The Small Brewers Duty Reform Coalition (SBDRC) consists of around 70 brewers, of which a majority are independent and/or family owned brewers, and was formed in the early part of 2017 with the very specific purpose of asking Government to review and improve Small Brewer Relief (SBR). You can read our proposals here.
Stakeholders from across the whole industry agree on the need for reform – and we are simply proposing the solution we think would work best. We are calling for the Treasury to now review and in the meantime we are happy to discuss alternative proposals from other groups with different ideas.
This is not an issue of “Big vs Small”. All the brewers most directly affected are small or very small. 85% of our members are below the SBR limit and over 20% are breweries brewing less than 1,000hl a year. A brewer at 1,000hl gets the same cash relief per hectolitre as someone five times larger (and therefore self-evidently more efficient). That is unfair to the smaller brewer just as it is to the brewer at 10,000hl who gets half the relief of his smaller (5,000hl) competitor when the improved efficiencies cannot compensate to that extent.
SBR was intended to be progressive, but it isn’t. Indeed the policy is in effect regressive at the artificial cliff edge that has been created at 5,000hl, whereupon further growth becomes extremely expensive because of the extra tax due.
At the outset of the policy 15 years ago the Government set a cash subsidy the equivalent of £25/hl for a brewer at 5,000hl. However as a result of increases in the headline beer duty rate it has actually grown by 60% to £40/hl. For a 5,000hl brewer this represents around 25% of total turnover. A small brewer without this support finds it very difficult to compete, even if they are bigger, as the relief does not taper in line with the impact of economies of scale.
SBR has had the effect of freezing small brewers ability to increase prices. Cask ale has seen ten years of static wholesale prices, whilst duty and raw material cost have continued to grow. If cask ale isn’t profitable, no one will invest and we will lose a quintessential icon of the British pub.
Support for reform is growing and membership of the Small Brewers Duty Reform Coalition has been growing steadily.