Partial dilution

From 1 August this year, a major reform of UK alcohol duties was introduced. As far as beer is concerned, the biggest change was raising the threshold for a significantly reduced rate of duty from 2.8% ABV to 3.4%, a level which makes it much easier to brew palatable and appealing beers. Obviously this was likely to lead to major changes in the beer market, which I wrote about back in March, in what has proved to be one of my most-viewed posts of the year. As I said at the time, “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.”

And so it has proved, There have certainly been significant changes, but they haven’t approached the earth-shattering level. Few of the changes have been entirely unexpected, and it’s surprising that some beers haven’t cut their strength. It must be remembered, though, that the cost impact is very substantial. The duty+VAT saving on a pint of draught beer at 3.4% is 26.01p compared with a pint at 3.5%, which will equate to twice that at typical pub mark-ups. But there is a challenge that you have to bring drinkers with you.

A problem with investigating this subject is obtaining accurate information, as brewers are understandably not going to make a big splash about reducing the strength of their beers. Plus the beers affected are not in general ones that I personally buy. So I’ve assembled the information from a variety of news reports, brewery and supermarket websites and checking on supermarket shelves. Plus there’s the beer list on the Wetherspoon’s app, although I have certain doubts as to whether that is up-to-date. Thus I can’t guarantee that the examples I’ve listed are entirely correct, and they’re certainly not complete.

The biggest mover in the cask beer field has been Greene King IPA, which has been cut from 3.6% to 3.4%. This is the second biggest cask seller, but most of the rest of the Top Ten are 4.0% or above and so probably won’t be shifting. Its strength has been reduced in all formats. I don’t know whether this will cause any kickback in its traditional East Anglian heartland, but elsewhere it tends to be just dismissed as a standard “ordinary”, so it will probably make little difference. On the other hand, its stablemate Ruddles Bitter, while it has been reduced to 3.4% in bottles, remains at 3.7% in cask, presumably because the vast majority of sales go through Wetherspoons and Tim Martin has said that’s what he wants.

Other cask beers that have been cut from 3.5% are Hook Norton Hooky Bitter and Hawkshead Windermere Pale. Such a small reduction is unlikely to make much difference either to taste or the beers’ appeal. Marble Brewery have cut their Pint all the way down from 3.9%. Presumably the motivation is to give them a contender in the discount sector, and they already have a product in the full-strength Bitter category in the 4.2% Manchester Bitter.

On the other hand, it is surprising that some beers have not had their strength reduced. Obvious examples are Taylor’s Golden Best and Dark Mild, and Hyde’s 1863 and Dark Ruby, all of which remain at 3.5% according to their websites. They must have their own reasons for this, but it’s hard to believe that the reputational damage would come anywhere close to the benefits from the duty savings.

Robinson’s have a 3.4% beer in their portfolio called Citra Pale which was actually introduced last year in anticipation of this change, but I find it rather thin and astringent, and it doesn’t normally sell for much of a discount against their stronger beers. It also rather treads on the toes of the 3.8% Dizzy Blonde. There have also been more 3.4% seasonal beers from various breweries which may appeal to the guest ale market.

Amongst the well-known canned widget bitters, Tetley’s and Boddington’s have been cut to 3.4%, while John Smith’s and Worthington, as far as I can see, remain at 3.6%. From this, I’d assume draught John Smith’s is still 3.6%, and Wetherspoon’s are still declaring the strength of Worthington Creamflow at that figure. I would have thought these products, being declining brands with something of a captive market, would be ideal candidates for a strength reduction. On a related note, the other day I spotted on the supermarket shelf a 10-pack of Hobgoblin “Session IPA” at 3.4%, so someone’s introduced a new canned product in response to the duty cut.

The biggest brand by far to undergo a strength reduction is Carlsberg Danish Pilsner, where it was announced back in August that all formats were being cut from 3.8% to 3.4%. This has duly happened to the canned version, although the fact they were offering a 10-pack for £7.50 in Morrisons recently suggested it may not be selling well. However, the Wetherspoon’s app still shows the draught version as 3.8%, and indeed one example I had tasted more like 3.8% than 3.4%. But this is something of a comedown when they did a relaunch in 2019 that won considerable praise from beer writers.

There has been no movement from the other two of the Big Three of cooking lagers. Foster’s has only relatively recently been cut from 4.0% to 3.7%, so a further move might seem a step too far, and Carling, the market leader, is probably happy to stay at 4.0% as a mark of differentiation. I would have thought Bud Light, which is only ever perceived as a low-strength commodity product, would have been an ideal candidate for a cut to 3.4%, and that has certainly happened to the canned version. But, again, it is still declared at 3.5% on the Wetherspoon’s app. As with Ruddles Best, Wetherspoon’s probably make up a high proportion of total draught sales.

J. W. Lees have introduced a new 3.4% lager called Lees Light. However, the history of new products identified as “light” and positioned below the standard beer does not augur well for its success. Going back some years, they introduced a 2.8% keg light mild and lager selling at a discount price which did not last very long.

In a rare demonstration of enterprise and quick thinking, Sam Smith’s took the opportunity to raise the strength of their keg light and dark milds and Alpine lager from 2.8% to 3.4%, and in the process made them considerably better beers. I’m not aware, though, of any other brewer having made a similar move. Surely Hook Norton’s 2.8% Hooky Mild is crying out for it.

So the conclusion is that, while the new tax regime has brought significant changes, it hasn’t turned the beer market on its head. While it is entirely possible to brew good beers at 3.4%, few if any will be improved by having their strength reduced to that level, and many of the beers of that strength tend to be somewhat thin and lacklustre. It would be a depressing prospect if that was to become the norm of British beer drinking.

In my previous post, I discussed how price sensitivity applied in the beer market. It’s certainly there, but there has never been a substantial discount sector. There are discount pubs, but not discount beers. In general, people don’t want to drink beers that are perceived as cheap, and that’s especially true if they’re weak at the same time. No doubt we will see further movement towards 3.4% but it has to be questioned whether, despite the cost advantages, drinkers will be prepared to accept this as their regular tipple.

Personally I can’t see myself ever wanting to buy 3.4% beers for home consumption, although I might well drink them on occasions if I come across them in the pub – and I have tried all three of Sam Smith’s contenders.

Some of the same ground as this post is covered in this piece by Matthew Curtis on Reverse ABV Creep.