Monday 27 March 2023

The 3.4% solution

It’s perhaps surprising that it’s as long ago as 2011 that the government halved the rate of duty for beers of 2.8% ABV or below. However, this proved to be a perfect demonstration of how changes in tax rates won’t carry the public with them if they don’t want to go. Although there was an initial rush of interest, as I wrote here, it rapidly became clear that it was difficult to brew palatable beers at such a low strength, and people didn’t want to drink them anyway, even if they were cheap. About the only remaining evidence on the beer market are Sam Smith’s keg Light and Dark Milds and Alpine Lager, which retail at a very low price (I think £2.40 a pint) and were only about 3.0% before anyway.

However, as part of the general restructuring of alcohol duties that comes into effect on 1 August this year, this threshold will be increased to 3.4%, which obviously creates a very different situation. It’s much easier to brew enjoyable, palable beers at that strength, and indeed many popular beers already qualify such as, in the North-West, Holts Mild at 3.2% and Thwaites Mild at 3.3%. The very tasty Brakspear Bitter (now ridiculously renamed as “Gravity”), which back in the days when it was brewed at Henley I would have classed as one of my Top Five beers, is only 3.4%. On the other hand, I do note that many of the beers perceived as “light” are actually 3.5%. There are a lot fewer low-strength milds and light bitters around than there once were.

The savings under the new regime are certainly not to be sneezed at. On looking at the detailed figures, the lower-strength duty is not half, but only 44% of the full-strength one. For draught beer, there is a saving of 24.7p on a 3.4% pint, which with typical pub mark-ups equates to 50p across the bar. It’s 21.1p for a 440 ml can, taxed at the slightly higher packaged rate, making 84p on a four-pack and £4.20 on a 20-can slab. No doubt these savings will be partly absorbed by brewers and pub operators, as indeed they should be, rather than being entirely passed on to the drinker, but they’re certainly pretty significant.

Price elasticity in the beer market does not work in an entirely linear way, though. It is broadly divided into standard and varying grades of premium, with no significant discount sector. Drinkers generally won’t go for beers just because they are cheap, and will be even more reluctant if they’re relatively weak too. People will generally look for cheaper places to buy their favourite brands rather than trading down.

In the on-trade, the impact of lower prices is reduced by the prevalence of round-buying. If people do feel the pinch, they will shift from the craft bar or brewery tied pub to Wetherspoon’s. In the off-trade, while there is cut-throat competition on major brands, supermarket own-brands have never gained much traction. They’re fine if you’re drinking alone, but if a friend comes round and you offer them an Aldi clone rather than a Punk IPA or Carling they’ll think you’re a right cheapskate.

It’s always difficult to make predictions on changes like this, and it should be remembered that measures such as the lower duty for 2.8% beers and permitting two-thirds measures have been damp squibs. However, the savings available are so great that it’s hard to imagine that the beer market will sail on little changed.

Surely it will be a no-brainer to reduce existing beers positioned at 3.5% by a single point. This would include Taylor’s Golden Best and Hook Norton Hooky Bitter, and locally Hydes Dark Ruby and 1863, and Lees Dark. The same would also probably happen to Bud Light, and very likely also the 3.6% smooth bitters such as John Smith’s and Worthington. Robinson’s have already introduced a new 3.4% beer called Citra Pale to compete in that category, although in my experience it’s a thin, lacklustre product and not a patch on the 3.7% balanced bitter Wizard which is being withdrawn.

I can’t really see established products around the 4.0% mark such as Carling or Holts Bitter having their strength reduced. But brewers of beers in the 3.6-3.8 range will be carefully considering their position. Of course if you do reduce the strength of a beer you need to take your customers with you, although a substantial price reduction might help persuade them. We may well end up in a position where there’s a yawning gap in the beer market between 3.4% and 4.0%. And who would introduce a new beer at 3.6% even if they think that’s the ideal strength for it? It will also be interesting to see if Sam Smith’s nudge up the strength of their 2.8% kegs by a few points.

Introducing new, weaker versions of existing products is something that doesn’t have a good track record, and it also serves to dilute the perception of the core brand. But it’s possible that brewers may consider launching entirely new beers that don’t identify themselves as “light” to take advantage. And it’s worth noting that in Scotland Greene King and Caledonian seem to have had success with Belhaven Best and Caledonia Best, relatively new keg and canned beers in the traditional sweet, malty Scottish style, both of which come in at a mere 3.2%. I have to say I have never even seen these beers on a bar or supermarket shelf, let alone tasted them, but they will certainly receive a big boost from the lower duty rate. And, under Scottish minimum pricing of 50p a unit, 4x440 ml cans of 3.4% beer at £2.99 is an attractive price point.

