Monday, 27 November 2017

A cloudy cider issue

There was some confusion following last week’s Budget as to exactly what the proposals for cider were. Initial reporting gave the impression that the intention was to seek legislation to come up with a specific definition for “white cider” to introduce a higher level of duty, which prompted me to tweet the following.

However, further investigation revealed that in fact the intention was to introduce a new duty band that would encompass all forms of cider. The official Budget document says:

Following the consultation launched at Spring Budget 2017, the government will introduce a new duty band for still cider and perry from 6.9% to 7.5% alcohol by volume (abv), to target white ciders. Legislation will be brought forward in Finance Bill 2018-19, for implementation in 2019, to allow producers time to reformulate and lower their abv.
The implications have been discussed by Drinks Retailing News and the Morning Advertiser.

Now, as I wrote here, I hold no particular brief for white cider, but it’s very questionable to seek to target a particular product through higher duty purely because you believe it’s worthless crap, and in any case it would be extremely difficult to come up with a watertight legal definition to separate “white” from “amber” cider.

But it is equally unreasonable to seek to target all ciders just because one particular variant is thought to be problematic. For example, respected independent cidermakers Sheppy’s and Thatcher’s both produce Vintage Cider at 7.4% ABV, which I don’t think are particularly associated with problem drinking. It’s yet another case of an indiscriminate blanket measure with implications that go far beyond the specific issue it is intended to address.

It remains to be seen exactly what the new duty proposals will be. But, if it’s simply a case of lowering the threshold for the current duty applying to ciders between 7.5% and 8.5% ABV, it may not be all that much to worry about. Currently, cider duty is £40.38 per hectolitre up to 7.5%, then £61.04 from there to 8.5%. Don’t ask me why one isn’t exactly 50% more than the other. So the duty on a pint of 7.5% cider would increase from 22.9p to 34.7p, which still compares very favourably to the 81.3p on a pint of 7.5% beer.

The makers of white cider could simply reduce the strength of their product to 6.8% to avoid the new duty band, or they could accept a hit of 40p for a two-litre bottle and keep the strength for the same. After all, High Strength Beer Duty hasn’t caused super lagers to disappear, or to be reformulated down to 7.5%. Currently, Westons happily sell their 8.2% Henry Weston’s Vintage, which is one of the top-selling premium bottled ciders, often found in supermarket 3 for £5 offers, and there are several other similar products on the market.

Yes, it’s another undesirable increase in alcohol duties, but it’s hardly the end of the world. And you do have to wonder whether some of those calling for an increase in the minimum juice content to qualify for cider duty aren’t actually angling for the exclusion of products like Strongbow, which just isn’t going to happen.

16 comments:

  1. You fooled me! I was poised to write something intelligent about pectin hazes.

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  2. The changes to beer duty did result in a whole bunch of 7.4% beers that had previously been 7.6%, 7.7% etc. which was sorta good news for tickers who were able to count them again at the new ABVs. Off the top of my head, Thornbridge St Petersburg and Halcyon, Lees Moonkraker, Dark Star Critical Mass, Marstons Owd Rodger and others.

    The downside is that you pretty much never see certain strengths of British beer now. The same goes for the 2.8% cut-off. Nobody brews a beer at 2.9% now.

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    1. Even foreign breweries play that game for the UK market - "Delirium" is the UK-only 7.5% version of the 8.5% Delirium Tremens.

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  3. I remember in the 90's, white cider used to be 8.4% - It was some sort of tax/duty type reason that saw it lowered to 7.5. If it goes any weaker, there'll be no point drinking it.

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  4. If all this posh cider is such a premium product how come it needs a special tax rate lower than beer? If it's so good it can weather a higher tax rate and customers will still buy it?

    Could it be that "farmhouse" cider is basically filth and punters would not touch it if it wasn't dirt cheap because they would then clean their engine parts with something else?

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    1. You may have noticed that premium bottled ciders sell for more than premium bottled ales despite the much lower duty. In Morrisons, they're £2 each as opposed to £1.65, and 3 for £5 as opposed to 4 for £6. Either they cost more to make, or someone's making a very nice profit.

