What does the alcohol duty change mean for pubs?

The purpose of change was primarily for health considerations, the thinking being, the less alcohol by volume (ABV) consumed the better for the nation’s wellbeing - the method used was to measure tax evenly on the ABV rather than a staggered tax below certain rates.

The main impact for pubs and clubs is no increase to the on-trade draught sales and a reduction of duty for draught below 3.5% ABV (formally applied at below 2.7%).  This may not seem so significant now, but all major brewers will be looking to produce draught at 3.4% ABV already.  This also explains the drive for some of the main producers to reduce their core draft lines from 4% in the last year.

Big factor

Another big factor here, for the first time in many years the reductions will not apply to draught sold in containers of less than 20-litres, giving the on-trade some redress against the supermarkets' off-sales. 

Sadly, this also impacts on bottle and canned sales in pubs which, along with most wines and all spirits, will increase in due course. As ever there is an anomaly created by the legislation that prevents sales of draught beers by off-sale at the lower duty rate, unless they are in a 20-litre container. Also as ever, there will hopefully be a practical solution\compromise before long.

Advantageous relief

Small independent brewers and producers have lost their advantageous relief on draught below 3.5% ABV by the new legislation, also the premium wines and spirit industry will be adversely affected.

Along with the demographic changes that tell us under 25-year-olds are reducing alcohol consumption but still happy to visit pubs, returning to the days when draught beers were between 3% and 3.5% may be of some benefit for attracting these consumers.