I have to say that in principle I don’t favour systems of tiered alcohol duties (or any similar taxes), as they inevitably produce perverse edge effects and distort the market. In my view there should be a single scale of beer duty proportionate to alcoholic strength. But brewers and drinkers can’t look a gift horse in the mouth, and any cut is better than none. It will be very interesting to see how this plays out in the beer market.

65 comments:

  1. Bathams Mild is 3.5 and needs leaving alone. It is excellent.

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    1. You're quite right - I thought I'd checked that. Post now suitably amended.

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    2. Professor Pie-Tin29 March 2023 at 14:36

      Surprised myself this week by having a couple of pints of Courage Best.Must be 35 years since I've had one.And they were very drinkable. Around 4% I think. I know, Courage Best. Who'd have thought.

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    3. Bathams mild is one I would love to try

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    4. Anybody remember Guinness mid strength a Yacht club bar I know of sold it until a few years ago

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  2. There's no point to beer below wifebeater strength, imv.
    No one drinks for the taste, you drink to get in a fighting mood.

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    1. It's a con, weak beer, Mudge Lad.
      After my last divorce my solicitor advised I neck weak beer so the court might change their minds and let me see my kids.
      But you just have to drink more of it and you're always going for a slash.
      Mugged it off and went back to the widebeater. Can always have more kids with my new bird.
      A man needs a proper pint of proper widebeater. Not puritan watered down piss.

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    2. You'd be a Carlsberg Master Brew sort. 10.5%!

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  3. I agree on Brakspear Bitter being a Top Five beer back in Henley days, with the death of lunchtime drinking and other social trends you've discussed here also contributing to its demise as a classic beer. Pubs in rural Henley such as Gallowtree Common used to shift gallons of the stuff. Same applies to Hooky Bitter up in Oxon.

    Best low ABV beer I ever had was Brew Dog's Edge, sold in Spoons during BD's cask phase. It was stunning, and along with their Porter rather disproves my current view that they can't brew good beer.

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    1. Martin, I agree with both you and Mudgie that Henley brewed Brakspears Bitter was up there, amongst the finest beers in the country.
      Sadly, the same cannot be said of the Wychwood brewed version, as proved beyond doubt by a recent visit I made to Henley on Thames.
      As for the change of name, to "Gravity," that's just plain ridiculous, as you rightly point out, Mudge.
      I wonder what overpaid, advertising agency was tasked with coming up with that.

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    2. Probably the same people who renamed Marston's Bitter as Saddle Tank and Jennings Bitter as Night Vision. I can understand the desire for a distinctive name that trips off the tongue, but these are just daft.

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    3. I agree that Brakspears Bitter and Special brewed in Henley were superb, as was the bottled Henley Strong Ale. I wonder if the new title 'Gravity' camd from the famous double drop system still apparently used in Witney at Wychwood.

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    4. I rather miss those days when I could order a mild, bitter, best, special or old. Knew where I was then.

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    5. Jet Black Heart was my favourite BrewDog beer, it was beautiful. Then they stopped making it! It's back now though in a super strength £3 a can version, which I haven't tried,

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    6. I wouldn't call 7% super-strength. 9% or 10%, maybe. Sounds like a decent drop though.

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    7. Brakspear's also used to have lots of lovely little unspoilt pubs in the countryside around Henley. Virtually all now either closed or gastroified beyond recognition.

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  4. I think it might have changed now, but traditionally the legal classification of Czech beers for tax purposes required a light beer to be below 8°, around 3.2% abv, with standard draught beers between 8° and 10°, 3.2% and 4% abv. What we think of as the classic Czech lagers, Pilsener Urquell and Budweiser Budvar, are, at 11° and 12° (4.4% and 4.8% abv), regarded as premium products there.

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    1. In the UK Budvar is 5%.

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    2. Yes, it's that in the Czech Republic too: I was converting the ° Plato to % abv by the usual formula of 0.4% for each degree without checking the exact strength, which can obviously vary slightly depending on the amount of attenuation.

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    3. Matt, if I may ask for your advice. I like Budvar because it is slightly stronger but unfortunately sweeter/maltier than P Urquell which I prefer because it is dryer and crisper. Do you know any 5% pilsners/lagers in the UK widely available which are on the drier side but stronger than 4.4%? Cheers.

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    4. Czech beers from small suppliers are facing delivery issues to the UK now so you may have to look in specialist shops for what you're after. The Czech Beer Fan Club on Facebook is an excellent resource for advice.

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  5. Without doubt Henley Brewed Bitter is my all-time Desert Island beer, though the Abingdon brewed Bitter was not bad either. Hope & Anchor in Wokingham was the place to be for Brakspears and the Queens Head for Morland.

