Business advice Legal, brand & marketing and intellectual property

Breweries are big business. There is huge demand for the amber nectar – and as well as generating significant profits for the sector this demand implies significant revenue for the government in the form of Beer Duty payable to HMRC as Excise Duty. The Chancellor of the Exchequer has promised a long overdue reform of the UK Excise Duty regime. The current regime is unwieldy and difficult to understand and comply with and the duty aspect of beer (and spirits) production and distribution poses problems for those managing the financial aspects of the business. Establishing a brewery business is fraught with issues, given the bureaucracy required to satisfy HMRC. However, it is difficult to find professionals suitably experienced in duty management, especially concerning small breweries producing niche brands.

HMRC considerations

Establishment of both breweries and distilleries is popular, with numerous enterprises springing up each year. HMRC requires such businesses to register online via GOV.UK websites, complete various application forms and have systems in place to manage the excise process in accordance with HMRC requirements - including excise duty management and record-keeping. For newcomers to this sector, such requirements can prove daunting. Even long-standing enterprises experience challenges, especially in obtaining advice on technical issues where excise management is concerned or where the company needs specific advice on excise issues.

The process of setting up a brewery or distillery can be time-consuming and all traders in excise goods need to be fully conversant with both the application and establishment process. Even after approval of such an establishment, the need for fully-compliant processes for production and management of excisable products is vita . The main areas of concern are:

• Excise approval • Excise compliance • Documentation

• Procedures

• Record keeping • Conditions of production and storage • Movement of excisable goods (domestic and international) • Overall knowledge and awareness of

Excise procedures and management

Excise Duty Regime Management

In this article, our legal partner Napthens Solicitors invites guest author Mark Rowbotham to discuss the crucial issues surrounding Excise Duty - a taxing topic for many. Mark has spent many years dealing with the Excise and Customs sectors, initially as an Officer in HM Customs & Excise (later HM Revenue & Customs) and latterly as a Customs & Excise Consultant.

Consultancy and advice

Excise specialists are hard to identify, and in many cases are part of large management consultants or are individuals whose knowledge may be niche and limited. A new consultancy was established in 2021 specialising in Excise, Customs and VAT matters. This is eTAG (www.etradegroup. co.uk), the electronic Trade Advisory Group, born out of the Bonded Warehousekeepers Association (BWA), which has long covered the Excise Bonded warehouse sector, and which has expanded its remit to cover excise production operations as well as storage of excise goods. The consultancy was formed by Customs and Excise professionals, both from commercial and HMRC backgrounds. The consultancy advises and assists companies with the establishment and running of excise businesses, whether breweries, distilleries or bonded warehouses. This involves removing the hassle of adhering to the requirements set out by HMRC regarding establishment and operation of breweries and distilleries, and advising on managing these enterprises, especially concerning compliance with HMRC requirements. The consultancy can help with the following processes: • Analysis of the excise business proposal • Application for HMRC Excise Approvals • Implementation of procedures to ensure compliant Excise management • Training in Excise operations and management • Dissemination of information on government initiatives on Customs & Excise matters

It is essential that excise traders keep informed about new guidance and compliance information for a smooth running and compliant excise business operation - and in order to maintain a good relationship with HMRC. The consultancy therefore maintains close links with HMRC and maintains databases on latest Excise and Customs guidelines and compliance information.

Support

The consultancy is available to talk with any individual or enterprise wishing to establish a brewery or distillery as well as companies already involved in the sector. Please contact eTAG: www.etradegroup.co.uk for further information or email Mark on:

mark@portcullis-isc.co.uk

For advice on legal issues affecting your business, please contact SIBA Legal Helpline on 0845 6710277

North West Law firm LLP is a SIBA supplier associated and Silver Standard Sponsor. The firm has a team of specialists looking after legal requirements of clients in the leisure and licenced trade sector, with clients including Daniel Thwaites Plc and Titanic Brewery. Napthens manage the SIBA Legal Helpline which offers legal advice and guidance on a wide range of legal issues affecting your business, including: General commercial, intellectual property, corporate finance, dispute resolution and litigation, commercial property, licensing, employment law and HR advice. Any enquiry through the helpline will receive up to 1 hour of free legal expertise (if further work is required, you’ll be advised of the appropriate charging structure). Full details of the helpline can be found on the SIBA Members Toolbox.

What’s the Story? (Golden Glory):

The tale underpinning your marketing.

Brand and marketing guru Nick Law from agency Hop Forward offers advice on getting your story out there...

When BrewDog tossed a clowder of cats from a helicopter over the city of London, their aim was to send a loud, clear message to their army of trusted fans: we don’t need those capitalist fatcats to finance our brewery - we need you. And ‘you’ responded. BrewDog managed to raise a staggering £5m in a mere 20 days. Imagine what you could do with an extra £5m in your brewery! Watt and Dickie seem to have an endless capacity for getting their brewery noticed… if not for all the right reasons. From harmless campaigns such as recreating Guinness’s Good Things Come To Those Who Wait advert by dressing as pantomime horses and going for swim, to the tone deaf Pink IPA and downright offensive #Don’tMakeUsDoThis - whether you agree or disagree with their company’s methods, BrewDog are extremely effective marketers, using the medium of story to communicate their brand message.

