Breweries unite for small beer relief reform
The Small Brewer Duty Reform Coalition (SBDRC) announced yesterday (Wednesday 18 January) its wishes to put forward a review of the current regulations.
The SDRC calls for the review to be conducted by independent consultants and to allow further benefits to small breweries, including fairer competition and exporting more British beer.
The SBR, or progressive beer duty (PBD), currently allows a 50% discount to breweries producing up to 5,000 hectolitres of beer. The discount then gradually reduces to 8% for breweries producing up to 30,000 hectolitres. No discount will be given if production reaches more than 60,000.
This forces breweries to produce lower levels of beer in order to benefit from the half price discount and avoid being penalised above the 5,000-hectolitre limit.
Concerned about ‘unintended consequences’
SBDRC co-chair Rupert Thompson told The Morning Advertiser (MA): “We are concerned about some of the consequences. We believe that is having an effect on the sustainability of the market and fairness between different-sized brewers.
“In this particular market, one of the problems is that it creates artificial barriers to discourage exports and growth.
“It gets very expensive and difficult for brewers to break through that 5000 hectolitre-level because of the way the regulations are structured.
“It's constraining exports and, in a post-Brexit market, it is really important that there are no unnecessary constraints.”
He added: “There have been discussions with trade bodies and there will be more in the future. The idea is to try to ensure that we have a benign approach and try to address the concern of all of the key stakeholders.”
Conflict between trade bodies and breweries
Breweries such as Hook Norton, Wychwood Brewery and Dark Star Brewing Co have backed the coalition.
Meanwhile industry bodies, such as the British Beer & Pub Association (BBPA) and Campaign for Real Ale (CAMRA) have also shown their support.
A BBPA spokesperson told the MA: “We support these objectives, as we have long called for a review of progressive beer duty to make the system fairer and more sustainable for the long term.”
CAMRA national chairman Colin Valentine also praised the SBR’s ability to deliver “unprecedented choice” for beer drinkers.
Valentine stressed that duty reductions were fundamental to preserve competition in a beer market dominated by global producers.
He said: “We welcome the prospect of an industry wide review as this will help develop a consensus on how the current system can be improved for the benefit of consumers, brewers and publicans alike.
“Change is required to remove disincentives to growth, ensure beer exports are encouraged and to provide support to many of Britain's traditional family brewers.”
“CAMRA will work in partnership with the industry on this important issue so that SBR continues to further beer-quality and consumer choice."
‘Unnecessary uncertainty’ to small breweries
However, Society of Independent Brewers (SIBA) managing director Mike Benner has voiced concerns on the matter: “We welcome the spirit of cooperation voiced by the SBDRC and we wish to engage constructively with all stakeholders to discuss if the current scheme could be improved.
“However, we are not in favour of a Government-led review which would bring unnecessary uncertainty to small brewers.”
SIBA warned that all factors, including access to small markets, should be considered rather than just taking into consideration a few “diseconomies” of scale that small brewers face into consideration.
Benner added: “It is important that common objectives and areas of agreement are established and that the principles and factors behind any review are agreed by stakeholders to give a view of what the outcomes might look like.
“This is particularly important for SIBA as the trade association representing the main beneficiaries of this essential relief on beer duty.”
The SBR was launched in 2002 to provide a discount on beer duty to smaller breweries and allow fairer competition with larger ones.
It was extended in 2004, but has not been reviewed since then, despite major changes that have shaken the brewing industry, such as the beer duty escalator in 2008.
