There was understandable euphoria in March when the Chancellor of the Exchequer scrapped the Beer Duty Escalator that automatically increased the price of a pint by around 10 pence every year. Has this heralded an era of cheaper beer? Don’t hold your breath.
Marston’s announced earlier this month that it is cutting the strength of Ringwood Old Thumper from 5.6% to 5.1%. That’s a big drop. Brewers do occasionally tinker with the strength of their beers, but taking 0.5% out of a particular brand is rare.
The savings in duty are considerable. Marston’s brews 5,000 barrels of Old Thumper a year. By reducing the strength, the company will save £15.65 per barrel, which adds up to a significant £78,229 a year.
This is not the first example of brewers altering the strength of their beers in order to pay less duty. Last year the strength of Carlsberg Export, Becks, Budweiser, Cobra and Stella Artois were reduced from 5% to 4.8%, which amounted to a total saving of £60m in excise duty.
Put another way, that’s a loss of £60m to the Government’s coffers.
Premium price
In January, Heineken UK cut the strength of John Smith’s Smooth from 3.8% to 3.6% and at the same time increased the price of the beer by 5 pence a pint. You have to admire the group’s chutzpah. The saving in duty for this particular piece of engineering is a cool £6.5m a year.
Chris Keating, who looks after the Ringwood Brewery in Hampshire, part of the Marston’s group, says the company will “pass on the savings
to the customer”.
By customer, he doesn’t mean either drinkers or publicans but the next link in the supply chain — including pub companies.
Do you think most pubcos will pass on the savings to their tenants and lessees? Don’t bother to write in. In the meantime, I have no doubt that Old Thumper will continue to demand a premium price.
Chris Keating was open and frank about the reason behind the reduction in strength. Consumers thought the beer was too strong, he said. “They’ve told us it’s too strong. They don’t get beyond the trial stage when they learn it’s 5.6%. They won’t try it.
“We want to keep the beer alive. It’s been a real dilemma — one of the biggest decisions ever taken.”
Old Thumper is a beer with history. It helped boost the fortunes of Ringwood when it started life in 1978 under the guidance of Peter Austin, dubbed “the father of British micro-brewing”. The beer was named Champion Beer of Britain in 1988 and, though its volumes are small, it’s one of those legendary strong bitters that sends older drinkers misty-eyed with nostalgia.
Other brewers have approached the strength of their “super premiums” in a different way. A few years ago, when Fuller’s saw a sales dip for its 5.5% Extra Special Bitter, it put the solution in the hands of its brewers, rather than accountants. Head brewer John Keeling and his team changed the beer’s “hop regime” to give the beer greater hop character. It was the rich malt and fruit character of the beer that caused some drinkers to feel the beer was too strong. Hops came to the rescue.
At Greene King, with its famous 5% Abbot Ale, the feeling is that most beer drinkers are mature people who can handle a strong bitter sensibly and moderately.
One thing is clear, the tiny handful of people who are determined to get wrecked in town centres at weekends don’t say: “Let’s go and get battered on Ringwood Old Thumper.”
It’s supermarkets, not pubs, that provide them with cheap loony juice.
Top dollar
There are two issues at stake: consumers are missing out if ABVs are lowered without a cut in price. Second, beer lovers will see some of their favourite beers slowly denuded of character.
When Old Thumper was named Champion Beer of Britain, it was 5.8%. Over the years, that was reduced to 5.6%. Now it will be cut to 5.1%. However skilful a brewer is, a beer that loses such a large level of strength cannot taste the same.
I don’t believe Marston’s is deliberately setting out to short-change the drinker. But as a result of the complexity of the supply chain, drinkers are likely to end up paying top dollar for a rather-reduced Old Thumper.
At the Parliamentary Beer Club’s annual dinner on 10 June, Chancellor George Osborne was given a special award for axing the duty escalator. He was warmly applauded by MPs, brewers, publicans and beer writers.
But the battle for a fair tax and a fair price for beer is far from over.