Brewers' outrage at beer duty hike

Leaders of the country's brewing industry have reacted with outrage to the above-inflation duty rises imposed alcohol in today's Budget.

Jonathan Neame, chief executive of Kent brewer Shepherd Neame and head of the British Beer & Pub Association's Duty panel, said the 4p on a pint hike announced by the Chancellor was "a pathetic, idiotic and shallow political gesture", one that "does nothing to address the issues of alcohol abuse".

A clearly incensed Neame said: "This will raise less revenue, accelerate pub closures, accelerate binge drinking and do nothing to address the differences between on and off trade pricing."

Neame said he was particularly upset after what he described as a "significant lobbying effort" by the industry.

"If this is the disdain they are going to show our sector then it's about time licensees and the wider industry gets off their collective backsides and realises where they're coming from."

Neame acknowledged that the industry's lobbying had clearly not been good enough. "That's a fair accusation. We've improved things, but we're faced with a juggernaut of prejudice."

Prices at the pumps would have to rise, Neame said. "National brewers make 0.7p on each pint of beer they produce. How are they going to get back 4p?" The duty rise will "push production to the margin", Neame said. "This is very serious."

Michael Turner, chairman of London brewer Fuller, Smith & Turner, was slightly more circumspect. "We are very disappointed that the Chancellor has ignored the industry and continued along this Government's path of raising beer duty, regardless of the facts," he said.

"With energy and raw material costs rising rapidly, beer sales in the country at their lowest since the Great Depression and up to four pubs closing each week, a great British tradition is facing the perfect storm.

"Figures have shown that the Treasury's revenues from beer duty have decreased as the duty has gone up in recent years, so we are disappointed that Mr Darling has chosen the knee-jerk reaction of a pointless rise in duty on beer, denying our industry some much needed relief in a challenging year."

Others took a similar line. Paul Inglett, finance director at Midlands brewer Marston's, said the level of the tax rise was "a sledgehammer to crack a nut".

"This wasn't about addressing the issues of binge drinking, this was a tax raising exercise. It was predictable but we were taken aback by the level of the increase."

Marston's would be looking at the question of raising its prices to customers, Inglett said. "There is the issue of maintaining margins or maintaining volumes," he said.

Adrian McKeon, chief executive of Cobra Beer, said: "This represents a fundamental misunderstanding of the problem, which is a far deeper societal issue that cannot be remedied by blanket duty rises.

"I think that, unfortunately those likely to be hit hardest by this latest duty hike are the publicans and ultimately, and most significantly, the moderate drinking customers."

Fred West, sales director with Wiltshire brewer Wadworth, said it was "perverse" to widen even further the gap between beer and cider.

"Tax on a bottle of wine is now 30 times that charged across the Channel and the 4 pence per pint announced by the Chancellor on beer takes the total tax on 6X in the pub to nearly 80 pence per pint: that's Excise Duty on which VAT is then levied," he said.

"Perversely, the gap in alcohol taxation between beer and cider has today been widened even further, with tax on a pint of premium lager now being charged at almost three times the rate on cider.

"As most people believe binge drinking to result from alcohol sold below cost through supermarkets, the approach of this government seems to be both ill-conceived and worse executed," he added.

Above inflation increase in alcohol duty in today's Budget were justified by the government as a way of financing support for families and lifting thousands of children out of poverty.

Chancellor of the Exchequer Alistair Darling stunned the drinks industry with a 4p hike in duty on a pint of beer and 3p on a litre of cider. Wine duty rose by 14p a bottle, with spirits up 55p a bottle. 11p went on packet of 20 cigarettes.