Saturday 1 October 2011

Low ABV, low duty, low IQ

Duty on beer has been slashed. Unless you are a micro-brewer that is, in which case beer duty goes up.

I blogged about it more than once when it was first announced. Unfortunately, the arguments I put seemed a little to complex for most of you to get on your high horse about it then.

I'll put it simply:

  • The low ABV duty discount can only be claimed by brewers who do not get small brewers discount.
  • CAMRA campaigned for the low ABV discount.
  • Below 2.8% cask beer is not practical as it has low demand and goes off faster.
  • The duty rise on 7.5% beer is to pay for the low ABV discount.
  • Low ABV discount can only be claimed by supermarket own brands, large brewery "mid strength" lagers and perhaps some large cask beer producers.
  • At present, we are unsure how the high ABV is to be calculated1, but there is a suggestion that micro-brewers making beer over 7.5% might be charged 150% more due to us loosing our small brewers discount on these beers.
  • Until now beer duty was completely fair - duty was charged per unit volume of alcohol. Not any more.
Overall, CAMRA are claiming it as good news. IT IS NOT.

Chasing a discount on beers under 3.5%, which CAMRA are doing, will only cause the Government to put up beer duty somewhere else - you have been warned.


Magic Rock also have some stuff to say on the subject.

1Since I first published this post I looked into the facts. HMRC have never sent any information, but I did research when the budget announcement was made. As I suspected it is confirmed that we are still permitted the discount on the regular part of beer duty but not the High Strength Beer Duty. Our duty will go up by 50% on all beers above 7.5%

"Small Brewer's Relief is still available on the general beer duty element of beer above 7.5% abv. However, it does not apply to HSBD and no further relief will be applied to the reduced rate for lower strength beers."
There is information on the HMRC site for those concerned.


Owen said...

You don't produce any beers <2.8% so the fact you can't claim it makes no difference to you -- and even if you did, you'd be paying the same rate of duty as everyone else. Look at it as you getting the Low-ABV rate on everything up to 7.4% rather than not getting a reduced rate on <2.8%

As for the high ABV rate, yes you're paying 50% more, but you're still only paying 60% of the duty that a large producer pays on the same beer.

It's not great, but it's not the end of the world.

Unknown said...


CAMRA have failed small brewers, it is as simple as that.

Beer duty is not low, it is our single biggest cost and as from today that cost goes up on some of our best products.

Owen said...

I believe your anger would be better direct at the people setting the duty rates, and not the people who support the brewing industry.

Most small brewers don't even produce beer over 7.5% (or beer under 2.8%).

Ed said...

Oh give over. It's the government that's to blame, not CAMRA.

Unknown said...

CAMRA have been calling for a cut in low ABV duty and the way it has been implemented has benefited no one.

It is a CAMRA home goal and I remain unconvinced of anything else.

Owen said...

It benefits mid-large size brewers who produce beers <2.8% ABV, and it benefits consumers of those beers.

The fact it doesn't benefit you personally does not make CAMRA the boogeyman.

Unknown said...

The extra beer duty on the beers I produce over 7.5% is to pay for the benefits to others.

It not only does not benefit me it is going to cost me more.

Ed said...

OK, don't let facts get in the way of your opinions then.

Neville Grundy said...

You really do like CAMRA bashing, don't you Dave?

CAMRA campaigns for lower duty; it has never campaigned for higher duty on beers over 7.5%. The fact that the government has pinched the idea and distorted it for its own ends is not CAMRA's fault. As a politically active person, I can assure you that governments do that all the time: they take bits of proposals they like, discard the bits they don't, add their own spin and - hey presto! - they've quite a different policy from the original. As here.

CAMRA simply doesn't have the kind of clout you credit it with, otherwise beer duty would have been cut years ago, the pubco tie would have either reformed or abolished, the now-abandoned hike in cider duty would never have seen light of day at all, and full pint legislation would be in place.

The reality is that ALL beer duty is too high, and that is the government's fault, not CAMRA's.

StringersBeer said...

Look! Here's some sub 2.8% bitter

That's the kind of stuff we want to see more of, right?

Curmudgeon said...

CAMRA have been trumpeting this as "the People's Pint" which suggests they think it's a good move and are claiming at last some of the credit for it. If they had adopted an agnostic stance, their position might have been more credible. In reality, it's more a case of "watering the workers' beer".

Owen said...

@StringersBeer : No, but it is what the government [claim they] would prefer people currently drinking stronger beers to drink. Not all government policy on beer is aimed at artisan producers.

The fact the government doesn't distinguish between Belhaven 60/- and Tesco Value Bitter in its policy is, I'm sure you'll find, something CAMRA probably disagrees with, but the government shouldn't legislate for taste.

StringersBeer said...

