Tuesday, 30 November 2010

Cat to be castrated after all

The Treasury have just published the results of their review of alcohol taxation. In general, this doesn’t recommend any major changes to the tax structure, but there are two significant exceptions.

The first is that they are planning to introduce a new higher rate of duty for beers over 7.5% ABV. The intention here is to increase the cost of super-strength lagers such as Carlsberg Special Brew which are clearly associated with consumption by problem drinkers. However, it will apply across the board and so will also hit traditional British strong ales such as Robinson’s Old Tom, and imported products such as Duvel and most Belgian abbey beers.

The report argues that such products will only see a small percentage increase as they are already typically sold at a premium price, but even so it seems unreasonable to penalise them when they are in general consumed responsibly and are not associated with problem drinking. Old Tom is not something you can pour down your neck at a rapid rate of knots.

I would have thought there was a golden opportunity here for CAMRA to campaign for an exemption from this new tax for cask- and bottle-conditioned products, whether home produced or imported. (In my view, the whole thing is misconceived, but obviously CAMRA can't be seen to be standing up for Special Brew, and at least this would give them something reasonably productive to gnaw at)

And surely what will happen in practice is that the super-strength lagers will simply be reformulated to bring them down to 7.5% ABV to avoid the new tax, so there will be a clustering of products at that level. Arbitrary tax cut-offs of this kind inevitably lead to distortions in the market place and are prone to unintended consequences.

The other proposal is to introduce a reduced rate of duty for beers of 2.8% ABV or below. As I’ve argued before, I can’t see this making much difference, as it is difficult to brew beers at such strength with much taste or character, and realistically the demand for them is minimal. On the other hand, had the threshold been set at 3.5% it might have encouraged a revival of the milds and light bitters which have become a neglected part of the British beer scene.

18 comments:

  1. "And surely what will happen in practice is that the super-strength lagers will simply be reformulated to bring them down to 7.5% ABV to avoid the new tax."

    PC, you have got it in one.

    Up and down the country, people like Tennants will be saying the same thing. The chances are, not a penny of this super tax will ever be paid.

    So then the bansturbators will hit back by reducing the strength at which the super tax kicks in to 7% and so on.

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  2. When a higher duty rate was introduced for ciders over 7.5%, Strongbow Super was renamed Strongbow Black and reduced in strength to, you've guessed it, 7.5%.

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  3. Talk about throwing out the baby with the bathwater! Yet another example of muddle-headed, ill-advised, government meddling; and this was the party that promised to role back the powers of the state!

    ps. I will have to stock up on Old Tom, and other similar strong ales (Harvey's Christmas Ale springs to mind), before this ill-thought out, knee-jerk measure comes into force.

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  4. The lower strength provision can only be for beers up to 2.8% because otherwise the Government would be breaking European law!!

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  5. "prone to unintended consequences"

    As is every intervention by government, of any colour, and in any country. Yet still they will never learn.

    You know they're reaching when the two recent public health measures they talk of as hugely successful are seat belt laws and the smoking ban, neither of which have resulted in any realistically tangible positive effect on health whatsoever. In fact, it is more than arguable that both have shifted problems elsewhere.

    The white paper is yet more government idiocy placing hope and ignorance before their care for the preferences of the population.

    One of the Shepherd Neame directors was on the radio today talking about the 2.8% incentive for producing 'tasty' low-alcohol beers. Bet he doesn't bother. ;)

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  6. two things, first the intention of this isnt to raise more taxes, its deliberate intention is to force super strength brewers to drop their %ABV down to 7.5%, because that delivers the government commitment to dealing with "problem drinkers", they change taxes, brewers make weaker beers as a result.

    secondly why should Camra get involved, were back to the Camra has to always do something because this is beer related stuff, even though very few cask ales (as a percentage of the over 7.5% market) will be affected, and of those that are very few people drink anyway because of price sensitivities.

    so is this a battle Camra needs to start, is this a burning issue facing cask ale at the moment,no probably not IMO. there are far more important problems to raise with government affecting cask ale, and you do lose the ability to lobby successfully if every little thing the government announces about beer you object to, sometimes you have to concede ground to make headway in other areas.

