Progressive beer duty 'forcing family brewers out of business'

However, he said he does not think the Government will act to end the disparity of the system until “a number of established family brewers go out of business”.

He said after three years of testing its managed model the company was now ready to focus on acquisitions.

The growth strategy, headed up Bateman and newly appointed retail director Linda Green, will focus on buying managed houses and converting tenancies to the company’s managed franchise, or ‘manchise’ agreements.

Pressures​

He told the Publican's Morning Advertiser​ sister title M&C Report​ the strategy had evolved because of the pressures facing family brewers. Progressive Beer Duty is a duty system that allows smaller breweries to pay less tax on their products.

He said: “I know of a wholesaler that is able to buy beer from a recently established brewery at nearly half the price that it costs us to actually brew it.

“The way in which progressive beer duty works is making it more and more difficult to pursue a constructive, viable, development beer and brands strategy.

“Supply is starting to outstrip demand and there are smaller brewers who are benefitting massively from being able to sell their beers at a very low price. This means that breweries such as ourselves need to start looking at other aspects of our business beyond brewing and brands and seeing how we can develop these. “

He said the Government needed to examine how to help “those breweries that are being squeezed in the middle that aren’t much benefit from either progressive beer duty or economies of scale”

He said: “They should raise the lower threshold below which those breweries get the half duty relief. I do think one day that is what will happen, but I’m afraid that what will make the Government sit up and listen is when there are a number of established family brewers, who are big employers, go out of business.”

Response from SIBA​

SIBA managing director Mike Benner said: "Small Breweries' Relief has been incredibly successful since it was introduced in 2002 leading to a diverse and innovative independent brewing sector which has created thousands of jobs, often in deprived areas and huge choice for consumers. The 50% relief is essential to the survival of many hundreds of small brewing businesses.

"I agree that there is an opportunity to extend the benefit to more brewers by increasing the lower threshold to enable more established companies to invest and expand and by increasing the upper threshold to the maximum permitted by EU law. This would be an excellent way to evolve the scheme to boost investment and jobs, by thinning the glass ceiling and reducing the disincentive to invest."