The Morning Advertiser quotes brewers Theakston as stating that "The market is being distorted by progressive beer duty benefit for microbrewers."
It is generally accepted that PBD has been a good thing, allowing micros to compete on a better footing with larger breweries that benefit from economies of scale. But if the regionals are squeezed by the ever increasing number of successful micros they could be ripe for mergers, or even takovers by the Multi-Nationals who are showing signs of re-entering the quality beer sector.
Hmm, while it probably has been a good thing all round, I think there's a widespread feeling that it does serve to featherbed a number of micros who turn out dull but cheap beer.
ReplyDeleteI think the key phrase in your post is "as a consequence of the rise in beer tax [35% since 2008]." It's logical to conclude from what you wrote that the enemy is the rise in beer tax, rather than progressive beer duty.
ReplyDeleteBollocks. We've been undercut by bigger (non-PBD) brewers, who cross-subsidise free-trade sales by setting prices high for their tied customers. This is the kind of market distortion that PBD was intended to redress. And it works somewhat - hence, they don't like it.
ReplyDeleteWhat StringersBeer said and a bit of what Nev and Mudgie said.
ReplyDeleteMudgie: "it does serve to featherbed a number of micros who turn out dull but cheap beer."
Nev: It's logical to conclude from what you wrote that the enemy is the rise in beer tax, rather than progressive beer duty.
To clarify, my "Bollocks" was (were?) aimed at "brewers Theakston", rather than any previous comment. Also, I should say, we've seen aggressively pricing by micro-brewers of dull beer, but you know, that's business and it's a problem for all producers - regardless of size.
ReplyDeleteI heard Paul Theakston pass the same comments in person a few weeks back at the CAMRA Investment Club AGM. Personally, I think Black Sheep's beer range is mediocre. Address that and they'll stop losing accounts.
ReplyDeleteAnd yet today Pete Brown has named Black Sheep Bitter as one of his Top 50 UK Beers.
ReplyDeleteDo small producers really have an advantage? Doesn't PBD just compensate for them having no economies of scale?
ReplyDeleteThe small brewers' problems include, but aren't limited to: high labour costs (which is to say they generate more employment per pint than the big boys), poor access to capital, relatively weak economies of scale, restricted access to market & unfair competition by cross-subsidy. There are other scale effects - for instance, a larger operator can target smaller rivals - beer dumped into a particular local market at a knockdown price might have little significant effect on the overall profitability of the big fish, but can completely destroy the business of the little guys. This is not a mode of competition that's realistically open to small brewers, many operating terrifyingly close to break-even.
ReplyDeleteAt the time PDB (or Small Brewers Relief) was introduced, it wasn't thought appropriate that the burden of taxation (which is really high in this industry, in this country) should fall equally on all brewers regardless of size (and those scale effects).
I can't see what's changed. Except that PBD has worked, somewhat, and has supported a vibrant choice-providing, but still tiny, microbrewery sector. The problems that bigger brewers have are industry wide: "a very significant move from drinking in pubs and clubs to drinking at home" as Theakston's Executive director Collin Wood said recently.