Category Archives: Beer Duty

Moderation before Consumption?

TwoBeers

At the end of last week, a press release plopped into my inbox from the team at Harvey’s Brewery in East Sussex, promoting the launch of their new beer, Harvey’s R. A teaser campaign has been running for a few weeks, apparently, to peak interest in the new product, which officially launched last Friday, the 4th of July. ‘R’ is a 2.8% ruby session beer, created ‘to be a contemporary brand that appeals not only to a younger cask ale demographic, but also to a growing market that are looking for moderation in their drinking’.

I’ve talked about 2.8% alcohol beers before – most notably in February of last year, with Black Isle’s Cold Turkey. Beers produced at this strength may well have been released in response to this sudden desire for moderation, but also in response to the alcohol duty being lowered for beers up to this abv level. Not that there’s anything wrong with that, of course; if the Government gives you an opportunity to save a little duty money, as a brewery it can only be a tempting proposition.

The Harvey’s Press Release featured a series of bullet points relating to this, quoted from Heineken’s ‘Seven Macro Trends’ (such as – “Moderation represents a 300 million [sic] category opportunity over the next 10 years and is growing at 10% year on year”). Obviously, I’ve no idea if that’s the reality or not – the low-abv beer market, going on that sentence, is forecasted as an ‘opportunity’ only; but the thing that really stood out for me, was the next section of the press release, about the reasons why moderation provides this potential windfall:-


20 to 25 year olds are looking to moderation for the following reasons
• They want something refreshing and easy drinking rather than strong.
• A desire to last the pace; they don’t want to miss out.
• They feel peer pressure to drink but want lower alcohol options.
• They want to preserve their reputations socially.
• Want to look fit and healthy.

Now, firstly, I’m way over the 20-25 age bracket – I long since had to tick a couple of boxes further on in any survey (’30-50′ being a recent favourite). But I can just about remember being a young, impressionable early twentysomething. Of course, I drank Carling then, but had these 2.8% abv cask ales existed, would I have been tempted? Well, no, probably not. But that was before the ‘craft beer revolution’ and all the joyful bonhomie that followed; back then, anything low in alcohol was the impenetrably mysterious world of Grandad’s mild.

When I was 20-25, did I want something refreshing and easy drinking, rather than strong? Actually, yes, on occasion – but only to keep up with my drinking mates, not for any reasons of moderation. The only thing I would have ‘missed out’ on would have been a limp, plate-sized burger from Casablanca’s near the station. I’m wondering if these answers hark back to Heineken’s ‘Dance More: Drink Slow‘ campaign that launched in January. Do young’uns think “I don’t want to drink that much, as I don’t want to miss out” – or do they think “I don’t want to miss out, I need to have a few more drinks.”?

Terms like ‘peer pressure’ and ‘reputation’ do exist, of course, for this age-group – but do they interlay with the beer/cask ale drinking section of that group? I’m not saying Harvey’s – and others – shouldn’t be offering these kinds of beers; I hope Harvey’s R does really well, but I’m wondering just how successful this moderate alternative will be. Certainly, when I was between 20 and 25 I can only have seen myself switching to a 2.8%er to keep up with the round, but then what would the associated ‘peer pressure’ and ‘reputation’ have been to me, then?



If you’re 20-25, or can remember vaguely what you were like when you were, would those five bullet-points have had you reaching for a 2.8% cask ale?

Deuchars – due an abv cut?

DeucharsCap1

It was announced yesterday by Heineken that the abv of John Smith’s Extra Smooth will be decreasing, effective from the 4th of February – from 3.8% to 3.6%. The reports surrounding this statement mention several familiar excuses – high duty, rising costs, the recession. Heineken are quoted in the BBC article as wanting to pass on the duty savings to their trade customers – although other pieces I have read state the savings (rumoured to be around £6.6m) will be re-invested in brewing and marketing John Smith’s. Alongside this (and where many of the comments have arisen), the brand will also increase by around 2.5p a pint.

This tactic of abv-shaving to cut costs is something we’ve seen before – early last year, ABInBev trimmed Stella Artois, Budweiser and Beck’s by 0.2% for the same stated reasons. Carlsberg then did likewise with Carlsberg Export, and MolsonCoors matched them both by whittling 0.2% from bottled Cobra. I’d be amazed if the Dutch hadn’t monitored the effectiveness of these strategies before announcing their own reduction. If, over the next few months, it pays off for Heineken, and they end up saving noticeable amounts of money whilst not losing too many customers in the on-trade – will they look to apply a similar approach to another of their draught beers that currently sits at 3.8%?

