Tuesday, 28 October 2008

Slump in beer sales

Government is killing
the brewing industry

The British brewing industry faces its gravest crisis since the Great Depression of the 1930s. Latest figures show that for the three months to the end of September 2008 sales volumes in pubs declined by 8.1%, according to the British Beer and Pub Association.
And for the first time in 18 months, sales of beer in supermarkets dropped by 6%. This has prompted fears of a supermarket price war as retailers attempt to claw back lost sales. Any pick up in supermarket sales can only mean that fewer people will go to pubs, accelerating pub closures. Currently five pubs a day are closing.
It was hoped that, two years after the smoking ban in pubs was introduced, sales would recover. This has not been the case. Smokers are drinking elsewhere and non-smokers are deterred from visiting the pub as a result of the high cost of beer. The Chancellor of the Exchequer, Alistair Darling, increased beer duty in this year's Budget -- and increase that effectively slapped around 20 pence on the price of a pint. Brewers have also passed on rising costs of barley and hops to drinkers. The average price of a pint is now close to £3 in many parts of the country.
The British government seems determined to destroy one of the country's last remaining industries. Brewing and retailing employ close to one million people while taxes on beer and retailing -- duty, VAT and income tax -- deliver £9 billion a year to the government. And yet the government responds by adding to the crippling burden of duty brewers have to pay.
With the exception of the Irish Republic, Britain is the most heavily-taxed countries in the European Union where beer is concerned -- and the Irish froze beer duty this year and cut duty on low alcohol beers while Chancellor Darling was stoking the flames under British breweries.
One-third of the price of a pint of beer in Britain goes in tax. That's 42 pence , making Britain one of the most heavily taxed countries not only in Europe but in the world. In France, tax accounts for 5.9 pence of a pint, in Spain it's 4.5 pence and in Italy it's 12.8 pence.
And duty and other taxes disproportionately affect British beer as most of it is sold as draught in pubs, whereas in France, Germany and Italy 80% of beer is sold in the take-home trade.
The government's attitude is short-sighted to the point of blindness. If excise duty and other taxes were cut and brought into line with the rest of Europe, the government would actually gain. More people would visit pubs. Beer sales would increase, providing more duty for the government. Food sales in pubs would also increase, generating fresh income, while the need for more staff would lead to a bigger income tax haul.
If the government responds to such suggestions by saying a cut in beer duty could only fuel "binge drinking", the answer is simple: most binge drinking -- a problem now in decline -- is connected not to pubs but to supermarkets. The problem should be addressed by preventing supermarkets selling alcohol as "loss leaders", for less than the cost of production.
The government should also lead the way in Europe by calling for a look at the way beer is treated as an "industrial product". Wine is treated as an agricultural product and benefits from grants to wine producers. If brewers enjoyed the same benefits, it would mean a reduction in production costs.
Action on all fronts is needed to stop breweries and pubs closing.


Blogger The Beer Nut said...

most binge drinking ... is connected not to pubs but to supermarkets
This gets said a lot by the pro-pub lobby. Is there any actual evidence for it? Most of the binge drinkers I meet have usually just rolled steaming out of an on-trade establishment.

The problem should be addressed by preventing supermarkets selling alcohol as "loss leaders", for less than the cost of production.
This was investigated by Ireland's Government-sponsored Alcohol Advisory Group earlier this year and they determined it couldn't be done because there's no way of knowing what the minimum price should be. The wholesale price of a given beer varies widely, often depending on local, individual arrangements between the brewer and retailer, plus a lot of macrofizz is imported from countries where the cost of production is incredibly low to begin with. See Group chair Gordon Holmes's statement to the Irish parliament here.

Hobbling the supermarkets is not going to improve the social fabric or save pubs.

28 October 2008 at 16:05  
Blogger The Woolpack Inn said...

Hear! hear! beernut!!

Alcohol and binge drinking

29 October 2008 at 11:47  
Anonymous Anonymous said...

The old leftie singing the praises of tax cuts to encourage business! Hilarious.

31 October 2008 at 22:31  

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