BBPA fears for British beer industry

The British Beer and Pub Association (BBPA) has put the future of the British brewing industry at the heart of its submission to chancellor George Osborne ahead of this month’s Budget.

The BBPA is leading the industry’s lobbying of the chancellor, highlighting the fact that latest data shows total UK alcohol consumption is lower than it was 10 years ago and action is required to protect the British brewing industry.

According to the BBPA, the figures also show a trend away from lower-strength drinks such as beer towards stronger drinks. Beer producers say that after over a decade of unfavourable tax treatment for beer, the new consumption figures add to the case for the government to end the beer duty escalator and freeze beer duty in the 23 March Budget.

The BBPA also says that when it comes to this week’s call from the chancellor for policies that support UK manufacturing, “he could hardly pick a better place to start than Britain’s brewing industry, with its unique variety of British-based products.”

While total alcohol consumption per head rose slightly in 2010 (up 0.6% following last year’s 6.1% decline), beer consumption per head fell by 1.9% whereas spirits rose by 4% and wine by 1.1%.

The BBPA says current taxation policies not only encourage consumers to switch from beer to stronger drinks, but also have a negative effect on jobs, as beer is largely UK-produced, and typically enjoyed in the labour-intensive pub sector.

The BBPA says that a freeze in beer duty this year would create a "win-win" situation that would nudge consumers towards lower-strength drinks and boost the brewing and pub industry, creating employment and investment in the UK economy and generating more money for the Treasury.

Brigid Simmonds, BBPA chief executive, said: “With total alcohol consumption nearly 12% lower per head than in 2004, these figures show that we need to look beyond the headline figures when it comes to shaping alcohol policy.

“Scrapping plans for further rises in beer duty in the Budget would also send a signal on encouraging consumption of lower-strength drinks, and crucially at this time, this could also save over 10,000 UK jobs, protecting Treasury revenues, and stop several more pence being added to the price of a British pint, further hitting UK consumers.

“The government says it wants to champion pubs, and herald a great UK manufacturing revival. Our brewing industry is the perfect place to start.”

Meanwhile the National Association of Cider Makers (NACM) has held a series of discussions with government in advance of the Budget, culminating in a meeting with economic secretary Justine Greening MP.
 
Industry figures shared details of the increase in retail pricing brought about by increased duty, the increase in VAT and the new definition for cider.
 
The combination of the duty definition and VAT has added 13% to the retail price of the cheapest ciders in just a few months from late 2010 to the end of January 2011, according to the NACM.

The association says this is likely to accelerate the significant changes in the profile of cider sales, which has seen premium cider now account for 19% of total sales while white cider represents less than 6% of UK cider sales. 

Chair of the NACM, Henry Chevallier, said: “Officials and politicians recognise that we seek to work with them where we can and that we develop proposals that are measured and effective.
 
“For this reason we believe we get a fair hearing, and given our relative scale, government does understand the unique nature of our industry and the positive role it plays in rural locations.

 
“However, there are some clear economic and political imperatives that will impact what we might expect in terms of duty next month – not least the fact that the Treasury is looking to maximise revenue, even if that might create problems for industries like our own.
 
“We made the point that the investment decisions we make are measured in decades when you consider the planting of new orchards.
 
“Also the utilisation of major capital equipment has a very different profile in our industry compared to many others, hence a stable duty regime is vital to protect the confidence and investment that will protect the progress we have made in the last decade – progress that has dramatically grown the contribution cider has made to government revenues.
 
“We were also able to share with the economic secretary the fact that while the story of cider is still the move from cheaper brands to more premium products the category is not immune to reduced consumer spending.
 
“Coupled with the significant above-inflation increases in duty we have seen sales plateau since last summer. In simple economic terms we made the case that additional duty rises now might reverse sales and lead to declining government revenue and that is in no-one’s interest.
 
“The final element for us was to reflect on the change in cider definition introduced in the autumn. Whilst the clear indication is that this will lead to a marked increase in retail pricing for own label and cheaper products the full impact of this will not be known for several months.”

Alan Lodge, 09.03.2011