What impact have tax cuts had on beer sales?

The British Beer and Pub Association (BBPA) said that results of its quarterly Beer Barometer signal that sales are stabilising after years of steep decline, but still called for further tax cuts.

Since 2000 on-trade beer sales paint a bleak picture - with only three quarters out of 63 seeing a rise.

Steep decline

Until George Osborne scrapped the beer duty escalator in 2013​, sales were falling at an alarming rate. Q1 in 2012 saw on-trade beer sales down 4.9%, followed by drops of 4.8%, 5.2%, 5.5%, 5.3% and 6%.

At its worst year-on-year sales fell by as much as 10%.

But the industry has steadied since Osborne cut beer duty by 1p and scrapped the escalator. Quarterly beer sales in 2014 saw less drastic drops of 3%, 2.2%, 1.9% and 2%.

So after a worrying 4.9% drop in Q2 this year, it will come as a relief to many to see a marginal 1.2% decline in July-September this year compared to 2014.

The beer duty escalator, which was introduced in 2008 by the-then chancellor Alastair Darling, put up the price of a pint by 2% above inflation every year, which resulted in a 42% tax hike from 2008-2013.

Call for action

The BBPA has repeated its calls for further cuts to boost the industry.

Chief executive Brigid Simmonds said:  “There is a real opportunity to build on these strong figures and secure future growth, with continued action to reduce beer duty.

“Despite positive action from the Government, with three, one penny duty cuts in recent years, duty still places far too great a burden on British brewers and beer drinkers when compared to our main competitors in the European Union.”

Beer tax in Britain is among the highest in Europe. Britons pay 40% of all EU beer duties, but drink just 12% of the beer, and rates are estimated to be 14 times higher than the German rate​.

“With further tax cuts we can create jobs and protect pubs, where beer is the cornerstone of sales,” Simmonds added.

Off-trade

The barometer showed beer sales as a whole were up 3.9% in Q3 due to a hike of 9% in the off-trade, helped by retailers stocking up in the build-up to the Rugby World Cup.

The BBPA said sales were “astonishingly buoyant”, and congratulated brewers for recording the highest ever Q3 off-trade sales.

Overall, annual total beer sales are relatively stable, at 0.4% below the previous 12 months, following more challenging figures in the first six months of the year.