Pub beer sales slump as duty rises hit drinkers

James Thompson
Tuesday 25 January 2011 01:00

The brewing industry has blamed tumbling sales of beer in pubs last year on "huge" rises in taxes and urged the Government to abandon plans for further rises in this year's Budget.

Total beer sales fell by 3.9 per cent in 2010, driven by a 7.5 per cent plunge in pub beer sales, according to the British Beer & Pub Association. The trade body said sales of beer in pubs had slumped by 20.2 per cent in the past three years, citing a 26.1 per cent hike in duty on beer since March 2008.

But the off-trade sector performed far better last year, with shop sales actually rising by 0.6 per cent, providing further evidence that the big supermarkets' discounting strategies are paying off.

The BBPA said that if overall beer volumes had been maintained throughout 2010, an extra £257m would have been funnelled into the Government's coffers. Brigid Simmonds, the BBPA's chief executive, said: "Beer has always been a rich revenue source for Government – but they may now be cooking the golden goose. As beer duty has increased so dramatically over the last few years, the amount of beer produced and sold in Britain has fallen."

Labour lifted the beer duty by 5 per cent in the April 2010 Budget. The Coalition Government has vowed to maintain the controversial duty escalator that the former chancellor, Alistair Darling, introduced in 2008. This means beer duty will rise by 2 per cent above the projected retail prices index in September 2011. The RPI actually stood at 4.8 per cent last month.

Ms Simmonds said: "Huge tax rises are having a big impact on beer sales. The Government should abandon plans for above-inflation hikes in beer tax in the Budget, as further rises are simply unsustainable."

Pubs are already reeling from the rise in VAT earlier this month, which the BBPA said would add at least 6p to the cost of a pint in pubs.

She added: "The Government needs to pursue more pub-friendly tax policies. This would create a win-win situation, with a boost for lower-strength, pub-based drinks like beer, and more revenues for the Treasury."

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