UK: Independent breweries calling on government to confirm review of Alcohol Duty System one year on

Independent breweries are calling on the Labour Government to confirm that the new Alcohol Duty System will be reviewed after three years, as research shows its impact on the beer brewed by more than half of breweries, The British Guild of Beer Writers reported on August 2.

The call comes on the first anniversary of the most far reaching changes to the Alcohol Duty System in generations, which were introduced on 1 August last year.

The previous Government pledged that the changes would be fully considered in 2026. The Society of Independent Brewers and Associates (SIBA), that represents the UK’s small and independent brewers, is asking the Government to commit to this deadline to ensure that the changes are properly evaluated.

“One year ago the Government introduced the most radical changes to the Alcohol Duty System in generations which is having an impact on what independent breweries brew and what consumers get to enjoy.

“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,” Andy Slee, SIBA Chief Executive.

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.

The new alcohol structure is already having an impact on what small breweries are producing. Changes to the system meant that strong beers including Imperial Stouts and some Double IPAs are no longer eligible for relief. Research by SIBA shows that in response 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.

It also introduced a new lower alcohol band at 3.4% ABV which gives a discount on duty to lower strength beers. Over a quarter (27%) of independent breweries have either introduced new beers (18%) or reduced the strength of their existing beers (7%) in response while several Global breweries have dropped the ABV of their beers, reducing their duty bill by millions of pounds.

While the new system aimed to remove distortions, Global cider producers also continue to benefit from a duty rate 46% of that on beer in the new system which is gives Global companies are unfair advantage.

“It’s important that the new system is fully reviewed after three years so that any distortions or issues are understood and addressed and I hope that the new Government will commit to this review in 2026.” Slee added.

Research from SIBA’s Independent Beer Report 2024 shows:

• 54% of respondents said that the new alcohol duty system had an impact on the ABV strength of their beers
• Over a quarter (27%) have used the new lower duty bands. 18% said that they had introduced new beers below 3.4% and 9% said they had reduced the ABV of existing beers to take account of the lower duty rate.
• Nearly a quarter (22%) have changed their beers above 8.5% with 7% reducing the ABV and 15% have either stopped producing some or all beers over 8.5%

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .