C)-21-CCP) estimates that of all subscription contracts only 30% involve the delivery of goods. Clearly, a significantly lower proportion than this will involve food and beverages.

Evidence indicates that customers who wish to terminate goods subscriptions are readily able to do so. Reliable or definitive industry data on customer ‘churn’ are guarded by operators but it is generally accepted that the rate of cancellation is high in goods subscriptions relative to that for services, and within goods, particularly high for food and drink subscriptions.

For example, McKinsey research from 2018 reported that "more than one third of consumers who sign up for a [goods] subscription service cancel in less than three months, and over half cancel within six".

Also, listed online subscription business Virgin Wines PLC reports in its interim results presentation of March 2023 (slide 14) a cancellation rate of 40% among its Wine Plan subscribers and 18% in its WineBank customers.

5. Conclusion:

While the intent of the Bill with respect to subscription contracts is laudable, its blanket imposition across all contracts captured by the employed definition of Subscription Contracts creates regulatory and administrative burden for little evident consumer benefit in the innovative and popular ‘flexible rolling subscription’ sector.

June 2023


Prepared 29th June 2023