The Small Brewers Duty Reform Coalition (SBDRC) formed a little over a year ago and since then has expanded to over 60 members. Our members range in brewery sizes, trade association membership, business lifespan, and more, but our desire to see change unites us. The market is at a critical point: the sector literally cannot afford to do nothing or more breweries will close their doors for good. For far too long, the status quo has gone unchallenged and the beer duty “plateau” has meant a painful threshold of growth for brewers looking to grow beyond 5,000 hL. Worse still are those who have had to scale back production because of the sudden steep increase in duty. The aim of Government surely must not be to hinder growth but rather to encourage it.
Our proposals seek to restore progressive beer duty and promote growth in a sustainable way. For example, we recognise that a brewer at 500 hL does not have the same economies of scale as one at 5,000 hL, much like a brewer at 50,000 hL has more economies of scale than a brewer at 5,000 hL. Yet the relief a brewer receives at 500hL is the exact same as the one ten times its size. This is not progressive and needs to be addressed. The current 50% threshold at 5,000hL also prohibits normal merger and acquisition activity seen in other sectors – only very big brewers can afford an acquisition that results in immediate duty increases. The Government also continues to include export volumes as part of the total barrellage counted for the purposes of relief, even though duty is paid in the market it’s exported to. Pegging the relief to a percent of an overall beer duty rate, which is also far too high, has exacerbated this distortion over time and needs to be reviewed.