New tax on high strength beers…
If you weren’t aware from the 1st of October 2011 a new duty rate will be introduced for beers above 7.5% ABV.
This new tax rate is supposedly being introduced by the government as an attempt to curb irresponsible drinking of higher strength beers.
As producers and regular drinkers of these type of beers this effects us in a number of ways… For a start it will mean our higher strength offerings such as ‘Human Cannonball’ IIPA and our forthcoming Imperial Stout ‘Bearded Lady’ will pay more tax and therefore cost you more to buy at the tap/in the bottle. It will also mean many of the specialist beers we enjoy will rise in price.
How does that make us feel? Probably a little confused more than anything else. Clearly the price rise on stronger beers is going to create an added barrier to beer drinkers wanting to expand their beer experiences, but will it stop the hardened beer aficionados drinking stronger beers? probably not.
The niche ‘craft’ sector of the beer market is on the whole upwardly mobile, fanatical and often able and willing to pay high prices for unusual strong and rare imported beers.
An extra £1 a bottle really isn’t going to make a difference to people who are already willingly paying £5, £10 and upwards for bottled strong beers.
The tax is presumably aimed at alcohol dependents who’s drink of choice is Tennants Super or Carlsberg Special Brew, but surely when someone is looking for a low cost high strength alcohol fix they don’t really care whether it’s malt based or fruit based?
Why doesn’t this new tax extend to strong Cider, for example, which is often just as cheaply produced, as well as being more aggressively marketed toward young people?
Or for that matter Wine? All wine is over 7.5% and much of it is available very cheaply, so why pick on beer?
While the new tax will have no bearing on our future production, what’s especially galling about the new tax is the lack of recognition for the 7.5%+ beers so many of us enjoy and the punitive treatment of the developing UK ‘craft’ beer sector.
The government is either unaware that the craft beer market exists or less likely it is actively taxing a niche industry because on the whole the people who enjoy these beers can afford it.
So which is it? Who knows… One thing for sure is the biggest loser in all of this will be the importers, and retailers of strong beer whose job of convincing the public that strong craft beers are worthy of their attention just got a bit harder….
Leave a reply
Fields marked with * are required
16 Comments
01 October 11 at 8:24am
1
I wholeheartedly agree, it's an absolute disgrace. As I said & you've quite rightly pointed out, the very people this is aimed at don't really care what's in the can, it's not about taste, all they want is the end result. To that end it's either an easy switch to an alternative or they will find SOME WAY of getting what they want by fair means or foul. I for one will carry on buying, it just means I'll be able to buy less variety I suspect and less often which is a bad thing for everyone conceded... Cheers Phil (P.S Bearded Lady hmmmm sounds good)
01 October 11 at 8:25am
2
concerned even, bloody predictive text....
02 October 11 at 7:16am
3
"it is actively taxing a niche industry because on the whole the people who enjoy these beers can afford it." I think I recall exactly that argument being put by the government. Will it really cost an extra £1 a bottle though or would that be more of a protecting margins and differentials thing?I suspect a bit of the latter, but really don't know for sure. Nicely balanced and thoughtful piece. This is an ill thought out change, which as you point out, will hit the wrong targets. And again as you say, why just beer?
02 October 11 at 7:27pm
4
Phil, Peter: the whole thing is odd, I can hardly believe the government is aware of the high strength craft beer sector, or for that matter that taxing it more highly would make any significant contribution to the coffers. On the other hand I find it equally odd they'd single out strong beer as the specific problem where alcohol misuse/dependency is the issue, especially as strong cider/alcohols etc have just as bad an image....
03 October 11 at 9:03am
5
Really good article. I’m disappointed with the Government’s decision on this tax! I don’t think I’ve ever seen an alcoholic begging outside Tesco with a bottle of Magic Rock Human Cannonball, BrewDog Hardcore IPA or Stone Ruination IPA! They are usually drinking themselves into a stupor on Strongbow Cider, Tesco Value Cider, cheap red wine or Special Brew. Tesco Value Cider for example is 4.2% and is only £1.39 for 2litres. The alcoholics choose these types of drinks because they are an average ABV and really cheap for two litres. They can buy much more of this type of drink and stay drunk longer and costs far less than trying to get drunk on a 7.5%+ craft beer. Same for the wine market, I have seen a lot of alcoholics drinking wine, because it’s cheap and its strong. In most off-licence’s you will see a lot of cheap wine for £2 or less that is around 7.5% ABV. Again take Tesco as an example. Their own brand red wine (Tesco Australian Red Wine) is 12.5% ABV and costs £2.24 for a 75CL bottle! It’s an absolute disgraceful decision by the Government. It shows they do not understand the craft beer market at all and this decision will really punish craft brewers, pubs and the consumers. This comes are at time when the Government promised more help for small business. The craft beer sector could do with more Government help. Craft beer sales are increasing year on year and Craft Brewers are brining jobs to their local area and supporting their local communities. If they really want to curb irresponsible drinking then they should be increasing taxes on wine that is 7.5%+ not beer. They should also look into the cheap cider market and prevent it being sold in 2 litre bottles. That’s where the real issues around irresponsible drinking and alcoholism are that have been caused by huge corporate breweries and wineries, producing cheap beers and wines in volume. The issues does not lay in the small art of craft beer!