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  6. A number of 2.8% beers were introduced a few years back, but I don't think you could argue that any of them really 'took off'. Kernel's Table Beer series, maybe, but a niche audience. I spoke to Stuart Bateman a few years back when Bateman's discontinued their 3.0% Dark Mild and brought out a replacement at about 3.6 - his view was that there was no point brewing a 3.0% beer and the brewery had to make a choice between getting under the 2.8 cutoff or beefing it up a bit, and they opted for the latter. Though Redemption Trinity is usually 3.0 and has been remarkably successful, though it's a very different kind of beer to Bateman's DM. Also, the many strong beers that came down to 7.4% overnight weren't negatively impacted to my knowledge.

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  7. Professor Pie-Tin29 March 2023 at 14:38

    A proper nutty brown ale, either on its own or mixed to liven up a sad pint. I miss brown ale a lot.

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    1. Why don't you homebrew it if you miss it?

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  8. Professor Pie-Tin29 March 2023 at 16:42

    I don't miss is THAT much.Certainly not enough to have the house stinking like a ripe minge.

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  9. It's the multinationals that benefitted most from the lower duty for 2.8% beers, mainly in the off trade by reducing the strength of canned fizz such as Skol, but also with keg beers like M&B Mild.

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  10. This is really off topic, (apologies), but do beer drinkers go for mixes like 'brown and mild', or 'light and keg' any more? When I was much younger, I rarely - if ever - mixed beers because my dad worked for Guinness, and always declared that if a beer was brewed properly, why on earth did customers try and change it! (That was also aimed at anyone who put lime in lager)! But I knew many friends and pub visitors who seemed to make their 'mixes' a sort of badge of office!

    I'm sure this has been discussed at length here, but as a newcomer, I thought I'd ask again...

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    1. I think I've blogged about it in the past, but it has largely disappeared now. The half-pint bottles of brown ale and light ale have gone, and pubs no longer serve Mild and Bitter so you can have a pint of Mixed. The first beer I ever ordered for myself in a pub was a Brown Over Bitter.

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    2. I don't remember that one, Mudge, but when we served a 'Mild and Velvet', (Courage), one or two public bar customers moaned that it was never a full pint, as the Velvet Stout was less than a half pint of course!

      Senora O'Blene soon sorted that little issue out, by showing the Chief Moaner what he had asked for, using a half-pint glass of mild, then handing him a pint glass with an opened bottle of Velvet.

      He still came back for more though, so she was pretty good at delivering the goods, and keeping the annoying little fart quiet back then...

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    3. I think Brown over Bitter and Brown Mixed (with mild) were mostly Northern. Light and Bitter was the classic Southern split.

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    4. Yup, light and bitter's the one which was most popular - if they wanted to mix it that is!

      Just looked - 'The Devonshire' in Bexhill was the place to go for a fabulous 'Brown and Mild' - according to a good pal one Sunday morning in 1967...

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  11. A lot of the food-led pubs around here will only serve beers which are in the 3.6 - 4% range because people want to have one or two and still be able to drive. I expect we will see several of these changing to become 3.4% as this must be a pretty big market.

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    1. That's too low. I'd say it should start at 3.5% and have no upper limit, but mostly it should stop at around 6%.

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    2. When I first started playing rugby (again) in 1965, we used to have jugs at 16/- (80p) a pop. It couldn't have been very strong as several jugs later, we were all still standing, but didn't the singing improve after all that!

      It was a beer called P.B.A., and very weak, and unkind members called it Poor B******s A*****e', but it always did the trick, as a light mild, when you're thristy, is really a great refresher, especially if the Welsh RFCs are visiting, and the singing is sublime...

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  12. Yes, i see 3.7 beers dropping to 3.4 or rising to differentiate. There were very few 2.8s I liked. 3.4 is different, that's a good all day session strength where you can still wake up the next day without issues.

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    1. 3.4% wouldn't get you anywhere near drunk if you had four or even five pints. Five pints of 3.4% beer would be the equivalent of having four pints of 4.7% beer.

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  13. Scrobs,
    I understood "Light and Bitter" and equivalents around London being for the bottle of Light Ale to liven up a half of flat Bitter. That more or less finished fifty or sixty years ago though when the big brewers replaced the flat cask beer with keg. Improving the quality of their cask beer would have been a better idea, and then we wouldn't have needed that CAMRA.

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    1. Thank you, T'oM - That makes sense of course. My local pubs were told to lose their barrels over time in the sixties, which meant that there was more standing room for customers after they'd altered the serving layouts behind the bar. The issue then became whether to resort to Whitbread's 'Trophy', or worse, 'Tankard', which was known locally as 'diesel', and tasted like it as well...

      We usually ended up with the former in the old Fremlins pubs, but then Courage went the same way, with 'Alton' Bitter, and 'Keg', although the latter was a bugger to serve on a hot day!

      'Director's bitter' saved the day though...

