Wednesday, 23 March 2011

Less can mean more

There will be plenty of wailing and gnashing of teeth from the pub and beer community over the lack of any concessions in today’s Budget but, to be honest, did anyone really expect anything different? Not only is beer duty to rise by 2% above the rate of inflation, but, as widely trailed, an additional 25% duty is to be introduced on beers above 7.5% ABV. This will mean that a 500ml can of 9% beer will incur additional duty (plus VAT) of 25p. It remains to be seen to what extent brewers of beers in this category will seek to reformulate their products to bring them down under the threshold – but I would expect an extra £1 on a four-pack to make this very likely.

To a large extent, this is pointless gesture politics, as beers over 7.5% make up only about 1% of the total beer market, and a negligible proportion of beer sold on draught. However, it’s entirely possible it may end up having the reverse of the intended effect. Most of the beer in this category is the super-strength lagers such as Carlsberg Special Brew and Tennents Super. These brews tend to be unpleasantly syrupy in character and aren’t really something anyone would want to drink unless inebriation is the primary objective. But it’s much easier to brew a strong lager at 7.5% that is also reasonably palatable. It’s widely recognised that the 7.2% Carlsberg Elephant Beer is a far better and more drinkable beer than Special Brew. So we could end up with a situation where these beers are reduced in strength and as a result gain a wider appeal, which no doubt isn’t exactly what the advocates of the tax rise intended.

Incidentally, while these beers are often characterised as “tramp juice”, bear in mind that they are on sale not just in seedy street-corner shops but also in major supermarkets, who often even have their own branded versions, and regularly appear in the Top 20 of take-home beer brands, suggesting that in reality they have a much broader and more respectable customer base.

5 comments:

  1. i'd be interested to see the 'Top 20 of take-home beer brands' - do you know a link?

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  2. Disappointed, but not surprised in the slightest.

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  3. @arn:

    Off Licence News - Beer Report 2010.

    Special Brew is #16, Tennents Super is #21, Skol Super is #40.

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  4. I'd say that having these beers reduce in strength but increase in popularity is exactly what advocates of the tax rise are after, as they can then throw their hands up in horror at all the people drinking beer over 6.5% and demand that is taxed through the roof.

    Then beers over 5.5%. And so on.

    We've given them an inch. They'll be reaching for the mile soon enough…

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  5. One of the things I have forecast for the future is that we will steadily move to a system of "progressive" beer duty where each 1% strength increment attracts a higher duty level. Eventually anything above 4.5% will be prohibitively expensive.

    ReplyDelete

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