Progressive beer duty 'forcing family brewers out of business'

By James Wallin, M&C Report

- Last updated on GMT

Related tags: Progressive beer duty, Brewing, Beer

Stuart Bateman: "The way in which progressive beer duty works is making it more and more difficult to pursue a constructive, viable beer and brands strategy"
Stuart Bateman: "The way in which progressive beer duty works is making it more and more difficult to pursue a constructive, viable beer and brands strategy"
Stuart Bateman, managing director of Batemans, has warned that the impact of progressive beer duty is forcing the family brewers to look at other revenue streams.

However, he said he does not think the Government will act to end the disparity of the system until “a number of established family brewers go out of business”.

He said after three years of testing its managed model the company was now ready to focus on acquisitions.

The growth strategy, headed up Bateman and newly appointed retail director Linda Green, will focus on buying managed houses and converting tenancies to the company’s managed franchise, or ‘manchise’ agreements.

Pressures

He told the Publican's Morning Advertiser​ sister title M&C Report​ the strategy had evolved because of the pressures facing family brewers. Progressive Beer Duty is a duty system that allows smaller breweries to pay less tax on their products.

He said: “I know of a wholesaler that is able to buy beer from a recently established brewery at nearly half the price that it costs us to actually brew it.

“The way in which progressive beer duty works is making it more and more difficult to pursue a constructive, viable, development beer and brands strategy.

“Supply is starting to outstrip demand and there are smaller brewers who are benefitting massively from being able to sell their beers at a very low price. This means that breweries such as ourselves need to start looking at other aspects of our business beyond brewing and brands and seeing how we can develop these. “

He said the Government needed to examine how to help “those breweries that are being squeezed in the middle that aren’t much benefit from either progressive beer duty or economies of scale”

He said: “They should raise the lower threshold below which those breweries get the half duty relief. I do think one day that is what will happen, but I’m afraid that what will make the Government sit up and listen is when there are a number of established family brewers, who are big employers, go out of business.”

Response from SIBA

SIBA managing director Mike Benner said: "Small Breweries' Relief has been incredibly successful since it was introduced in 2002 leading to a diverse and innovative independent brewing sector which has created thousands of jobs, often in deprived areas and huge choice for consumers. The 50% relief is essential to the survival of many hundreds of small brewing businesses.

"I agree that there is an opportunity to extend the benefit to more brewers by increasing the lower threshold to enable more established companies to invest and expand and by increasing the upper threshold to the maximum permitted by EU law. This would be an excellent way to evolve the scheme to boost investment and jobs, by thinning the glass ceiling and reducing the disincentive to invest."

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12 comments

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It's your on fault

Posted by Rico,

Over priced tied family brewer tenanted pubs.

Instead of flogging it cheap to the off trade, stop tearing the ar** out of the tenants, most of the pubs have been in the company for years and should be paid for by now.

Cut the wet rent & make your products competetive, therefore sell more.

Customers voting with their feet and going to the free houses selling your products and the upstart micros because of your £70 premium on an 11G barrel.

Rant over.

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Half the price?

Posted by Lawrence Brown,

If they are selling for half the price it costs you to produce, then either you have lost control of your own costs(not likely) or the new brewer is selling at a loss in order to gain market exposure (likely,and understandable)
However, if you really believe it is the governments fault, then the simple solution is to stop voting Conservative and persuade all of your peers to do the same.
Of course if you can't do that one simple thing, then you deserve to go the way of the dinosaurs...

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PS - What exactly is the problem.

Posted by John L. Evans,

.... progressive duty helps new / small brewers gain traction / customers and also supports the burgeoning micro-pubs sector. This new business model is proving very popular and profitable for beer enthusiasts, both licensees and customers.

Our local micro-pub, in a former Victorian Post Office, accommodates probably less than 50 people (standing), closes at 21:00, sells only beers, cider and wine, and encourages customers to order food from local takeaways to enjoy a novel evening out.

And, amazingly, there's always four an usually eight real cask beers on sale, with a fantastic range of choices.

And the gaffer - a former Punch Tenant - is taking a two week cruise less than 12 months in, while the place undergoes a major refurb.

Not bad!!

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