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    2. and at the same time it's buy one get one free on big bags of apples. robbin' barstools.

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  5. "an increase in the minimum juice content to qualify for cider duty aren’t actually angling for the exclusion of products like Strongbow, which just isn’t going to happen."

    Obviously that's part of it, in the same way that CAMRA would have happily supported anything that excluded Watney but there is also a heart-felt belief that juice content is the cider equivalent of the cask vs keg war. And it's probably the only way to target "bad" cider vs "good".

    Personally I'm all for keeping things simple - just bring cider into the beer regime, which means you pay more duty on Strongbow, but the little guys have 50% relief.

    And I would also have done something about banning a tie on cider as a condition of the Heineken deal for Punch.

    Another option would have been the same thing they did for strong lagers - don't ban them as such, but limit units per pack size - say >4 units per bottle and you get taxed like wine. It doesn't eliminate the problem, but it does discourage the consumption of cider by the 2-litre measure.

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  6. "..it would be extremely difficult to come up with a watertight legal definition to separate “white” from “amber” cider."

    Perhaps defining non-white cider would be easier, leaving anything else that's produced from apple pomace, added fermentables and undergone high ABV fermentation as 'White'.

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  7. White cider, non-white cider, ban cider racism I say.

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  8. Briefing here https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/661438/duty_on_high_strength_ciders.pdf

    78% of cider in the new band is white cider.

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    1. But 22% isn't - but I suppose that's just "collateral damage". And "reformulating" means making cidermakers water their products down.

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  9. Oh, I wasn't trying to defend it, just putting the number out there. Although I guess a fair bit of that 22% will fall under the 7000 litre zero-duty band - and right now the cider companies are making the real money from 4% flavoured ciders.

    As I say, I'd rather see them just come under the beer duty regime and then all but maybe Westons would be paying 50% of (a higher) duty. Maybe add on a zero-rated duty level at the very bottom end to allow for farm-gate scrumpy.

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    1. I'd say Thatchers certainly exceed 5000hl a year, and possibly some others. However, the chances of the government totally changing the basis of cider duty are zero. And to impose a massive duty increase across the board would be extremely destructive of the cider industry and meet with huge political resistance.

      As I said, if all it is is reducing the threshold for the higher duty rate from 7.5% to 6.8% it won't exactly be the end of the world.

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  10. The thing is, one reason the white cider market exists at all is an artefact of the way the cider duty regime works, which is completely different to the beer duty regime. Still cider gets a flat rate of duty, so a 7.4% cider pays the same duty as a 1.3% cider and more than a 2.8% beer. That just seems daft - and if drinking high ABV products is seen as a problem, why not tax it on the alcohol like beer and spirits rather than at a fixed rate? And why should Heineken pay the same rate of duty on Strongbow as a small producer of cider, when they don't pay the same rate as a small producer of beer?

    You can tweak the rates if you want to make it revenue-neutral, but it seems that the government would achieve its aims better by moving to per-alcohol duty system like beer/spirits rather than creating ever more bands of fixed-duty for cider, and a "Small Cidery" relief would also make sense. Personally I'd also add fruit ciders to the sugar tax regime as well as part of these reforms (again, tweaking the numbers for (duty + sugar tax) in a way that was revenue-neutral) which would almost entirely rest on the industrial fruit ciders like Rekorderlig which can have >10g/100ml sugar - similar to full-fat Coke.

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    1. Agreed that the alcohol duty regime is very much a case of "I wouldn't start from here", but as I said realistically no government is going to carry out a root-and-branch reform. Indeed I'd say there's a general reluctance on the part of governments to carry out root-and-branch reform of *anything* because the losers are inevitably far more vocal than the winners, council tax revaluation being a good example.

      Taxing all alcoholic drinks at the same rate based on the alcohol content seems superficially attractive, but in fact would skew the market towards spirits because of their lower production and distribution costs.

      Interestingly, I think there was no duty at all on cider until about 1976, which was one of the reasons behind the initial rise of products like Strongbow and Woodpecker.

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