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What The Budget Really Means For Us Breweries

‘Cheers!’ the headlines read, as Chancellor Rishi Sunak announced the biggest shake-up of alcohol duty in 140 years. But what does it really mean for us Breweries?
 

In his Budget speech, Mr Sunak announced a raft of reforms to the way alcohol is taxed, saying the current duty system is ‘outdated, complex and full of historical anomalies’.

One of them was ‘draught relief’ which will cut duty on draught beer and cider by 5% in a bid to support pubs that have been hard hit by the pandemic.

He said it was the biggest cut to beer duty in 50 years and claimed it will result in a ‘permanent cut in the cost of a pint by 3p’.

Taxes on sparkling wine and some other lower-strength products will also be cut.

The speech had beer lovers raising their glasses while share prices in pub companies immediately soared.

But what does that mean for smaller, independent breweries like ours?

Well, your guess is as good as ours. The devil is in the detail – and without it, it’s hard to say what impact these cuts will have on our industry.

For our Beer Drive Thru, which we set up during the pandemic to get you real beer lovers your cask ale wherever you are in the country, it won’t affect anything at all.

CAMRA has called the duty cut a ‘game changer’ for cask ale drinkers and local pubs – but on the face of it, behind all the positive headlines, this smacks of another budget in favour of the big boys and large corporations – with the craft industry and small breweries left hanging.

The huge pub companies will be toasting the cuts – with share prices at JD Wetherspoon going up 5.3% on the back of the announcement, Mitchells & Butlers gaining 5.7% and City Pub Group 1.2%.

But I remain unconvinced the ‘3p a pint’ saving will ever reach the bar – and therefore the drinker.

There’s changes afoot in the industry – with brewers having already told pubs that prices will be going up by 5% due to increasing supply chain costs and inflation.

And, although we don’t know exactly what those changes will be, it’s likely they’ll wipe out the so-called 3p a pint saving.

Just days before the budget The Times had reported that the price of beer could rise by as much as 30p, with apparently more than eight in 10 pubs already having raised prices – or planning to do so – due to increased wages, staff shortages and ongoing energy supply issues.

It’s no surprise then that Greg Mulholland, a former MP and campaign director at the Campaign for Pubs, said he thought the supposed saving for drinkers announced by the Chancellor was actually ‘nonsense’.

Direct Discrimination against Small Brewers?

There’s also been much talk of the decision to only offer the new relief on containers over 40 litres. Whilst our cask beers in “firkins” going out to independent free houses will qualify for the relief, many smaller brewers offering 20 litres “pins” and 30 litre kegs (we also only use 30 litre kegs) won’t see the benefit. The big beer boys though – offering 40 litre cask and a massive amount of 50 litre kegs WILL benefit. What does this mean for you, the beer lover? Ultimately, that your choice on the bar could get limited and despite the relief, you’ll be paying more for the “pleasure”.

That the chancellor and Boris Johnson took part in a photo-op hauling around 30-litre kegs – which don’t qualify for the cuts – to promote the announcement fell a bit flat among those of us whose livelihoods will be directly impacted. 

The pair’s visit to London’s Fourpure brewery – a one-time independent operation now owned by Japanese multi-national Kirin – was obviously designed to celebrate one of the Budget’s more eye-catching announcements.

But the craft industry’s growing anger as it quickly realised it would not be eligible for the cut quickly overshadowed the announcement, with the Campaign for Pubs seizing on what it has described as a ‘direct discrimination against UK small brewers’.

James Calder, chief executive of the Society of Independent Brewers, said the industry had been calling for draught relief to ‘apply to everything over 20 litres’ so it benefitted the craft beer industry.

But he said overall the policy was a positive “once in a generation” move for cask beer and pubs, and that he remains hopeful with an ongoing consultation ahead of the relief being introduced that the rules can be changed.

Let’s hope he is right. Furthermore, there’s one big piece of the jigsaw puzzle missing – the Government are looking to change the amount of relief that is given on beer duty to small producers like us, there’s no indication yet as to what that will look like so there’s lots of speculation right now, but what has been announced so far means that even if our relief stays the same (unlikely though!), this so called 5% reduction actually nets down to the equivalent of a somewhat pitiful 2.5%. Once more, big beer getting the benefit and the punter having their choices limited to a range of unexciting drinks.

 

Of course, missing out to the big boys is nothing new for us independent breweries in the world of beer.

We’ve become used to raising the game to compete over the years – most notably following a dip of traditional British beer varieties in the 1970s when big breweries bought out small to medium ‘craft’ breweries and pushed keg bitter and mass produced lager into pubs.

With a bit of innovation and a nod to traditional brewing methods, small independent beer brewing started to boom once again, producing beers with a vast range of experimental flavours and tastes that large-scale commercial brewers just can’t and won’t compete with.

The Covid pandemic then did its best to write us off.

With our main route to market – pubs – closed, it was the big breweries supplying supermarkets in bottles and cans that cashed in on people being forced to drink at home while we had to come up with a Plan B to survive.

With Beer Drive Thru we did just that – delivering our expertly brewed fresh beer directly to your doors – an arm of our business which will not be affected at all by the Chancellor’s announcement.

So, while we await further details about what this Budget really does mean for the industry and independent breweries like ours, our much-loved Plan B still remains the best value option for real beer lovers who want to enjoy truly fresh beer in exciting flavours and styles from the comfort of their homes.

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