In a move designed to cut down on the consumption of cheap, strong ciders – often consumed by those with a drink problem – Chancellor of the Exchequer Philip Hammond announced a new band of duty on cider and perry with an alcohol content between 6.9% and 7.5%, due to be implemented in February 2019.
In a document on the proposed new cider tax band, the Treasury claimed the change will impact around 11% of the cider market, of which so-called 'white cider' makes up 78%. The rest of the cider market will be “completely unaffected”, the Treasury has claimed.
However, traditional cider makers have warned that the legislation could inadvertently penalise them, while cider-focused pubs have also voiced concerns over the change.
Tom Oliver, of Oliver’s Cider and Perry in Herefordshire, said the tax would not fix the issue of white cider, and labelled suggestions that cider makers could reduce the strength of their product through dilution as “incredibly disrespectful”.
“White cider is not going to go away,” he said. “They'll just reformulate to 6.8% and away they go. The amount of alcohol per litre will drop a little bit but they can drop the price. I see the Government being no further forwards with taking white cider off the shelves.
“It is going to be penalising full juice cider makers that do not want to dilute. I find it insulting to read suggestions that one of the solutions available to us is to dilute. That is incredibly disrespectful.”
Dispensation on juice content
On the subject of how the problem of white cider should be approached, Oliver suggested making cider producers using more than 70% juice in production exempt from any rise in duty. “It doesn't have to be only full juice of say 99%,” he said. “You could drop it to around 70% and it would still cover quality cider makers.”
Cider expert Gabe Cook said that the problem stemmed from the lack of differentiation between traditional, small-batch cider and strong, mass-produced goods, and echoed Oliver’s calls for dispensation based on juice content.
“White cider as any kind of defined category does not exist,” he said. “This is the challenge and this is why it is going to cause smaller cider makers trouble. White cider technically abides by all the rules; it has a minimum juice content (35%) and sits at 7.5% which is the top duty threshold. It is almost impossible to differentiate white cider from any other cider under current mechanisms.
“This bill and consultation is aimed at tackling the abuse of super-strength ciders. That is not going to be Tom Oliver's finest vintage dry cider is it? We need to introduce a new mechanism to differentiate between smaller cider makers and their products, which are naturally of a higher alcohol content, and the products that are actually being targeted.”
“I would advocate a dispensation for producers who have a minimum juice content that is significantly higher than the current minimum of 35%,” he continued. “Let's say 70% juice, double the minimum. Good and well-made cider will receive dispensation at this level.
“We need to create a realistic aim that could be taken up by the Treasury. It is about finding a viable mechanism for effecting change. For me, 70% is the sweet spot.”
The Harlequin is Sheffield CAMRA’s cider pub of the year and stocks more than 20 traditional ciders. Landlady Liz Aspden also shared some of Oliver’s concerns but suggested it was unclear whether the new tax would impact on pub cider sales.
“I suspect that the white cider producers, who are the target of this tax, will dilute their products so the tax will not apply to them,” she said. “I also think some of the more traditional cider makers may stop making ciders above 6.8% or may change production so that existing strong ciders become weaker.
“Some producers may raise the cost of their lower ABV ciders to spread any financial impact across the business as a whole. I suspect that regardless of whether this happens, some pubs may raise their cider prices overall but we won't put our cider prices up unless the cost of buying it in changes.
“Our customers are generally fairly resilient to small price increases,” she continued. “They'll grumble about it but having a traditionally made strong cider with a very high price tag might actually encourage people to try it as a novelty or as a treat. Pubs might lose sales somewhere, but it might gain a bit of rarity/cult status.”
On the subject of whether the Government had missed their aims with the white cider tax, Aspden said: “I'm not sure – if their aim is to gradually reduce the strength and availability of cheap cider that they associate with antisocial drinking and behaviour then they'll probably achieve this over time.
“However, there may be unintended consequences of them doing so, for example, the impact it will have on traditional producers, pushing people towards other drinks and substances.”
Other Budget headlines
The National Association of Cider Makers issued a statement on Thursday (23 November) in which it said little detail had been provided about exactly how the new duty band would affect its members.
The organisation added it would be working with the Treasury in the coming weeks to “provide better clarity for all cider makers.”
Elsewhere in the Autumn Budget, the Chancellor announced a freeze on duty on all other types of alcohol, and an extension to the £1,000 business rates relief for pubs with a rateable value under £100,000.
The freeze in beer duty is expected to save beer drinkers £117m a year, according to the British Beer & Pub Association, while the Wine & Spirits Trade Association has estimated a saving of £247m for its members.
It is thought the freeze will mean the Treasury will forgo almost £1.2bn in alcohol duty by 2023.