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  7. But you get the impression that CAMRA is conceding ground on every front (and in some cases making short-sighted and ill-advised common cause with the anti-drink lobby) while actually making no headway whatsoever. There has to come a point when appeasement is recognised as a failure and you actually making a stand, even if the prospects of success are limited, otherwise all credibility is lost.

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  8. CAMRA is involved - they lobbied for the reduction in tax at low ABV. The inevitable result is that the Government has balanced the books by increasing tax on high ABV beers. If you read the review in detail it effectively says this.

    CAMRA have achieved very little positive on this one and provided a glass ceiling for ABV on beers that may well just stifle experimentation at higher ABVs.

    Yes, I can understand why CAMRA are not interested in the breweries that are producing high ABV beers, like me, but if the goal is to reduce overall beer tax it has failed. As has been pointed out the reduction in beer tax is only for a small segment of beer but the increase effects a section of the beer market that is already sceptical of CAMRA.

    Additionally, beer duty is currently fair until this new scheme is implemented. Duty on low ABV beers is already low as it is paid on the actual volume of alcohol. The duty on a 2% beer is exactly half that already of a 4% beer. The duty on a 9% beer, that is supposed to be so evil that we must do something about, is over twice that of a 4% beer.

    I'm biased, I know, my business plan was based on producing strong beer for a growing esoteric beer market. But to say I am very angry and disappointed with CAMRA, BBPA, SIBA et al is something of an understatement.

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  9. With HardKnott Dave on this one. It is bound to stifle creativity and experimentation at the higher ABV end of the market.
    We too have a higher strength beer in our portfolio, at 7.8%.
    What to do now? Reduce the strength to 7.5% to slot in to an arbitary assessment of what constitutes acceptable to society?
    Buffoonery in action!

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  10. What, special pleading for beers CAMRA members like? Poor show.

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  11. Cooking Lager: are you suggesting CAMRA should plead specially for beers they don't like? Now that would be silly.

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  12. "What, special pleading for beers CAMRA members like? Poor show."

    I rather thought the point was that CAMRA seemingly don't like them enough to fight the Government over this and that the special pleading was coming from those who do and who are generally a CAMRA sceptic.

    As always, it's the geeks what get the hump and CAMRA what gets the blame.

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  13. Well, of course it is special pleading (and thus I said I had reservations about it) but in this case it would serve to draw a distinction reasonably effectively between 7.5%+ beers that are consumed responsibly and those that aren't.

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  14. Newspaper reports today suggested that the additional tax could be of the order of up to 75p per litre, which would be pretty effective in either killing off super lagers entirely or moving them down to the 7.5% bracket. That's 85p a pint, which would probably have a similar effect on virtually all cask ales in that segment, especially when retail markup is taken into account.

    On the other hand, 25p on a 330ml bottle of Duvel wouldn't be utterly prohibitive, although it undoubtedly would reduce sales.

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  15. "That's 85p a pint"

    Apologies - it should be 43p a pint. Bloody foreign nonsense, taxing beer per smurfolitre. Still makes a big difference to the price of a pint of Old Tom, though.

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  16. Of course super strength lagers will be reduced to 7.5%, which is still pretty high. So the only beers whose price is likely to be affected by this daft measure are imported ones, usually beers of character and flavour as well as strength. Thus, those likely to be affected by this nonsense will be, in the main, responsible drinkers who like to drink the odd bottle of strong Belgian or German brews, or the occasional glass of something like Old Tom. A major contribution to the nation's health indeed!

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  17. Let's not forget the other burning issue of minimum pricing, which might be used here to good effect. I say - why not combine the two issues and settle on a minimum price per ABV in exchange for a maximum tax per ABV?

    Blind them with their own logic.

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