Beer tax threat ‘spurious at best’

Analysts have challenged the UK beer sector’s complaint that the Government’s alcohol duty escalator is threatening the pub and brewing industry.

Kevan Mulcahey, business unit director at consumer research analysts Kantar Worldpanel, described the connection between declining beer sales and the duty escalator as ”spurious at best”.

In response to recent campaigns by organisations such as the British Beer & Pub Association and the TaxPayers Alliance, Mulcahey suggested that the main problem lay within the brewing and pub sectors themselves.

“Beer has been suffering for many years, primarily because of increasing competition from cider, wine and spirits which are all taking consumers away from the beverage,” he argued.

In particular, Mulcahey blamed a lack of innovation and new product development within the beer category compared to other parts of the drinks industry.

Acknowledging “some really good signs” within the UK’s craft beer revival, with Kantar data to June 2012 showing that cask beer now accounts for 14% of UK beer sales by volume, he nevertheless described this movement as “quite niche”.

In particular, Mulcahey drew comparisons with a similar but far bigger revival in the US market, which saw sales of craft beer grow by 12% in the first half of 2012 alone, with its $9 billion value in 2011 very similar to the country’s Champagne market.

“In the US it’s more about heritage, different quality levels and different flavours,” he explained. “They’ve completely helped rebuild things from the bottom up.”

In contrast, Mulcahey suggested that craft beers in the UK “are appealing to a minority rather than generally. It’s still quite niche and focused on CAMRA members.” According to Kantar data, 93% of cask ale drinkers are male and 90% are over 35 years of age.

Turning to the pubs themselves, Mulcahey indicated a similarly slow reaction to the changing marketplace. “Pubs have lost customers because they don’t meet consumer needs and, as a result, we have seen more people drinking in the home than ever before.”

Rather than blame this shift towards drinking at home purely on the recession, he observed: “Entertainment and how you connect with people is far more home-centric now.

“The pub business has failed to understand that and entice people out. It’s not just recessionary – it’s been happening for the last 10-15 years.”

In short, he summed up: “Increasing the cost of a pint of beer certainly won’t aid sales, but price isn’t the only driving factor in its popularity.”