Telling a story

Stories are emotive. People don’t always make rational decisions and are often driven by emotion. Facts follow feelings. So, engaging consumers’ emotions and interest with a well told story will give people a greater incentive to pay you a visit, drink your beers and get to know your company than merely taking a photo of a Hazy IPA and posting it on Instagram. A story worth telling has to underpin all marketing efforts. But how do you tell your story? Do you even have a story worth telling? Here are a few things to consider when creating your narrative and communicating it to your consumer base: 1. The right story for your drinkers. Who are your customers? There’s little point telling a story about your young, hip brewery if most of your consumers are older drinkers who like Best Bitters. Define your archetypal customer and tailor the language to them. 2. Choose the right medium. Choosing the right platforms to tell your story is highly important. Where are your customers? Which social media platforms do they use? Do they listen to podcasts or prefer to read in print? Different mediums will enable you to communicate in long form and short form, depending on what you want to say and how you want to say it. 3. Create a narrative arc. Chances are your story will come from first-hand experience and be well-hopped with your values, feelings and personality. Continually retell your wider story with examples and lessons learned along the way. Ensure everyone with marketing responsibility uses the same language.

4. Make it human. Great beers usually have a good story behind them. Talk about your perseverance, share your hardships, celebrate your successes; everybody experiences these emotions and can readily relate. 5. Call to action. A good story should evoke some kind of response in your customer. By sharing your story, you’re helping people to emotionally invest in your brand. This is why people feel so offended when breweries crowdfund and then sell out, leaving investors high and dry; not only was their money on the line, but - more so - their vested emotions. On a more positive note, a call to action can be as simple as providing a great experience in your taproom so they in turn tell the story to their friends and become your brand ambassadors. 6. Listening. Really listening is an art. Listen to what your customers say about you: do they understand your story? If not, you can adapt it accordingly. The point is to take people on the journey with you, something that is much easier for the consumer if they can relate to your story. Obviously, there’s way more to marketing than storytelling; digital, printed and social media, networking, websites, mailouts, public relations, etc, all go a long way. But that’s another story…!

Great beers usually have a good story behind them. Talk about your perseverance, share your hardships, celebrate your successes

Nick Law is the Creative Director of Hop Forward: a branding, marketing and business consultancy for the brewing industry. He works with a variety of beer businesses both in the UK and overseas and also runs a weekly podcast with a variety of guests from across the world of beer. Find out more at www.hopforward.beer or email nick@hopforward.beer

Guarding Your Trade Secrets

Tony Proctor Chris Baume Cameron Malone-Brown

Tony Proctor, Chris Baume and Cameron Malone-Brown, attorneys at European intellectual property law firm Potter Clarkson, look at how and why you should consider protecting your trade secrets…

Potter Clarkson helps companies, organisations and individuals across all sectors of business to understand, create, protect and defend the commercial value of their innovations anywhere in the world through intellectual property rights. As a full-service intellectual property law firm with expertise in patents, trade marks, designs, litigation, licensing and consultancy, the firm can provide specialist support in all areas of IP. Find out more at https://www.potterclarkson.com

Trade secrets can be the crown jewels within an IP portfolio. Unfortunately, despite their importance, they can also be the forgotten component of a brewing company’s key assets, with more emphasis given to establishing the value of the brand. In our experience, this is because most businesses are less familiar with the processes for identifying, protecting and safeguarding their trade secrets.

What qualifies as a trade secret?

While the laws governing trade secrets differ slightly between territories, the majority consider a trade secret to be any business information that is secret, has value and is subject to reasonable protection methods. The scope of what can qualify as a trade secret is broad and can include:

• A mathematical formula (which may underpin a process or commercial method) • A practice (such as internal systems and business practices) • A process (e.g. for manufacturing a product) • A design • An instrument or tool

• A pattern • A commercial method

• A compilation of information (e.g. a database) When we think of trade secrets, the Coca Cola recipe or KFC’s blend of spices are the famous examples that come to mind. Indeed, the food and drink industry is probably the most fertile ground for trade secrets, but it is not limited to recipes as the list above shows. As disputes in the US craft brewing industry have revealed in recent years, trade secrets in this sector usually centre around access to distribution channels rather than the composition of the product itself.

Why should a business protect their trade secrets?

Unlike patents and trade marks, trade secrets are not a registered form of IP but there are still formal steps that businesses should take to protect them. Trade secrets last indefinitely if their subject matter is commercially valuable and kept confidential, affording a business protection against misuse and theft. However, they will lose their protection if they are disclosed in a non-confidential manner, either intentionally or accidentally. In recent years, laws governing trade secrets have been enhanced in a number of key jurisdictions. However, to afford this new level of protection, trade secrets owners need to ensure they have robust processes in place to verify ownership and keep the information out of the public domain. In the absence of such an approach, businesses might find it difficult to rely on their trade secrets in the event of a dispute. As well as the regulatory environment, the trading environment is also changing. Increased staff churn, heightened data security risks and a more fluid working environment means the types and levels of risk faced by businesses are changing too.

How to protect trade secrets?

Companies need to put in place a combination of administrative, legal and technical measures to protect their trade secrets. Administrative measures may include having robust trade secret policies and procedures in place. It may also include education of employees. Legal or contractual measures may include putting confidentiality agreements in place with those individuals given access to the trade secrets, adding a non-compete clause to their employment contracts, or stronger provisions should their work involve sharing trade secrets with third parties. Technical measures may include various access controls and security measures, such as encryption, to make it more difficult for the trade secrets to be stolen. Storing information relating to your trade secrets in a standard digital filing system is simply not adequate – it is akin to leaving your wallet on the bar or walking around with your mobile phone in your back pocket. That is why our client trade secret registry at Potter Clarkson is a block-chain enabled platform, storing information as a digital fingerprint that can only be accessed by the client.

Where to start

The first step is to identify potential trade secrets and this can sometimes require a specialist approach, but by using the definition above as a starting point, you might uncover significant hidden value in your brewing business.