Beer sales in pubs fell 8.1% between July and September on last year as the credit crunch and looming recession took its toll on consumer spending.
New statistics from the British Beer and Pub Association's (BBPA) Beer Barometer show that pubs and bars sold 104m fewer pints — 1.1m a day — than last year. The drop is the largest third quarter decrease for a decade.
Beer sales in the on-trade for the year to date are down a massive 9%.
Sales in supermarkets and off-licences also saw its first drop since the second quarter of 2007 with sales down 6% for the quarter.
Overall beer sales fell 7.2% for the quarter — the equivalent of 161m fewer pints being sold at a rate of 1.8m a day. The drop follows a 4.5% decrease in volumes last quarter.
"The accelerating decline in beer sales is a clear sign of a worsening economy, worried households and weakening spending," said BBPA chief executive Rob Hayward.
"The downturn has now broadened to affect sales through both pubs and supermarkets. This sales trend is symptomatic of the problems infecting the broader economy. But any prudent diagnosis would also identify the specific impact of the Budget's nine per cent beer tax increase."
The BBPA estimates that the Treasury has collected £138m less in beer duty and VAT in the six months since the Budget's duty increase than its forecasts and is now facing a £1.2bn tax shortfall over the next three years. The BBPA predicts beer sales will slide even further due to the duty escalator promise of 2% above-inflation rises for the next four years.
"Sinking beer sales and the record five pubs a day closing is a barometer of the UK economic climate," added Hayward. "We're busy responding to the economic challenges of today.
"But we need greater flexibility. Government needs to be looking to ease the constraints of the tax and regulatory burden on our sector. We're not looking for a handout just a hand-up.
"They must abandon their current plans to increase beer taxes by a third through a new tax escalator. They should also pull back from their current alcohol policy agenda which would introduce even more regulation on how alcohol is produced and sold in Britain."