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  14. Professor Pie-Tin31 March 2023 at 18:28

    Just out of interest last night I drank five cans of Brouwerij Kees Caramel Fudge Stout after half a gallon of Bristol-brewed Fortitude Bitter in the pub. The stout was 11.5%. I haven't had a hangover like the one I had this morning in at least several decades. At 6.37pm the following evening I think I'm just about well enough to chance a couple more Fortitudes ...

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    1. Maybe try just having one or the other? I'd be vomiting after that much beer.

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    2. I would have had a few more pinta of Bitter and skipped the Stout for another night.

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    3. Were you saying the pint mans prayer

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  15. Professor Pie-Tin2 April 2023 at 14:47

    It's not really stout as such but an explosion of caramel, fudge, coffee and chocolate. Not usually a fan of this type of beer but had a can on a recent holiday in Cyprus and was mightily impressed. And at 11.5% there's plenty of bang for your buck.
    As for one or t'other, one of the great joys of drinking is to occasionally do it to excess.
    It seems like a good idea at the time.
    Obviously not the most sensible thing for a 67-year-old stoner to be getting up to at 4am but Mrs Professor Pie-Tin and I like to stay up late shooting the breeze.
    There's not a huge amount else to do when you're retired and don't like golf.

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    1. It's alcoholic level for sure. Works out at more alcohol than a bottle of vodka!

      The stout does sound like it would be a good tope though.

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    2. I have to say - and I'm four years younger than you - that both my appetite and tolerance for drinking to excess have greatly reduced in recent years.

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    3. I'm 70 now and all i can manage is 3 pints of bitter. Quite sad really.

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    4. I’m hitting 73 and age has curtailed my drinking. Getting old’s a bitch.

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  16. Interestingly Marston’s have Manns Brown ale at 2.8% but charge the same price as their other beers ! Let’s hope the entire amount isn’t taken as extra profit on August 1st. I worked in various pubs in the 1960s and when a customer order a light and bitter if he was a regular I would pour a very good half of bitter into a pint pot , take the top off a bottle of light and hand it to him. If he wasn’t then I’d pour the bottle of light ale in a pint glass then top it up with bitter until he’d been in a few times then switch it over.

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    1. At 2.8% they will already be getting the duty benefit.

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    2. You sometimes see Manns Brown Ale at 89p a bottle.

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    3. I can still remember the song advertising Mann's Brown Ale on ITV, with the distinctive red bottle swinging around the 14" TV screen...

      'Mann's is the best brown ale, best brown ale, best brown ale...etc etc...' sung by a fierce male voice choir rather like The Lumberjack song!

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    4. It tastes sweet, a bit like an alcoholic cola. I love mild.

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    5. Mild was just called 'beer' at one of my locals back then, and tt would have been Fremlins back then, and straight out of the barrel...

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    6. What became of Adnams Fisherman brown ale

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  17. That was my point. They are benefiting from the duty break but not passing it on to the customer on their online shop site. Like many of the comments I used to love drinking Brakespear bitter before the family sold the Henley brewery . I heard that some of the next generation of the family have started a micro brewery in part of the old Henley brewery which is mainly flats of course ?

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    1. I really miss Henley Bitter, Special, Old, and Mild. When i first started drinking it in 1970 a lot was still from wooden casks. They were fabulous beers.

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  18. Would Chester's dark mild and Toby light be suitable?

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  19. Professor Pie-Tin5 April 2023 at 11:32

    There's an added bonus in the mix as I'm currently ploughing my way through six bottles of Bulleit bourbon whiskey mostly against my will.
    Last year while holidaying in the OBX off North Carolina our next door neighbour - a, rather irascible retired US Marine Corps 5-star general, invited us around for a drink and a barbecue introducing me to Bulleit Rye for the first time.
    On our return to Blighty I ordered three bottles from Amazon who promptly sent the Bulleit Bourbon instead of the Rye.
    I complained, they said they were out of the rye so had sent that instead but refunded the payment.
    And sent three more bottles of bourbon as a gesture of good will.Or as a cock-up.
    Obviously a stroke of good fortune but whilst the bourbon is ok I'm only necking it so we can order some more rye.
    Fortuntately Mrs PPT is partial to a drop too.
    We're spending next month back-packing around SE Asia so that'll put a hold on things AND give the liver a rest as there's only so much cheap bottled lager a feller can take.

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  20. My word ! You have stamina for a 67 year old !!

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    1. Professor Pie-Tin5 April 2023 at 12:31

      Young at heart.
      Shame the knees aren't any more but there you go.
      Thailand, Cambodia and Bali for a spot of early sun before the cricket season really starts in earnest.
      I have my budgie-smugglers primed and ready.
      Wahaay!

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  21. I prefer strong ales and that's what I used to brew. I do like Henry Weston's cider at 8.2% ABV. It's sold in my local too. Lovely taste. Since Stella dropped its ABV I stopped drinking it. The taste changed.

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