But reduction in duty for draught beer is trivial compared to price rises on the way
There was nothing unusual in Heineken announcing as-yet-undecided price rises this week, as we all know that all big breweries – and probably most smaller ones too – will soon do the same, and not just for lager. Price rises caused by the rocketing price of energy, labour and supply chain shortages, and any number of other factors will soon mean that you’ll be hard pushed to buy a pint of real ale costing less than £5 at any pub except Wetherspoons.
The 5% reduction in alcohol duty for draught beer sold in pubs, announced in the Budget last October, was widely welcomed as the first cut for 50 years, and recognition that pubs need support. But it won’t kick in until February 2023, and in any case equates to a price reduction of only 3p per pint. Who knows what the price of the average pint might be in 12 months’ time, the way inflation is raging?
As with all sectors of the economy, the big players will set the pace and they remain dominant despite the huge growth in small breweries over the last decade. Recent figures showing the top 10 cask ale brands by volumes sold – see below – don’t come as any surprise, with only two of those being from independent breweries.
The changes announced in last autumn’s budget also extended tax relief to smaller brewers, but with an important exception which the trade is now fighting during the consultation period. As things stand this will only currently apply to beer below 8.5% ABV supplied in 40-litre containers, whereas many small brewers supply it in 20- or 30-litre containers to manage their production. Many pubs prefer 20-litre containers so that they can offer greater choice without over-committing to beer that might remain unsold.
CAMRA national chairman Nik Antona said: “Introducing a new, lower rate of duty for draught beer and cider served in pubs and clubs is a hugely important change, which recognises pubs are a force for good in our communities and should be helped to compete with the likes of supermarkets.
“While 40-litre containers may be the most commonly used size across all beers, using this as a base point for the draught duty relief is a massive oversimplification. As our research shows, the current proposals exclude many small brewers and cider makers, which is unfair. The Treasury needs to make a small change to its plans to help to make sure all consumers, producers and venues can benefit, and help keep fresh cask ale and real cider alive and thriving up and down the country.”
These developments coincide with new figures showing how the pandemic impacted total beer sales in 2021, and a new report by the All-Party Parliamentary Group on Pubs setting out the measures needed to support pubs going forward. The figures from the British Beer and Pub Association show that pubs, bars and restaurants lost beer sales revenue totalling £5.7 billion in 2021, the equivalent of 1.4 billion fewer pints being sold due to lockdown, restrictions on trading, and the increasing trend to drink beer at home.
Key recommendations in the Parliamentary Group’s Raising the Bar report include significant tax reforms to address the disproportionately high Business Rates paid by pubs and extending the duration of the reduced rate of VAT for hospitality; action on the growing debt crisis, with rent debt and Bounce Back Loan repayments seen as barriers to success; refinement of Pubs Code legislation to ensure a fairer deal for tied tenants in England and Wales; and additional resources for the office of the Pubs Code Adjudicator.
CAMRA chief Nik Antona commented: “This is a crucial moment for pubs, and I hope Government will see this report as an opportunity to raise the bar. Without legislative reform and greater investment in the trade, thousands of pubs across the country face an uncertain future. We need action from the Government to keep these vital businesses, and local communities they serve, thriving.”
So there’s plenty happening to try to raise Government support for pubs and breweries, and we need to give independent pubs and breweries even more of a leg-up if the customer is to have choice in the future. The top 10 cask ale brands as listed below are a reminder that the big companies rule the roost, but well done Timothy Taylor and St Austell Brewery for getting into this exclusive club.
Top 10 cask ale brands by volume
Source: CGA consultancy, as published by the Morning Advertiser
- Sharp’s Doom Bar (Molson Coors)
- IPA (Greene King)
- Landlord (Timothy Taylor)
- Fuller’s London Pride (Asahi)
- Abbot Ale (Greene King)
- Wainwright (Marston’s)
- Pedigree (Marston’s)
- Tribute Ale (St Austell)
- Caledonian Deuchars IPA (Heineken)
- Ruddles Best (Greene King)