Last month, the brewer issued a letter stating the price of a 36-gallon barrel of Greene King IPA would fall by £2.04 as a result of duty reductions announced in the budget.
However, in the same communication — seen by the PMA — the company also revealed the cost per barrel would rise by £1.80 on the back of changes to its sediment allowance — set individually for each brewer by HM Revenue & Customs so brewers don’t pay duty on beer that cannot be sold.
The letter stated: “Following a review by HMRC of our cask beers, it has been proven that our yields have improved during the past year and, as a result, our sediment allowances have been reduced. This in turn has resulted in an increase in dutiable volume, which becomes effective from 23 March 2015.”
The news has left a bitter taste for one licensee who feels the brewer has given with one hand, but taken with the other. “I’m not happy about this at all,” he said.
“It’s very underhand. In January, prices went up but I always hold my changes until after the budget because I don’t like to increase prices twice. My customers are already asking about price reductions. I’m going to look silly if I put my prices up and we’ve had a reduction on beer duty.”
Profit
Greene King declined to comment on the timing of the letter but Chris Houlton, managing director of Greene King Brewing & Brands, said: “This year, HMRC determined there is less sediment.
However, this should mean little change for our customers as, while the amount of duty HMRC charges has slightly increased, there is more beer to sell in each barrel and therefore more profit per keg, which more than offsets the increase,” he said.
Greene King estimates licensees can sell up to six extra pints per barrel.