Is Deuchars due a chop?

Admittedly, the beers that have been cut so far are very different – universally kegged, almost all premium lagers (until yesterday, when the smoothflow drinkers were affected for the first time). As a cask beer, the production costs for Deuchars may be lower – although, of course, the ingredients used to make the IPA could well offset that dispense saving. I don’t know of a pound for pound comparison between brewing Deuchars and, say, Budweiser. At any rate, if Heineken are looking at the rest of their portfolio following a success with new 3.6% John Smith’s Extra Smooth, then it could be more than tempting for them to nibble a 0.2% from their Edinburgh-brewed IPA as well.

Maybe a more likely outcome is a reduction in the strength of bottled Deuchars – currently at 4.4%. Or, alternatively, a cut in another Heineken beer from the same stable (the company having previously reduced the abv of Strongbow cider from 5.3% to 5.0%). At the end of the day, other than the potential increase in price at the bar, will drinkers even notice the difference? Heineken don’t think so – “Extensive research conducted with John Smith’s retailers and consumers consistently confirmed that a 0.2% reduction in ABV does not compromise on the taste…” said a spokesman. So, that’s all right, then.



UPDATE 13/01

Here was the reply I got, via Twitter, from the Caledonian Brewery…

The Price of Craft?

What’s the most expensive beer in the pubs of Britain? The other day, for example, I saw one advertised in the city for £6.40 – the priciest pint I think I’ve yet witnessed in Edinburgh. Fair enough, it was an imported beer in an establishment that usually runs to a high retail price – but one look and I went for something else. As prices rise across the bar, are the increasing costs of these new, ‘craft’ beers becoming prohibitive to growth?

At the weekend I managed to scrape the other BeerCasters together and visit BrewDog Edinburgh (which was not where the above example occurred, incidentally). On offer, amongst other things, Tempest’s A Face With No Name – at £4 for a two-thirds measure. So, £6 a pint. Fair enough it wasn’t advertised at that price, the suggested serving was the lesser volume – but the very same beer is currently on (cask) elsewhere for under £4 a pint.

Again, we passed on paying that much – even for an excellent beer. BrewDog have said in the past that producing a kegged beer costs more than a cask, which would explain part of the higher sum in their bar than the other pub. But are these new wave of craft beer bars shooting themselves in the foot by charging large amounts for small amounts? Or, are the fans of these kinds of beers willing to stump up the cash?

The obvious answer is that they are – otherwise BrewDog wouldn’t sell their latest Abstrakt AB:10 for an eye-watering £5.45 a third. I’m sure they equate it to drinking a marvellous glass of wine, or splashing out on a rare whisky – in short, a top-end product bought as a treat. The reality is (from my observation) that the majority of people shy away, and the beery crowd buy collective thirds so they can have a sip each.

Is this craft? Sharing communal beers? The whole thing has become a parody of itself – surely beer isn’t meant to be drunk like that. You can create demand for a niche product, but when even the target market can’t (or won’t) pay for it, how sustainable is that? Part of me wonders if BrewDog are disproportionately passing on the unfairly monstrous cost of alcohol duty in these kinds of beers, knowing the ‘geeks’ are the group least affected by price.

As much as I hate writing that (and not only because it contains the hated G-word), it’s probably true. We are the people that go in these modern beer bars – from the new Craft in Brighton to BrewDog Aberdeen. We have the disposable beer income, regularly placing online beer orders that add up to an awful lot. All beer is expensive these days – but if there’s one sector of the pub-going community that can absorb the hit, it’s us.

This isn’t exploitation – craft beer fans are like any other branch of collectors that splash out large sums on their hobby. Sooner or later, however, there’ll come a time when the price point is pushed just that little bit too high. Customers will back away, and look to the offerings of another brewery, or visit another boozer. As beer becomes artisan, the price increases are going through the roof – and it isn’t just because of the duty.

A different kind of problem

Since we began following the issue of taxation and duty on British beer, one term has come sharply into focus:-

“As part of the Coalition Agreement, the Government committed to reviewing alcohol taxation to tackle problem drinking without unfairly penalising responsible drinkers…”

Review of Alcohol Taxation, HM Treasury 30/11/2010 pdf

“By setting a minimum price for a unit of alcohol, we can raise the price of cheap supermarket white ciders, lager and value spirits sought out by problem drinkers.”

