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A group of people toasting with their pints | AccountingWEB | Cheers to weak beer thanks to alcohol duty changes
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Cheers to weak beer thanks to alcohol duty changes

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With a 3.4% beer launching in Aldi on the back of alcohol duty changes announced last year, does this raise the bar on further tax incentives?

7th Feb 2024
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When the alcoholic content rises, the tax increases with it – that was the crux of the government’s new beer duty rules when they kicked in last August.

The split was set as:

  • duty on all alcoholic products less than 3.5% alcohol by volume (ABV) = £9.27 per litre 
  • duty on beer at least 3.5% but less than 8.5% ABV = £21.01 per litre.

Jason Croke, VAT director at Rayner Essex, noted that on the back of this, there was “very quickly” an incentive for producers to make a beer that is 3.4% in strength, thereby landing itself in the lower threshold.

Whose round is it?

Enter Aldi and the Hop Forward Beer, specially produced for the retailer with a percentage of – you’ve guessed it – 3.4%. This followed Carlsberg outlining plans last year to reduce the strength of its Danish Pilsner from 3.8% ABV to 3.4%.

So are more brewers eyeing a lower ABV?

Nik Antona, national chairman at the Campaign for Real Ale (CAMRA), said that the lower tax bracket of under 3.5% ABV “could potentially encourage innovation in lower-strength beers”.

He added that this could particularly be the case with independent brewers “who are struggling to survive against spiralling costs of goods and employing staff, rising energy bills and customers continuing to tighten their belts due to the cost of living”.

Choice at the bar

An announcement was later made in November 2023 that the alcohol duty regulations would be frozen until August 2024. At the time, Chris Jowsey, chief executive of Admiral Taverns, welcomed the measures, noting that both the freeze and an extension to the business rates relief would “reduce the unfair tax burden and provide many pubs with an opportunity to trade out of this economic crisis”.

Emma McClarkin, chief executive of the British Beer and Pub Association, added the call would “save our sector around £350m”.

So far as innovation goes, is that also set to be a positive for the beer industry?

Antona noted that a higher ABV “is integral for certain beer styles”, adding that it “would be a concern if the production of stronger types was reduced”.

“Consumers deserve to have a choice at the bar, taproom or bottle shop, and it would be a shame to see tax bands create any form of limitation to that choice.

Replies (13)

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By petestar1969
07th Feb 2024 16:23

Hmm, in theory I guess lower ABV should mean more sales as drinkers would need to drink more to get the same buzz....

Thanks (1)
Jake Smith, AccountingWEB
By Jake Smith
07th Feb 2024 16:49

I think that as I've got older my tastes have changes a bit and I am now more likely to order a lower-strength bitter or ale rather than the 5% lagers of my youth. Good to see more 0% options appearing in pubs too. I think it is important to cater for as wide a range of customers as possible and if the lower duty rate means that these newer beers are cheaper then I agree with Nik from Camra it's probably a good thing (as long as they don't compromise on flavour).

Thanks (3)
Replying to Jake Smith:
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By FactChecker
07th Feb 2024 18:05

From my (extremely limited) experience, and one might say fuzzy memory, of CAMRA just over 50 years ago ... the last word that anyone would've expected to hear on the lips of their spokesman was "innovation".
The whole point was to roll back time and re-discover/support breweries like Adnams in Southwold and prevent the (gassy) expansion of Watneys Red Barrel and its mates.
TBH I never got that excited by beers, but had a great summer (despite extreme sunburn) in Southwold & Walberswick in 1972.

Thanks (3)
By ireallyshouldknowthisbut
07th Feb 2024 19:07

Suits me. I normally pick ales in my local pub in the 3.5% or lower category vs 4.5% as after 5 of the former I can still get up in the morning, but only 4 of the latter.....and 6 of the latter im not much use until 11am, but am just about OK on the former if kicking myself for over doing it.

When they only have stronger ones on, I slip in a Guinness zero.

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By Open all hours
08th Feb 2024 09:34

Can’t get used to people ordering a pint of zero. Sounds like software for soft folks but if tax avoidance is your priority then it’s understandable. Personally an occasional
Cranachatoa 8.4% Double Stout from Turning Point Brew Co, Knaresborough hits the mark.

Thanks (1)
Replying to Open all hours:
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By FactChecker
08th Feb 2024 12:11

And so it should ... at a typical cost of £7.50-£8.00 per 440ml can (and that's if you can find anywhere carrying stock), it'll be interesting to see the impact of the new duty rates.

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By Kentwillumsen
08th Feb 2024 11:03

Looking forward to the day where the elites will be drinking 6% wine and champagne. One rule for me and another for thee.

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By Postingcomments
08th Feb 2024 12:11

The more that companies profiteer and the more tax government demands, the more I bother myself to opt out of their system a little bit more.

A couple of years ago, I started making alcohol due to there being a tree of unwanted apples down the road. Then, because I had the gear, I tried other things.

My best work so far is making up a wine kit, fortifying it and putting it into a barrel - ie making port. It has turned out very well.

Thanks (1)
Replying to Postingcomments:
By SteveHa
08th Feb 2024 15:24

Many years ago I went to the market and stocked up on a variety of fruits, including grapes, both red and white. Got them home, separated, and made a demijohn of red and one of white wine.

After 12 months the white was passable, but the red was horrible (I'd only stopped it fermenting three months prior), so I stuck a bunk in the top, put it in a cupboard, and forgot about it.

8 years later we were clearing the cupboard out, and so I gave it a go. It was like nectar of the gods, but hell, it was strong.

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Replying to SteveHa:
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By FactChecker
08th Feb 2024 17:09

Patience (well OK absentmindedness) rewarded ... I like it!

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Replying to SteveHa:
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By Postingcomments
08th Feb 2024 17:17

Nice. I want to make a cherry port - because I love cherries. And port!

I've found it is fun making drinks. You can make things that aren't sold - and I don't use a load of chemicals (as is in in pretty much every food and drink sold commercially).

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All Paul Accountants in Leeds
By paulinleeds
08th Feb 2024 19:06

It's £21.01 per litre of alcohol in the product, not £21.01 per litre of beer!

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Replying to paulinleeds:
the sea otter
By memyself-eye
12th Feb 2024 14:19

Phew- thank god!
I need a beer to recover.

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