One of the more interesting beer stories of the week was a chap called Tim Dewey (nope, me neither) of Timothy Taylor Landord bitter (Oh yeh, now I’ve heard of it, that’s that overpriced bitter you see in posh pubs that jenga the chips and charge £20 for a burger) saying “craft” had made beer prices “dangerously low”. Now this appeared to get much derision on Twitter because as we all know, craft is proper expensive innit? Its pricey grog drank by fools and snobs. That and the only “danger” in low beer prices is that you might end up behind the bins of a Wetherspoons with a lady larger than you usually consider attractive. Not me, though, I’m a good boy; I don’t do that sort of thing.
Meanwhile, behind the bins at Wetherpoons........
I made the mistake of reading the article, however, and you know what? I think the fella has a point. His point isn’t about retail prices, it’s about wholesale prices and specifically it’s about small brewery relief (SBR), the mechanism by which smaller breweries pay less duty on their produce.
SBR is something most beery geeks like. It’s a tax break on small producers which they tend to prefer. A lot of beer geekery is about preferring the small producer over the big producer and they tend to get upset when big brewers make things they like, are quality products, and encapsulate the history and tradition of a beer style more effectively than a bearded middle class man under a railway arch. Much of beer geekery is the middle class preference for “small”, from beer to the cheese in a farmers market. Big bad. Small good.
The ostensible reason for SBR, as far as I can make out, is that smaller brewers have fixed costs and barriers to market entry that make competing with large oligopoly brewing difficult. Or at least that was the reason when it started. Now there are more breweries than ever and from the retail prices round my way it’s clear that a micro-brewery can produce a cask of indifferent bitter cheaper than the local regional brewery can produce a cask of indifferent bitter, and the reason for that is tax. I can think of 2 northern regional brewers, Hydes and Robinsons that have reduced capacity. The former specifically to qualify for SBR. I know that because I heard a man from the brewery say so at a beard club talk.
So let’s get this straight, a tax system that encourages firms not to grow beyond a certain size and encourages firms above that size to shrink down?
In what other industry would we do this? What else do we manufacture that we would want the industry to be structured as thousands of cottage industry sized businesses? What industry would we actively discourage businesses to grow to a size where they export their produce? If British beer is a world beater why is the import beer of most countries likely to be a Dutch or German lager, and not a bottle of British Ale? Maybe a really big British brewer exporting beer isn’t a bad thing? Maybe that’s good for us? I quite like a bottle of Becks or Heineken, myself and I’ve never encountered a German complaining they have large corporations exporting to the world. They appear quite proud of it.
It seems to me there are currently 2 purposes of the tax system. The original being to raise money for the crown to spend on things. Your personal politics will make judgements on the relative importance of the defence of the realm, the NHS or even £300 trainers for poor London kids but revenue to do that was the original point. Of more recent times, “creating desirable outcomes” has become a function. Stopping you smoking, drinking or even restructuring a brewing industry that was uncompetitive & oligopolistic and forced Watneys Red Barrel down your unwilling throat. You may not like that, but tax can and does determine behaviour because we want to pay less of it. Does this tax break result in more or less revenue? I would guess at less as the costs of collection are higher over a distributed base, the duty is lower and beer volumes are declining even if number of producers are increasing.
Taxing a product like micro brewed beer, enjoyed by a primarily middle class consumer base, less than beers enjoyed by primarily working class consumers is even applying a regressive tax. Should the middle class pay less tax on their beer? Should the middle class pay less tax on the 4x4 they take little Toby and Clarissa to school in than the small car the old retired lady is going down the shops in? Should the middle class get a tax break on the artisanal crafted handmade bit of carpentry they put in their kitchen, whilst all those that go to IKEA for mass produced stuff pay full whack?
The idea of SBR, a tax break on small producers, looks ludicrous when applied to other industries.
I know you like SBR; it’s one of the reasons I would guess why the multi beer free houses charge 50p a pint less than the regional brewery tied houses for the indiscriminate brown bitter they all flog. I know beer geeks like their brown bitter to have a different name for each pint, despite it all tasting and smelling the same. I know you like having lots of small producers and think they deserve a tax break.
But what if a more efficient brewing industry with fewer cottage industry shed and railways arch producers resulted in more tax in treasury coffers and that resulted in less personal tax on you or a few more schools and hospitals? Maybe beardy shed man should be asked to cough up more by way of tax? Just saying.