Monday, April 4, 2011

Weak interest

With the government planning to halve duty from October for beers of 2.8% ABV or lower, I asked the question “Would 20p off a pint encourage you to buy 2.8% ABV beers?”. It can’t be said there was much enthusiasm about the idea, as the 84 responses broke down as follows:

Very likely: 3 (4%)
I’ll see what they taste like: 28 (33%)
Highly unlikely: 53 (63%)

This cut will provide a significant saving of duty plus VAT of 16p on a 500ml can, and 18p on a pint. The problem is that one of the key reasons people drink beer is that it actually does contain alcohol, and at this kind of strength level the alcoholic content becomes so low that it is little more than a distress purchase. Also, especially in pubs, drinkers don’t tend to choose their drinks primarily on the grounds of cost.

I can’t honestly see much demand at all for cask beers of this strength, especially given the fact that the weaker a beer is, the shorter the time it keeps. The chief beneficiaries will be the big lager brewers. Paradoxically, it will make the supermarket “value” lagers that are supposedly sold “cheaper than water” even cheaper, and I can see the major brands like Carling, Fosters and Carlsberg bringing out 2.8% “light” versions to take advantage of the duty cut. And, of course, the concern is that this, combined with the extra duty on beers above 7.5%, will lead over time to a tiered duty structure in the UK that penalises stronger beers.