Nicola Sturgeon, Cabinet Secretary for Health and Wellbeing, Scottish Parliament



These two statements were made about very different responses to the modern perils of drink. The first related to the UK-wide introduction of High Strength Beer Duty (HSBD) – whereby all brewers of beer over 7.5%abv now pay a higher rate of tax. The second was a quote regarding Scotland’s draft bill on minimum pricing – long championed by the SNP – and destined to become law here sometime this year.* Both repeated the idea that these policies were devised to help ‘problem drinkers’. Both will see the price of alcohol increased.

*The latest update is that during the past week Ms Sturgeon met with Brussels counterparts, afterwards reiterating that the SNP believe setting a minimum price per unit of alcohol would comply with EU law. However, the European Commissioner for Health and Consumer Policy stated that it still wasn’t fully clear that the SNP scheme wouldn’t be illegal. Expect this to a) run and run; and b) end up in the courts.

It’s our opinion that the HSBD measure will not help these people, who will switch to other forms of alcohol (if they haven’t already). As beer over 7.5% constitutes >0.5% of UK alcohol sales, it’s not going to raise a significant amount of money for the Treasury either. The issue of minimum pricing is less black and white. Firstly, the actual price needs to be decided upon (45p has been rejected, rumours of 50p abound), Secondly, unless it’s north of 80p it won’t affect the on-trade – the booze boffins at Sheffield University are already talking about differential minimum pricing (i.e. 30p/unit off-trade versus 80p/unit on-trade). Thirdly – as this isn’t a tax (just a price increase), all the extra money raised will pour into the Supermarkets.

On Friday the BBC reported that a significant group of ‘problem drinkers’ were taking the matter of their health to the US courts. The Oglala Sioux are asking for $500m (£316m) for healthcare, social services, and child rehabilitation for the people of the Pine Ridge reservation in South Dakota. The lawsuit has been filed against a familiar line-up of names – Anheuser-Busch InBev Worldwide, SAB Miller, Molson Coors Brewing Company, MillerCoors LLC, and Pabst Brewing Company. These four (and Pabst) can be considered as ‘big beer’ – so are the Oglala Sioux going after them in the same way as others have taken on ‘big tobacco’ and ‘big pharma’?

The reason behind their specific targeting of the macro-beer giants lies over the state line in Whiteclay, Nebraska. The town would give Portland a run for it’s money as ‘beervana’ if the issues involved weren’t so cripplingly awful. With a population of 14, the tiny community serves only one purpose – to sell alcohol to the residents of the Pine Ridge reservation. The people there drive two miles to Whiteclay as alcohol sales are illegal on tribal lands. The four off-licenses in the town (who have also been named in the suit) sell only beer – but at staggering amounts. In 2010, the four bottle shops combined to sell 4.9 million cans to the Pine Ridge community – 12,300 every day.

In America, this is an infamous story dating back decades – local Indian groups have long led marches and urged action from local and national Government on the issue. But over here, the article generated by the lawsuit brought the story to public attention for the first time. To be fair, the tiny town also sold $2.7m worth of groceries in a year, so the citizens of Pine Ridge clearly conduct most of their transactions there (as Nebraska doesn’t levy sales tax on food, unlike South Dakota). But roast chicken doesn’t make the same kind of headlines as alcohol.

I wonder what would happen to the ‘problem drinkers’ of Pine Ridge – there are obviously a huge number of them – if something similar to the British proposals were attempted there? The documentary The Hidden Massacre of Whiteclay (YouTube link) reveals that where previously brands such as Budweiser were the big sellers, these days they have been replaced by blindingly strong malt liquors such as City Brewery Evil Eye (10%) and Camo 900 High Gravity Lager (9%). Under the HSBD rise, and if there were a minimum pricing scheme, these cans would become significantly more expensive to buy.

How significant depends on each individual person – as everyone’s situation will be different, of course. But the key aspect of both of these pieces of legislation is the notion of pricing people out. But onto what? What would be the next steps in Whiteclay? Would the citizens of the reservation revert to Budweiser? Or would something else fill the vacuum? When you put frameworks in place to make a drug more expensive to the people who abuse it, what will be the outcome? I’m not sure anyone really knows.

The lawsuit from the Oglala Sioux stands a small chance – but you can imagine ‘big beer’ will gather together many legal minds to defend themselves. If they do so successfully, what happens to the people of Pine Ridge, only time will tell.

The end of Big BeerCast month

Support your local strong brewer…such as London’s Kernel

So we reach the end of October, and our big beer month here at the BeerCast. For the last few weeks we’ve been featuring only beer over 7.5%, in protest at the Treasury raising High Strength Beer Duty (HSBD) on all beer above that abv. Since that time, the e-petition has gained over 850 signatures – if you haven’t yet done so – please add yours to the list. Admittedly a fair way from the 100,000 needed to get the petition debated in Parliament, but all campaigns have to start somewhere.

