Drastic changes to the system
The request fell on the first anniversary of the most extreme amendments ever made to the Alcohol Duty System, which were introduced on 1 August 2023. Research found the impact the system has had on more than half of breweries.
The previous Government pledged modifications would be considered in 2026, however the Society of Independent Brewers and Associates (SIBA), has requested the Government commit to this deadline in order to confirm that changes are assessed.
SIBA chief executive Andy Slee stated: “While it is too early to understand the full implications of the changes, we are already seeing that large global companies have significantly reduced their duty bills by benefitting from the new lower rate and that small independent breweries are stopping or reducing production of innovative beers such as imperial stouts. Global cider producers also continue to benefit from a significantly lower rate of duty than beer.”
Key Research
Research from SIBA’s Independent Beer Report 2024 showed 54% of respondents said the new alcohol duty system had an impact on the ABV strength of their beers, with more than a quarter (27%) have used the new lower duty bands.
Research also revealed 18% said they had introduced new beers below 3.4% and 9% reduced the ABV of existing beers to take account of the lower duty rate.
Slee continued: “Under the new system, Small Breweries Relief (SBR), which helped small breweries to compete with global breweries, was radically modified and extended to other products under a new Small Producer Relief.
“It also created a new Draught Relief where cask and keg beer destined for the pub is given a 9.2% reduction in alcohol duty.”
Slee also summarised the new structure is “already influencing” smaller breweries and what they are creating.
“Research by SIBA shows that nearly a quarter (22%) of independent breweries have altered their beers above 8.5% ABV, with 7% reducing the ABV and 15% have either stopped producing some beers or all beers over 8.5% ABV,” he added.
Unfair advantage
The SIBA boss explained more than a quarter of independent breweries have decreased the strength of their already existing beers or implemented newer beers as a result of the latest lower alcohol band, which stands at 3.4% ABV, and gives a discount on duty to lower strength beers.
According to Slee, global companies may have an unfair advantage, due to the fact that “global cider producers continue to benefit from a duty rate 46% on beer in the new system”.
He added: “Global breweries have dropped the ABV of their beers, reducing their duty bill by millions of pounds.”