03 October 11 at 6:23pm
6
Great piece, very well put. I think another possibility is that is simply a sop to the health lobby / new-prohibitionists. It's a headline grabber - "tax on high strength..." sounds like they're doing something to combat something extreme. But in reality they're targeting what is (alas) a vanishingly small sector of the overall market for beer in the UK, never mind the overall alcohol market and not pissing off the legions of middle-class wine-drinkers who presumably prop up the bulk of the Tory voting base. Personally though, I'm not going to be put off by an extra £1 on a bottle. After all, what else can you do with that £1 these days? But 1.5 Mars Bars? A can and a half of Coke? I'd rather put my hand in my pocket and support a craft brewer to the tune of an extra quid, thank you very much.
04 October 11 at 8:35pm
7
[...] deal if you were to cross the road to Sainsburys, well at least it is for now (read here, here and here if you want to understand why it will soon be much more expensive). Next up in the enthralling [...]
06 October 11 at 9:08am
8
Rich, It's like you said - the government has no idea that there is a niche brewing industry that is being affected by this change in the tax. They're focused on the mass market. Cider managed to get themselves removed from the new tax when the producers kicked off. Our industry doesn't have a strong enough voice speaking up for the brewers like the FSB is there for business and so Magic Rock and other craft brewers who make the high ABV, not for binge drinking craft products. The result - taxes like this. Don't let it stop you Rich - there is a place in the market for you're beers. I guess we'll be seeing a lot more lower ABV beers from now on, making it easy for the cream to float to the top!
06 October 11 at 9:59am
9
The obvious way to deal with the problem is to put minimum pricing on alcohol, not to keep putting taxes up. This however would mean taking on supermarkets and other irresponsible retailers who put cheap booze on the shelf to get people in to by other products. There is no way the government would do that - it would mean taking on big corporations rather than small producers. Reduce taxation but install minimum pricing - result: pint in a pub is cheaper - more people go out socially, rather than drinking with the devil at home. The economy and businesses do better and diversity of products and styles isn't hit. Tax on a litre of 40% proof spirits is about £10, I've seen litres of spirits advertised at supermarkets for less - nuff said.
06 October 11 at 10:41am
10
Agree completely with Mark
06 October 11 at 6:37pm
11
[...] (except from the tax revenue of course!). You may have seen the blogs which focus on the brewers perspective, those working in independent retailers, and from a largely unified blogging [...]
09 October 11 at 2:02pm
12
[...] http://hardknott.blogspot.com/2011/10/low-abv-low-duty-low-iq.html http://www.magicrockbrewing.com/blog/new-tax-on-high-strength-beers/ http://ghostdrinker.blogspot.com/2011/09/1-week-till-judgement-day.html [...]
19 October 11 at 12:00am
13
[...] HSBD – Zak Avery, James Clay, SW Brewery, The Indy, Moor Beer, Gadds, Broadford Brewer, Magic Rock, [...]
29 October 11 at 6:42am
14
[...] Magic Rock Brew Co – New tax on high strength beers [...]
13 November 11 at 2:51am
15
totally agree with mark two of my products have been hit, put an extra 18p a pint on em. deeply dissapointed with the new tax not well thought out at all
22 March 12 at 6:21pm
16
[...] Magic Rock Brewing, despite being disillusioned be the HSBD, have announced that it won’t affect the beers they create but unfortunately some breweries have decided that it just doesn’t make financial sense for them to brew beers with an ABV above 7.4%. Moor Beer Company have published an open letter that outlines impact the HSBD is having on their business – I’m sure I’m not the only person saddened by the news that we’ve seen the last batch of the delicious JJJ IPA. [...]