UK brewers and pubs are preparing for cost increases from Tuesday 1ST August as beer duty will reach the highest level it has ever been.
From Tuesday this week brewers will pay 10.1% more tax on bottles and cans of beer, meaning tax will make up around 30% of the cost of a 500ml bottle.
At the same time, duty paid on draught beer in pubs will be frozen but the tax increase on packaged beer is set to have an impact on both breweries and pubs, adding an extra £225million of costs per year across the industry, at a time when businesses and consumers have already been battling high inflation for months on end.
The changes, which are being introduced as part of wider reforms announced in 2021, simplify the regime so that duty paid on all alcoholic drinks is relative to their strength (ABV).
The move is part of the Government’s plan to incentivise the production of lower-strength alcoholic drinks, with products qualifying for the new lower rate of duty now being anything less than 3.5% up from 2.8% in the previous system.
The long-awaited introduction of this new system is a positive step forward, but with other cost increases showing no signs of let up and the overall rate rising due to inflationary pressures, pubs and brewers are pleading for Government to guarantee an end to price increases and stop further hikes to duty in the future.
Emma McClarkin, Chief Executive of the British Beer and Pub Association said:
“Our duty system was long-overdue reform, to better incentivise the production of lower-strength products and nudge consumers towards them. This is a very welcome change for our industry which will help to generate even more variety and greater innovation in our sector, as is the freeze for draught beer to support pubs.
“But brewers don’t just supply draught products, they package beer in bottles and cans for enjoyment in pubs and at home as well, so the 10.1% duty increase will have a huge impact, and overall will likely lead to costs going up across the whole category.
“This will be on top of the enormous price hikes they’ve faced on energy, barley, wheat and other key commodities across their supply chains over the past two years. The cost of consumer goods have risen on average by 24% in that period, but brewers have worked hard to keep the impact of disrupted supply chains and cost increases to customers at a minimum, with average cost of beer increasing by just half that, at 12% because the last thing they want to do is price people out of enjoying their favourite drinks.
“We need the Government to guarantee there will be no further increases to duty in the coming months, because there is only so long our brewers and the pubs they supply, can continue to shield customers from these rising costs so that a pint at the local remains affordable for everyone.”
ENDS
For more information or to arrange an interview contact Jessie Powell at press@beerandpub.com / 020 7627 9199
Notes to editors:
Case studies available on request.
For more information on the details of the duty system visit the Government’s website.
Key stats & data:
· Despite beer being Britain’s drink of choice, beer duty in the UK is staggeringly high compared to our European counterparts – it is almost 12x as much as Germany’s duty rate and the third highest in Europe overall
· From 1st August, the duty rate on UK 4% ABV packaged beer will be the highest it has ever been. It previously peaked in 2012 before duty cuts in 2013, 2014 and 2015.
Since 2021:
· Average energy costs for pubs are three times higher
· The price of barley, a key raw material for the brewing process, has risen by 50%
· The price of wheat has increased by 20%
About the British Beer & Pub Association
The BBPA represents UK companies which between them brew over 90% of the beer sold in the UK and own 20,000 pubs.
Our members include international companies, national and local brewers and pub businesses operating managed and tenanted pubs in cities, towns and villages across the country.
These businesses are at the heart of communities and local economies and include family businesses who have been brewing beer and running pubs for hundreds of years alongside emerging brewers and pub operators.
· The UK’s beer and pub industry supports close to 940,000 jobs
· The industry adds £26.2billion to the UK’s economy each year
For more information or to arrange an interview contact Jessie Powell at press@beerandpub.com / 020 7627 9199
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