Tom Scotney sees how the war on binge drinking could create an unexpected Midlands victim in the brewing industry.
In tough times people often turn to the bottle. The Treasury is no different – the economy looks better through the bottom of a glass of well-taxed booze.
Alcohol duty has always been one of the choicest targets for revenue-conscious chancellors. Last year’s Budget saw the announcement of an ‘escalator’ that ensured alcohol duty rates will increase by two per cent above the rate of inflation every year for the next four years.
But the latest step being mulled over by parties risks stifling the growth in one of the healthiest markets in the West Midlands – cider production.
Legislation on alcohol has always been used as an outcrop of social policy. As attempts to combat heavy drinking increase by the Government of the day, breweries, distilleries and cider presses are often the first to feel the pain.
And so the ramping up of the rhetoric over binge drinking has sent a shiver down the spine of the cider-makers and apple farmers across the region.
Shadow Home Secretary Chris Grayling said last year that the Conservatives, if they take power, would double the tax on strong cider, defining this as anything more than five per cent.
Not to be beaten, the Government is currently looking at plans to further increase alcohol duty in the upcoming pre-election Budget in another anti-binge drinking move.
All these moves could end up putting a burden on the cider industry – and the Conservative plans for extra tax on strong cider would mean the burden disproportionately falling on small-scale makers of ‘craft’ cider.
When Irish brand Magners relaunched its bottled cider in the early years of the last decade, the hefty marketing push behind it meant bottled cider built up a huge presence both in bars and supermarkets. And the growing presence of bottled ciders made it possible for small producers to get a piece of the market.
Duty on cider started in the 1970s when Denis Healey put in place a tax on the drink during the ‘long hot summer’. Before this, the drink was completely free from tax. Afterwards, all but the most tiny producers found themselves paying the same rate of duty.
While the currently-proposed opposition measures against strong cider are largely based on sales of cheap white cider, this makes up less than one per cent of the alcohol market – and declining.
The craft industry is also more likely to keep money in the region, with the counties of Herefordshire, Worcestershire and Gloucestershire producing most of the apples used by smaller-scale cider makers. Larger firms are more likely to buy in apples or apple pulp from abroad.
Henry Chevallier Guild, the chairman of the National Association of Cider Makers, said there was a danger cider could be unfairly singled out in any proposals to tackle the issue of binge drinking.
He said: “The fact is, there are no problems drinks, there are problem drinkers, and singling out one category of drinks for financial penalties simply means the problem is displaced somewhere else.
“We must be careful to ensure that misguided understanding does not turn into sloppy and lazy legislation which just gets nodded through without us making every effort to make our case.”
Allen Hogan is chairman of the Three Counties Cider and Perry Association and an executive member of the National Association of Cider Makers, as well as head of Hogan’s Cider, the only commercial cider maker in Warwickshire.
The organisations have been lobbying the Government and the opposition to try to scale back punitive alcohol duty. And Mr Hogan said using alcohol tax legislation to attack binge drinking was hitting the industry hard.
“The policy is to reduce the problem of abuse of alcohol by young people,” he said. “It’s a laudable aim, but it’s going to have a devastating effect on smaller producers like me.
“I think they are trying to address a social problem which is across all alcohol not just cider. In the run up to the election it’s headline-grabbing stuff, but I just think it’s misguided. As a nation we are in a pickle and the easiest thing to turn to will be the old favourites – cigarettes and alcohol.”
But he said he was still hopeful there could be growth in the market, but the expected legislation would be a big block to the future.
“I have already made the cider for this year – if the serious tax comes in I can’t adjust my input costs,” he said. “Based on our growth which is at about 100 per cent on last year I took a decision to invest in additional tank capacity in the Autumn.
“I’m pretty worried about this because had I known there was likely to be a doubling of tax by a new Conservative Government I’m not sure I would have made that investment.
“I’m still confident this growth will continue because there is still a very strong movement towards products that are well made and locally produced using good raw materials. I just think we will be held back significantly. It will slow down growth dramatically.”