Tuesday, 27 December 2011

Increase in HSBD

I got a DM yesterday on twitter regarding High Strength Beer Duty (HSBD). I was being informed that there may be more increases on the way. I can see this as being very likely. Thanks to the provider of the information, and for the kicking to get me to talk about more important stuff.

I currently have no firm information, it's a rumour. But there certainly are noises off stage left1 regarding this issue. Let us make sure this baddy is defeated.

CAMRA are championing an increase in the low strength relief. The family brewers would also like this to happen. Beer duty reduction for the big, efficient brewers would help pubs, apparently. This is something I disagree with, but it would certainly be politically beneficial. I feel certain that if the low strength duty band is increased it will almost certainly be countered by detrimental changes in HSBD in order to balance the books for HMRC.

We, the microbrewer, will see no benefit from the low strength discount. We already get 50% discount so we are told we can't get more. Progressive Beer Duty (PBD) which is the name for the discount given to microbrewers, is what has given the microbrewing sector a much needed boost. Erosion of this taxation relief will see the microbrewing industry start to dwindle.

Failure to see that the discount given to low strength beer is going to damage the microbrewing industry is a major issue I have with CAMRA. It is undoing the one thing for which I applaud the organisation.

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1Stage left is a thespian term to indicate the side of the stage as seen from the actor's perspective. i.e. the right from the audience. In pantomime, it is traditionally the side the baddy enters.

20 comments:

batmansbeerblog said...

hhmmm. Is this a case of CAMRA/government thinking that microbrewers need no further help past PBD, considering the sector is in growth, or a case of the bigger brewers having more influence over their policy?

Dave Bailey said...

There is an argument that says there are too many very small brewers who aren't very good. I field questions often from people who think that they can start a microbrewery. It's getting tougher for everyone. There is an argument that claims it is too easy to start a microbrewery. The family brewers do have a grip on the CAMRA ethos and they are the ones that have been hurt the most by the microbrewers.

I have just been DMed by someone who says that progressive beer duty won't last. I suspect there is an element of truth in this. It's not a question of if, but how soon. HSBD is a start of it.

Curmudgeon said...

"There is an argument that says there are too many very small brewers who aren't very good."

Yes, while it has helped good brewers, it has also brought too many half-arsed brewers into the industry.

Three months in, it's a bit early to assess the effects of HSBD, but it's clear that all the Special Brews of this world have simply taken it on the chin. They have increased the price a bit and cut the margin a bit. There has been no evidence of cutting strengths in that sector of the market.

IMV the whole concept of tiered beer duty is flawed both practically and intellectually. A single basic system* of duty directly proportionate to strength is, to my mind, the only sensible way of doing it.

* for the avoidance of doubt, I have no problem with Progressive Beer Duty as a discount against that scale.

StringersBeer said...

These half-arsed brewers pointed up by Curmudgeon - who's buying (and drinking) their beer? Would that be half-arsed publicans and their half-arsed customers?

RedNev said...

Dave: please show me the CAMRA document which called for increased duty on higher strength beers. It is the government that took the idea of lower duty for weak beers and added their own proposal of the higher duty for stronger beers. If someone takes your idea and adds an unwelcome twist, you can't be blamed for the end result.

Dave Bailey said...

Nev, just because someone hasn't got the intention to cause harm does not mean they can absolve themselves of blame.

wee beefy said...

I think a country with 3000 breweries will always have a proportion of dross, but there seem to be large numbers of breweries that exist only to supply festivals and freehouses with 4.3-4.5% rebadged ale, showing a lack of long term planning, and supporting the idea that it's too easy to set one up - look how many have opened in 2011 alone...

Meanwhile, the better brewers, often exclusively without a pun for a name, are more succeptible to HSBD as they tend to be confident enough to branch out into stronger brews. The sub 2.7% duty relief helps none of the UK's brewers, gimmick or otherwise, so fighting any increases/extensions to HSBD is in everyone's interests, as Mr H Dave suggests.

Ed said...

As a beer consumers' organisation isn't CAMRA bound to be in favour of tax reductions on beer and against tax increases?

Dave Bailey said...

Ed, CAMRA are in favour of tax reductions to a small section of the beer market. Overall they have failed to reduce beer tax. They are currently favouring the family brewers and alienating the "craft" beer market AND the microbrewing market.

Microbrewers will loose out if the low duty threshold is increased to 3.5% as is being proposed.

Curmudgeon said...

CAMRA are far too wedded to seeking special privileges from government for things they happen to approve of.

RedNev said...

"Nev, just because someone hasn't got the intention to cause harm does not mean they can absolve themselves of blame."

