Thursday, 25 March 2010

A Budget for Beer

I’ve had a couple of whirlwind-busy days with meetings, a full email inbox and different important projects flying around at work, hence I’ve been a bit quiet. While I was dipping in and out of twitter today I kept seeing people talking about their budget. During a long evening meeting I scribbled down some numbers to try and work out mine. Here it is:

Around half my wages goes into the joint account for rent, bills and food. I try to save a few hundred but in reality this just gets eaten up on paying off the credit card, overdraft or the holiday to Greece that’s booked for July. There’s some set aside for phone bill, internet and the monthly payments for the laser eye surgery I had two years ago. Then I allow myself about £100 a week for spending. Anything left after this just goes to make my student overdraft (it’s interest free so of course I still use it – free money!) less harrowing.

The important bit here is the £400 a month for spending. This is effectively my beer money. It used to pay for clothes and important things like that but now it just gets poured into a pint glass and swallowed. This is quite a lot of money considering I keep my drinking to two or three days a week but in this I have to factor train tickets, magazines and diet Coke for Lauren, snacks and meals, erratic drunk purchases, etc. I also have a list of places to visit, festivals to go to and events in the next few months, all of which need paying for. Plus online orders (maybe one every other month) and it soon adds up. I often wonder what I’d spend the money on if I didn’t like beer and I have fantastical daydreams about my lavish lifestyle, but then I realise that I’m putting my money into the best craft industry there is, enjoying unique and delicious products, loving hand crafted to give pleasure to others, best consumed with friends. I wouldn’t want it any other way.

But the industry has been socked in the stomach again with another tax rise and the promise of it increasing 2% above inflation for the next few years (that's a 5% rise overall). From Sunday that supposedly puts 2p on your pint. In reality it’ll be more like 10p – how many places currently charging £3 a pint will up their prices to £3.02? It’ll be £3.10 (see the end of this press release). The scary figure in all of this is that beer duty has increased 25% since 2008. That’s insane.

The taxes come to help curb binge drinking, apparently, but what they do in the real world is push people out of businesses and jobs. The community pub, already under great threat, will now have an even harder job. Breweries will be put under more financial pressure. The social drinker will be hit in the pocket. If this move is intended to push up the prices of cheap supermarket lager then why not just gun straight for those 24-cans-for-£8 deals and ban them or start using a minimum unit price. The sad fact is that a lager drinker who likes to go to the pub for a few jars will see a bigger rise in the cost of his pint and might even be turned towards buying that cheap multipack instead of going out to drink it, so it’s utterly counter-productive. And real ale and cider drinkers and makers are just being blindly shafted.

The big breweries who can afford to sell their beer that cheap will not feel the impact as much as a small micro-brewery. The big breweries will always have an outlet for their beer but the micros rely on local pubs to stock their beer. Fewer pubs, fewer drinkers and more competition for handpumps isn’t a good equation.

Binge drinking can’t be solved by throwing taxes at it. Binge drinking can only be solved through education. With a government only interested in tangible, year-on-year figures, this is completely reductive and ignoring the real problems in the dark side of our drinking culture. A quick fix this ain’t; a tick in a box it is. Britain is still broken.

I’m happy to pay good money for good beer and I want my money to go back into the breweries and pubs that make and sell it. I don’t want a large wad of it going into a government that is unfairly branding all beer as the same and all beer as bad. A lot has been done in this budget to help out small businesses but it seems the craft beer and cider makers have just been ignored. It’s so frustrating to see something you love suffer because it’s at the control of someone else who just doesn’t care.

There is a facebook group to fight back against the ridiculous rise in cider taxes. I haven't joined it because most of the people in that group are sad that their ‘Bows might get more expensive, but over 11,000 have signed up already. The artisan market could really suffer from this unless, as promised, the increase is specifically targeted towards certain brands. Perhaps more effective is this petition. It will be interesting to see if social media will be able to impact upon politics, although I doubt it will in this case.

I don’t really understand politics or money, but I do understand people and this is going to affect a lot of people.

And I got the picture from Arfur, here.


  1. I agree with the sentiment that taxes ain't the way to fix a country. There's much more complexity to it than that. I'm not a big fan of the phrase 'broken Britain' though. It gets used to explain every last Daily Mail moan. Does anybody appreciate how lucky they are to born in this country and not in the monotonous poverty of some countries? We even have the mildest weather on the planet and we moan!

    Taxing the beer industry won't curb binge drinking and it will hit pubs and breweries harder than it will hit supermarkets. It sure ain't gonna help the industry and the smaller fish will likely feel the pinch.

    Interesting you mention the price increases, I wonder what there is to stop a pub pricing something at an odd number? I've seen it happen before, when I moved to Leeds a pint of best bitter in the local Sam Smith's pub was something like 94p or £1.12? (and that was only 3 years ago!)

