Sunak’s smoke and mirrors won’t bring down the cost of a pint

After reading this, I have tried to understand many times what his statement really meant.

I’m a brewery owner and we opened our Liverpool operation just before the first Covid lockdown in December 2019. We experienced (like the rest of the industry) an unbelievable and unfortunate series of events.

There were lockdowns, pseudo lockdowns and a huge drop in confidence in the hospitality sector as a result of Covid. We witnessed cost increases across our entire supply chain, from CO2 to fuel surcharges to chemicals and an almost catastrophic lack of one-way kegs thanks in part to Putin’s invasion of Ukraine. We work ever harder to simply tread water.

Sunak’s changes to beer duty are due to come into force on 1 August.

Hugely complicated system

The system remains hugely complicated, but now we have beer duty rates linked to the dreaded Retail Prices Index, so sky high inflation equals duty increases.

For craft breweries who produce a variety of beers that are often higher abv beers, these duty changes will continue to make huge dents in our already wafer-thin margins. So, not good for craft brewers then, but what about the punters? Will Sunak’s changes mean consumers pay less for a pint of beer in their local?

The answer is a clear and categorical no!

Landlords will receive some duty relief on draught beer sold, but pubs have also been hammered by Covid, inflation and cost-of-living increases too. How many landlords will be able to pass these savings onto consumers to bring the price of a pint down?

I talk to our customers each day and every single one of them has had to increase prices to maintain an acceptable margin.

Price rises inevitable

With very few exceptions, licensees are doing their best to keep the price of a pint at a reasonable level. Unfortunately, it looks inevitable further price rises will occur this year especially with increasing interest rates and tapering of the Government’s energy bill relief scheme.

So, who was this statement from Sunak aimed at? Upon reflection, it is clearly a bit of red meat for the Brexit supporting press, but as we’ve seen with so many pre and post-Brexit policies, the smoke and mirrors have been fully deployed.

If any future Government wants to aid the brewery and hospitality sectors, the best action they can take is to significantly reduce beer duty, bringing excise taxes into line with our European neighbours so we can compete.

Oh, and please future Chancellor of Exchequer, cut the rate of VAT. This latter measure would ensure Sunak’s statement comes true, and more importantly, whoever makes this vital change could save the future of our fragile and highly volatile industry.