Rubbish, and it does not answer my point. True, CAMRA did not intend to cause harm, but furthermore they did not call for higher duty for strong beer and expressed disapproval of that aspect of the duty changes when they were announced. As I said before, if someone distorts your idea, you are not reponsible for their version of it.

I'm sorry, Dave, but you really don't understand politics and politicians at all: they are forever taking other people's ideas and proposals and altering them to suit their own agendas. Funny how you love CAMRA-bashing, but never have a go at the politicians who actually make the decisions you disapprove of. Why not?

Rabidbarfly said...

@stringers - amen sir!

Dave Bailey said...

Stringers and Rabid, I'm a little uncertain if your comments are cynical sarcasm or not......

Nev, I understand politicians much better than you think - they are all the same. The concept of HSBD was created by the previous government and has been carried through by the current set of (insert your own thoughts)

Whether or not CAMRA could have seen the inclusion of HSBD or not first time around, what I am trying to illustrate is that further progress down the idea of increasing low strength discount will result in further increases of HSBD.

They should immediately drop the idea of expanding the low strength beer duty discount as it is of no use to pubs or the wider beer world.

Tandleman said...

It would seem logical that if the government can be persuaded of a view that we should lower beer duty on beers up to 3.5%, then they will rake it back in again against other beers of a higher strength. That's what they've done now and presumably will do again. There is form here.

There is no real market for these beers though. There is a market for higher strength beers. Dilemma.

I have said on my blog repeatedly that Family Brewers need to up their game. Lower strength beers won't do the trick I fear. This all goes back to two things;

Cheap supermarket beer and the Health Lobby. Dilemma again.

I kind of agree with Dave overall though I also agree with what Nev says. CAMRA didn't think this one through enough. Mind you, CAMRA is damned if it stays silent on a subject and blamed when it takes a stance. Dilemma again.

Dave Bailey said...

Tandleman, you are right of course, CAMRA are in a bit of a dilemma because they have to be seen to be doing what the majority of the membership see as the right thing.

CAMRA, brewers, politicians and the pub industry are playing a PR game. We're all the same really.

I don't have wholesale disagreement with Nev either. He might be miles to the left of the fence I unsuccessfully try to sit on, but his points aren't daft either.

Curmudgeon said...

"There is no real market for these beers though."

There isn't for 2.8% beers, but there certainly is for 3.5% beers, and if the duty cut-off was increased to that strength a lot of beers a few points above would be reduced to that strength. Which is why I suspect it won't happen.

"CAMRA is damned if it stays silent on a subject and blamed when it takes a stance"

If it is going to take a stance, it helps to think it through first. Much of CAMRA's response to recent developments in the beer market and legislative climate seems incoherent.

Dave Bailey said...

"There isn't for 2.8% beers, but there certainly is for 3.5% beers" and it isn't a great leap for brewers to drop mainstream lagers from 4% to 3.5% - I'm not sure that this isn't what has been agreed behind the scenes anyway. The whispers in corridors are saying that the low threshold is going to go up.

StringersBeer said...

I wasn't being cynically sarcastic - but the idea that PBD has of itself generated a slew of "half-arsed brewers" foisting their sub-standard muck on an unwilling public is so much nonsense. Rather, you might say, the market for novel beers (and breweries) has been stimulated by demand. Festivals, pubs with ever-changing line-ups priding themselves on selling "[so many] beers this year", tickers, even - the demand has been there, and growing. There are (what I'd call) crap brewers, and there are people who buy their beer. But there always have been.

PBD was put into place to bump up the supply side - in recognition of the problems faced by small brewers entering and getting access to the market, their poor profitablity compared to large brewers (enjoying vast economies of scale) and the value of diversity and choice for the consumer.

PBD was a huge success for SIBA, which campaigned for years before anyone else (like CAMRA) came on board (although CAMRA seem happy to take credit for it!).

CAMRA are, of course, a consumer organisation, and primarily a members organisation. They're for (small) brewers only when there's an alignment of interests.

Personally, I think that campaigning for low strength duty (rather than pushing for a general reduction in the drinker's tax) was a shot aimed squarely at the foot. There was no way the exchequer was going to go for something revenue negative - so something like the High Strength trade off was always going to happen. I'd be amazed if a raising of the limit for low strength isn't matched by something at the top end.

RedNev said...

You've changed your argument in your second reply to me. That's not quite the strident blame you were chucking CAMRA's way earlier.

Have you actually contacted CAMRA about this? If I remember correctly, you are a member, though a disaffected one, and it might be interesting to see how they reply to your concerns as to where their policies will - in your opinion - take beer duty.

Dave Bailey said...

Nev, no, I don't suppose I have contacted CAMRA directly. I am still a CAMRA member and have no intention of giving that up any time soon.

Perhaps you are right, perhaps I should have a go at contacting them directly. I believe I have Mike Benner's email address.