Unfortunately, the mainstream press haven’t latched on to the issue – leaving only the bloggerati to harrumph into their stemmed tasting glasses. However, one notable exception is Will Hawkes, who wrote an excellent article in the Independent arguing that the duty rise will seriously affect small British breweries.

He’s absolutely right – one thing that has come out time and again over this month is that many brewers simply aren’t willing to pass this increased cost onto their customers (and more on them, later). Brewing has always thrived on experimentation, and small micros in particular need that option, if only to stand out from the crowd at their beginning.

For me, the associated duty cut in beer under 2.8% is a complete non-starter. That’s not to say I don’t enjoy a mild on occasion, but as Justin Hawke of Moor Beer Co said in the Independent article – there’s very little market for beers at this strength. Ghost Drinker – who works in Beer Ritz, Leeds – checked their 600 beers and found 109 over 7.5%, and 0 below 2.8%. I doubt they sell Skol though, which reduced in abv from 3% to 2.8% – at the start of October.

I predicted that this ‘point-shaving’ would arise as a result of the duty increase, as small differences are smoothed out to leave brewers in the clear. We spoke to Evin O’Riordain of the Kernel Brewery – one of the vanguard of strong beer producers in the UK at the moment – as their Export Stout (1890 London) (reigning SIBA Champion Bottled Beer of Britain) originally clocked in at 7.8%. With the latest batch coming in at exactly 7.5%, it’s a no-brainer to retain future runs at this strength.

The Kernel are in an enviable position, despite their regular strong brews (several of which are in my cupboard at the moment). Demand for their beer is so enormous; there will always be a regular queue of customers – even if the price of their products has to rise. Evin clearly brews for the love of doing so, and if he feels like producing a 10% imperial rye stout infused with peppercorns*, then sod the taxman. As he told us – “Even at the new higher prices, we think our beers are worth the money.”

This is the other point that I really struggle with – the Government stated that consumers of artisan strong beer are fine with paying more for their ‘niche’ product. And they are absolutely right. We’re not going to stop buying strong IPA’s just because they clock in at over a fiver for a 330ml bottle. But that doesn’t mean I’m going to not resent doing so. And all because they want to address ‘problem drinkers’? Give me a break.

All along, this increased duty was misguided. To help people who are addicted to alcohol – a horrendous and very real problem – take a look at what they are actually drinking. Forget the strong ciders and spirits for the moment (although they surely feature highly) – it’s the multi-buy cans of 5% lager that should be looked at first. Bravo to the Scottish Government for banning 2-for1 and other cheap alcohol deals.

Today, the SNP administration here have gone further, and re-introduced the debate on Minimum Pricing, which was voted out by the other parties in the last Parliament. They have yet to set the actual price per unit this time (originally it was 45p). Although the UK Government has described Minimum Pricing as ‘probably illegal’, today’s proposal will certainly get everyone talking once again.

This can only be a good thing – alcohol abuse is a cultural disease. There are many causes, and the solutions extremely hard to find. We’re only one beer website, but we firmly believe the HSBD Duty Rise is not the way to go about this – it will only affect struggling UK brewers, and stifle creativity at the time when it finally seems to be flourishing. If you love strong – proper – beer, carry on drinking it responsibly – take that financial hit, and support our brewers.



*Hint hint, Evin.

BeerCast #64 – Big BeerCast

Note to self…remember to take photo before drinking the beer

If you’ve been following the BeerCast for the past couple of weeks, you’ll (hopefully) know we’ve been talking a great deal about a recent piece of Government legislation. On the 1st of October, the UK Treasury raised duty on all beer over 7.5% – ostensibly to tackle ‘problem drinking’. We’ve written several posts on why we feel this is a bad idea (here, here and here) – and so today we’re holding a protest podcast. Richard, Shovels and Grooben get together to sample four British beers over 7.5%, and debate the state of UK alcohol taxation (along with vikings, addictive coffee and why you can never lose a greyhound). The four strong beers we drink responsibly are:- Sinclair Orkney Skull Splitter (8.5%), Traquair House Jacobite Ale (8.0%), Thornbridge St Petersburg (7.7%), and BrewDog Abstrakt AB:06 (11.2%). Fight the power!





