How do those operating in the brewing and distilling sectors move forward securely with evolved businesses post pandemic? Mike Dickinson, sales and marketing director at independent insurance broker and specialist services partner Russell Scanlan, tells all.

Russell Scanlan first developed its bespoke insurance offer, Masterbrew, back in 2007, one of the first brokers to do so. Since then the offer has evolved with the changing needs of the indus-try and the Masterbrew team at Russell Scanlan stay close to the industry and the needs of its client base –  start-up and artisan brewers, larger breweries, and distilleries.

Despite universal support for measures needed to get the coronavirus pandemic under control in the UK, the decision when it came, to order a nationwide shutdown of pubs, clubs and hospitality venues at the end of March was still a shocking moment for the industry. 

We took calls and emails from almost all of our Masterbrew customers over the following days. Some faced with excruciating and unforeseen business decisions, most needing to talk through what options were available to them, all forced to explore crisis management strategies and invoke survival plans.   

One of the bitterest pills to swallow for these businesses at that time was the controversy sur-rounding Business Interruption Insurance (BI) – a complex area which will hopefully be resolved, or at least provide some clarity, by a legal test case being brought against some insurers by the FCA (Financial Conduct Authority). 

For those that thought that BI could offer a financial lifeline, it was a blow when realised that, for most, their policy was neither designed or intended to cover the circumstances created by the pandemic. Most policies covered very standard scenarios that could affect loss of income due to, for example, damage to property from fire that rendered business premises inoperable and the cost of mitigating that disruption. 

Extensions to BI were available, including cover for non-physical damage such as closure of premises or denial of access, or cover which explicitly related to infectious or contagious diseases, but most were costly and beyond the reach of most. Saying that, and as widely reported in the media, some insurers are being challenged on the wording used in their policies by customers believing they have had valid claims rejected. It is a complex situation, unlikely to be resolved quickly. 

As brokers, we have scrutinised polices in detail and advised clients on their contents. We will follow the legal proceedings carefully to provide updates and analysis and work with our teams and clients to follow through with the outcomes. 

We know that our brewery and distillery businesses are founded and grown by people who have a particular profile in common. Usually passionate, proactive, creative, entrepreneurial, resourceful, with close links to the communities they operate in. Those characteristics really became evident as we entered full lockdown. 

We had Masterbrew clients that responded in the first two weeks of lockdown, looking to diversify and adjust their business models, offering take-outs, deliveries, online orders, new beers and then, using WHO formulas, switching to hand sanitiser production. Many donated to their local communities, some supplied at cost and others, capable of larger production, took on more significant orders. 

We’ve adjusted cover for some, argued the case with insurers for these new production plans, and rebuilt bespoke plans for others. Interestingly, some of these new ventures look likely to be built into growth plans post lockdown – and for us that means we will go back to the insurers in order to evolve Masterbrew to cover these areas with an affordable level of premium.

As we look at the full easing of lockdown, now on the near horizon, it is time for these businesses to consider future strategies and business growth plans. For some, plans to open leisure and hospitality venues aligned to the original business may be postponed indefinitely. Others may retain new production practices and look to diversify further.  

We know that we will emerge post pandemic with a more hygiene conscious public and that the use of alcohol-based hand gel will remain high. There are global forecasts of continued growth in this area, which could mean a stable revenue stream for many breweries and distilleries – even at a local level.

Similarly, those that established new ways to get product to customers directly, shopping by App, Social or Online, may adopt and develop these sales routes permanently. At which point, we would strongly recommend reviewing how they collect, store and protect any personal data collected and look at what cyber cover they will need in place.

The advice is always, pick up the phone and discuss plans with your broker. Look at the oppor-tunity, consider the growth, manage the risk, evaluate the cost of insurance cover required.

Like most industries, certainly the insurance industry, the brewing and distillery sector will emerge changed from this experience, but for some businesses new opportunities will have presented, diversification that could lead to a secure future. 

Image: Shawn Ryan