Chairman’s comment Roy Allkin

United we stand

To say I am looking forward to joining you for a beer at BeerX UK 2022 is an understatement. Like most brewers I have spoken to, the event back in 2020 was the last big industry event I attended and it is wonderful to be able to run the event once more in-person.

I’m sure that one subject which is likely to come up whilst enjoying a beer at one of the Regional Award Winners bars is that of Small Breweries’ Relief and what the newly announced changes mean for you as independent brewers. So I’d like to use my column today to set out some of my thoughts on the new Alcohol Duty System, what is being introduced and what SIBA will be pushing for in the future to ensure small independent brewers are being treated fairly. One thing which I would like to highlight is the considerable improvement to the Small Breweries’ Relief banding, and the rates which will apply in its new format as the Small Producers’ Relief, when compared to what was originally proposed by the Treasury. Not only will the new taper begin from 2,500hl, rather than the 2,100hl previously proposed, but crucially the percentage relief rates are also more favourable. For example a brewery of 2,500hl averaging 4.2% will pay no additional duty whereas under the prior announced proposals they would have seen a rise of around £3,200 per year, a brewery of 3,000hl will see costs rise by just £2,000 rather than the whopping £7,200 initially proposed. Considerable amounts which make the new system much less damaging to breweries in the 2,100hl – 5,000hl ‘danger zone’. The shift in these bands and the rates that apply is huge for small breweries and is an important demonstration of the lobbying power of SIBA on behalf of members. When the Treasury announce something they rarely, if ever, change that decision and I’d like to thank all of the brewers who wrote letters to your MPs to keep up the pressure on this issue. Whilst there are things which could be improved and there is still work to be done, which I’ll go into a bit more detail on below, we should recognise the fact that the Treasury is clearly listening to our recommendations and submissions and that our lobbying work can enact real change. One area where beer still gets a raw deal though is in comparison to the duty paid on cider, which still gets a much lower rate of duty than beer despite them being equivalent products. Beers between 3.5% and 8.4% pay a duty rate of £19.08 per litre of pure alcohol, whereas ciders are payable at a rate of just £8.78. That simply isn’t fair and must be addressed by the Government, particularly as the aim of the new Alcohol Duty System is to create a level playing field for small producers of equivalent products. SIBA would like to see full equivalence between beer and cider, backed up by the new Small Producers’ Relief, which ensures small cider producers are able to compete against the dominance of Global brands in the same way as we as brewers previously benefitted from SBR.

That shift to calculating relief based on ‘hectolitres of pure alcohol’ is also important as it means that relief is based on your average strength as well as total production. This will mean if your average ABV is higher than the overall average, you will ‘use up’ your relief much quicker. To put this in real terms if you’re a brewery of 2,500hl and your average ABV is 5.2%, rather than the national average of 4.2%, across the beers you produce, then you would see your relief start to taper at around 2,000hl rather than 2,500hl. The above of course uses some estimated figures including that crucial ‘average ABV’ number, as the exact figures which are going to be used to make the calculations have not yet been set in stone by the Treasury. It’s an issue we are pressing them on and which we will update members on in due course. Another interesting aspect is the extension of the lower rate of duty to under 3.5%, meaning relief will apply below 2.9% for the first time. But as global brewers will reformulate their beers to benefit from this new rate, it is important that the government ensures that small brewers have the full relief at this lower level.

In addition, beer between 0.5% and 1.2% now doesn’t count towards your production figures for relief but any beer over 8.5% is no longer eligible for Small Producers’ Relief – so whilst your no or low alcohol beers may be cheaper your DIPAs and Imperial Stouts are going to be more expensive. Another issue is the Government’s announced draught duty rate, which currently would only apply to containers of at least 40 litres, excluding much of the beer produced by SIBA Members in, for example, 30l kegs. We are confident the Government will move to 30l but are trying to push to get the threshold down to 20l, so that all draught beer from independent brewers gets the benefit, including cask pins and 20l kegs etc. SIBA is speaking to Government at the highest level on these issues and fighting the corner for small independent brewers and I’d like to once again thank you for the support you have shown on this issue, we’re stronger together and by fighting with a united front we stand a far greater chance of success in the future.

Roy Allkin