1. Orkney Skull Splitter
(8.5%abv)
Sinclair Orkney Brewery, Quoyloo, Orkney Islands.
330ml glass bottle

Founded by Roger White in 1988, the award-winning Orkney brewery are another local producer who started in untypical surroundings – in this case an old school house in Sandwick. In June 2004 they merged with the Atlas Brewery of Kinlochleven, to form Highland and Islands Breweries – which in turn was taken over by the Sinclair Brewery Ltd in 2006. All the way back in January 2008, we sampled Orkney Dark Island as part of BeerCast #11. Drinkers in North America may know the brewery best for the very beer we’re sampling today – Skull Splitter is seemingly far more popular over the pond than back home.

What They Say
“Sophisticated, satiny smooth with a deceptively light character, it is a tribute to our colourful forbear Thorfinn Einarsson, the 7th Viking Earl of Orkney.” [Official Website]

What We Say
Richard – Classic Skull Splitter aroma – sweet fruity caramel
Shovels – Not as syrupy as I remember, good balance
Grooben – I do like it but probably wouldn’t drink it much 6




2. Traquair Jacobite Ale
(8.0%abv)
Traquair House Brewery, Innerleithen, Peeblesshire.
330ml glass bottle

Traquair House is an extremely impressive, and very old, country estate about an hour south of Edinburgh. Famed in Scottish history for it’s association with the Jacobites, it also contains a thriving microbrewery – which begun in the 18th Century, brewing for the estate workers. The 20th Laird of Traquair re-founded the brewery in 1965, and they specialise in Scottish styles – that are all rich, dark, and above all – strong.

What They Say
“Brewed to celebrate the anniversary of the 1745 Jacobite rebellion the ale proved to be so popular it has become a permanent addition to the range. Based on an eighteenth century recipe the ale is spiced with coriander which gives a remarkably fresh aftertaste.” [Official Website]

What We Say
Shovels – Spices linger at the end, needs a bit more body 7
Richard – Not as spicy as I was expecting, it’s a nice old ale7
Grooben – Doesn’t bash you around the head for an 8%er 7




3. St Petersburg
(7.7%abv)
Thornbridge Brewery, Bakewell, Derbyshire.
500ml glass bottle

The first Thornbridge beer to make it onto one of our BeerCasts was their chestnut honey ale Bracia, back in BeerCast #61. A 10% powerhouse of flavour, we’re following that with another of their big hitters – the fantastic Russian Imperial Stout St Petersburg (7.7%). We already know it’s fantastic, as it was awarded one of our much-prized Best New Beer Awards for 2010. Doesn’t mean we can’t put in on a podcast…

What They Say
“Rich and dark with smoke, subtle peatiness and the power of the dark malts. Molasses and liquorice and chocolate goodness all wrapped up in a smooth, warming liquid.” [Official Website]

What We Say
Richard – Black, roasty, creamy, chocolatey, smoky, love it 9
Shovels – Lovely flavours – one of my favourite beers
Grooben – Doesn’t have any bitterness at the back of the palate you get with some strong stouts




4. Abstrakt AB:06
(11.2%abv)
BrewDog, Fraserburgh, Aberdeenshire.
375ml glass bottle

BrewDog are without doubt the most talked-about brewery in Scotland, with their charismatic press releases and wacky ideas. Not afraid to experiment, there’s no denying they always elicit strong opinions. What is often overlooked amidst all the hoo-hah is that they have only been going for just over three years. Their ‘concept beer brand’ Abstrakt is already on the 7th version (a whisky aged Scotch Ale), the original, AB:01, made it to our most recent Beer of the Year Show, and AB:04 (a coffee, cacao and chili Imperial Stout) might just be the best beer they’ve ever made. Can AB:06 cut it?

What They Say
“AB06 is a 11.5% Imperial Black IPA which has been triple dry hopped. This beer is savage; boasting more bitterness and more hops than any BrewDog creation to date, combining loads of awesome malts and monumental amounts of our favourite hops.” [Official Website]

What We Say
Shovels – You can definitely tell it’s dry hopped, love those hops
Richard – Very good beer, this could be a great regular
Grooben – Decent, but I expected it to be better 7




Panellists
– (clockwise from top left) Shovels, Grooben, Richard

BeerCast panel verdict
Thornbridge St Petersburg 26/30
BrewDog Abstrakt AB:06 24/30
Sinclair Orkney Skullsplitter 21/30
Traquair House Jacobite Ale 21/30

  • Listen to the episode on Soundcloud here:


Please keep those comments and emails coming in, and check back in a couple of weeks for our next podcast. In the meantime, keep drinking those strong beers wherever you are. In the UK, you can sign this petition against the duty rise. For the BBC article on responsible drinking we discussed during this episode – click here. We’ll be continuing with our strong beer month right the way throughout October. Fight the power!