@Owen: HardknottDaves point (altho I do think he bangs on about CAMRA a bit much) is, I gather, that the restructuring of the beer tax regime (if you consider it a tax on the producer) is essentially regressive - in that it's the likes of Tesco who'll benefit while (disproportionately) smaller producers are taxed more highly on strong beers to make up the shortfall.

By arguing (in effect) that low-strength beers are less bad, and therefore deserving a lower duty rate, CAMRA risks sending the message that alcohol is an unwanted contaminant in beer, an unfortunate by-product of fermentation, and that we'd be better off if we could get rid of the damn stuff. Us being too stupid to drink slowly I suppose.

Owen said...

The flaw in that argument is that the for small producers to make up the duty shortfall caused by the low-strength relief, they'd have to produce twice as much 7.5%+ beer as all the <2.8% beer being produced by non-small brewers.

That's nonsense. The large producers make far more 7.5%+ beer than all the small producers combined, and Belgian brewers/importers thereof will bear far more of the brunt than native small producers.

...and CAMRA is already campaigning to have the government recognise that the current daily allowances for alcohol are nonsense and that exceeding them is not automatically lifethreatening.

StringersBeer said...

@Owen: It's not an argument, it's a plain statement of fact. Duty is cut on weak beers and an extra tax is applied to strong beers. It doesn't matter that the revenue generated from the one will not exactly match the revenue lost from the other.

And it doesn't matter either that large producers make more strong beer than small producers. They make more weak beer also - that's what makes them large. Isn't it?

So no, not nonsense. Unless you show that large producers pay more of their duty (as a proportion) on strong beers than the smaller ones. Which you don't.

I'm not super interested in what CAMRA say about "current daily allowances for alcohol". It's barely in their remit.

Tandleman said...

Am I correct in thinking (from Dave's HMRC link) that it means 23.2p increase in duty per 500ml?

And Dave I think - again from your link - that you pay that and otherwise as before.

Owen said...

@Tandleman : Depends on the strength of the beer.

If it's exactly 7.5%, then it's an extra 17.4p per 500ml bottle. Every 0.1% increase over that is an extra 0.2p on the bottle.

Curmudgeon said...

The official HMRC figures are here. And, as I've said elsewhere, HSBD only applies on beers OVER 7.5%.

A 7.6% beer would incur additional duty of 17.6p per 500ml, or 21.2p once VAT is added.

Tandleman said...

Mudgie. I have checked everywhere I can think of and can find no source for Camra coining Peoples Pint, far less trumpeting it. Do you have a link?

Curmudgeon said...

See here.

Mike Benner, CAMRA's Chief Executive, said:

'On the basis of today's research, CAMRA believes the introduction of a low strength beer option in pubs could be a great selling point for all licensees looking to offer diversity and choice to their customers, as well as making it easier to regulate their drinking.

'Brewers are proving it is wholly possible to brew a low strength real ale packed with flavour, and as we've emphasised before, introducing the 'People's Pint' into pubs is a win-win scenario for both the industry and Government in promoting a responsible drinking message.

'Lower strength beers also offer a great choice to the health-conscious consumer as they have fewer calories than stronger drinks, so there's no need to ditch your pint if you are counting the calories and research has shown that they are effective in rehydrating***. With lower strength real ales you have a product that is natural, refreshing, and can be part of a healthy lifestyle.

If that's not trumpeting it, then I don't know what is.

StringersBeer said...

@Tandleman You've checked everywhere you can think of?

There's this "Interweb" thing the kids have nowadays:

You should give it a go.

Tandleman said...

Well bang to rights on that one eh? Couldn't find it on CAMRA's web site Doh. My excuse is smartphone but mainly incompetence. Yup. I'm just plain old wrong on the origin of Peoples Pint. I'll get my coat.

Curmudgeon said...

Here comes the People's Pint - and it's...


StringersBeer said...

All that said, I'm not sure Dave's right to be having a go at CAMRA over this. They're a consumer organisation - they don't work for the small brewers - that's SIBAs job.

I'm not convinced that CAMRA pushing for a reduced (or zero) rate on LA beers was a very clever move, since it tends to weaken the argument that duty is too high across the board, but CAMRA consistently made it clear that they were agin the HSBD.

It does smell a bit like a quid pro quo tho' doesn't it?

Anyhoo. Must dash, have to "constructively remove" some Mutiny (9.3%) from duty suspense.

Cooking Lager said...

CAMCL has not officially welcomed this yet. I need to taste Skol 2.8%, first.

As for CAMRA, they don't drink to get tidly. They are posh, like, and more discerning than you. They drink for the "taste", and one must presume they like the taste of watery piss.

StringersBeer said...

I'm sure it'll taste just as "good" as "full-strength" Skol, Cookie. And it should be priced to sell, now that Partly Beer Duty applies.

pdtnc said...

it certainly is a load of cock and is going to do nothing for the drunkard antisocial behaviour when Wine and Cider are available so cheap.