  2. We are a country of moaners! I don't like 'Broken Britain' either, to be honest, but taken in certain contexts it works. As an overall analysis of Britain it's a bit crap.

    And I'm sure there's nothing to stop a pub charging whatever they want for beer - £2.47, £3.02, £4.26 - but down south it's generally rounded up to the nearest 10p.

  3. If the pubs are going to take an extra bite of your beer money that's four times bigger than what HMRC are taking, it sounds to me like you're complaining about the wrong people.

    The government is using the 2p to rebuild the economy. What is the pub doing with its 8p?

  4. "I don’t really understand politics or money"

    Obviously not. In which case my advice would be to stop writing about it and stick to beer.

    Are you really suggesting that if tax on a pint had come down by 2p then pubs would have taken 10p off because of the rounding? No, I thought not.

  5. TBN, it's all just knock-on effect though.

    IM, no they wouldn't have rounded it down and it's likely that it would stay the same, but at least that would allow for a period where the beer and pub industry could recover and grow, now it just needs to carry on fighting. And I will stick to writing about beer, mentioning politics always scares me!!

    Here's one point/question: when a brewer sells his beer on to the customer/supplier/pub, I assume they pay a tax on that. Then when the pub/supplier sells it on they pay a tax too, right? So does that mean multiple amounts of tax are paid on one batch of beer?

  6. 2p on a pint is relatively small (remember this is only 1p on produces of less than 60 Barrels a week), compared to the other costs a pub have to pay for. Pubs are energy hungry with lights, heaters, cookers and coolers on all day. Lots of pubs have also seen large rate rises (especially those investing in improving the pubs building). Brewers have to deliver the beer and have Hops, Malt and brewing aids delivered, with Diesel at £1.15/L plus, this starts to add up. As a brewer, with an interest in a pub I see these as the threat. Being a small brewer we will pay a 2.5% increase which is actually below the predicted inflation rate. I know many brewery’s that started small and though getting duty relief have been able to grow their business to a scale that is no longer eligible for it. They are not moaning, they are grateful. People often forget that this government introduced duty relief that has helped many of the small, innovative, local brewers too brew the beer we love.

  7. My quick calculation shows duty on beer to be about 40p a pint while duty on cider is about 17p a pint. (For most micro brewers, those brewing less than about 233, 9gallon casks a week this beer duty is halved)(Small cider producers only enjoy lower rate (zero) if they produce less than 1500 gallons a year). VAT on top of course.

  8. Beer duty varies according to alcoholic strength, and the 2p a pint increase only applies to beers of around 3% ABV. Once you're up to 4% or so, the increase is 3p a pint, and add VAT on and it becomes 4p a pint.

    Also pubs tend to work on a fixed mark-up above cost price to cover wages, overheads etc, which is typically at least 50%. If they only added on the strict increase in duty and VAT, yes they would still get the same amount of additional revenue in cash terms, but they would be eroding their profit margin, which if repeated year on year would ultimately make them unviable.

    That is why Darling's claimed 2p becomes 10p at the bar.

  9. If they only added on the strict increase in duty and VAT ... they would be eroding their profit margin
    So they would remain as rich, but not get exponentially richer, right?

    Of course as overheads etc go up the price at the bar will go up. But tacking it on to a tax hike -- multiplying it, in fact -- looks like they're trying to hide it. It certainly can't be honestly claimed that the 10p increase is the Chancellor's fault.

  10. And if they didn't do that, licensees would have to put on an even bigger increase than they do at present when they had the annual brewery price rise, and would be accused of the same thing, but more so.

    In the long term, eroding your profit margin is suicidal even if you maintain the same absolute return.

  11. In regard to your personal finances Dredgie. Save more. Find the money by giving less of it to pub landlords. Drink cheap lout at home and rattle your missus more often. This time next year you'll be richer than you were.

  12. Erratic drunk purchases = BRILLIANT!

    I do this too.

    Pubs tend to upgrade their drinks' prices immediately after then for some strange reason they simmer after a month or two. I have experience price ranges increase and contract around the budget time. It's very odd.

    I think they should be promoting the tax break on the English session pint. That should be done to entice more people for lower abv ale. A dramatic break not a 20pence break. Like £1 tax break. They should be taxing the vodkas which you can still get for £5 in the supermarket yet they freeze spirits. It's backwords and beer is always the larger lout cop out route even though this is actually the worst stereotype in the drinks' industry. They never learn.

  13. I'm fairly sure that taking a lower tax on English products only would be illegal.

    A £1 tax break would mean the government paying you to drink beer. Great idea: don't forget to mention it to the canvassers when they call round.