Small Brewers Relief changes and what it means to our local beer scene
As if things weren’t hard enough already for small breweries, a proposed change in the Small Brewers Relief could make it even harder and even result in some being forced out of business. Chris Martin explains...
What is the Small Brewers Relief?
In a nutshell, the SBR - introduced in 2002 - is a tax scheme to encourage growth in the brewing industry. It does this by allowing a 50% discount on beer duty to any breweries making less than 5,000 hectoliters (HL) - that’s almost 880,000 pints - a year. The tax relief is then tapered up to 60,000HL and for context, a brewer at the 5,000HL end of the scale can save around £200,000 a year thanks to the tax relief.
What are the proposed changes?
At the end of July, the government announced draft legislation stating that it would lower the cap for the SBR from 5,000HL to just 2,100HL.
Who will this affect and why is it happening?
The reform will affect more than 150 breweries across the UK, although that number could be higher by the time the changes are made in 2022. Those breweries include Burning Sky and Nottingham-based Lincoln Green Brewing Company. As well as affecting those producing between 2,100 and 5,000HL, it will also significantly reduce the incentive for those under 2,100 to grow beyond that figure. You might be surprised to hear that part of the reason behind this whole thing is a coalition formed by other breweries that are larger, established and have good reputations in the industry.
The list includes Timothy Taylor, Exmoor Ales, Hogs Back, Harvey’s, Wimbledon Brewery, Theakston’s and Marston’s. The Small Brewers Duty Reform Coalition (SBDRC) has been lobbying for this for 16 years. If you’re interested, Beer Nouveau has a comprehensive list of the breweries supposedly affiliated, highlighting those in support with links to any statements that have been released.
The SBDRC says: “The current design of SBR has led to an unexpected, and worsening, market distortion that is a real barrier to growth and threatens the long term future of the independent brewing industry.”
Coalition co-chair Rupert Thompson of Hogs Back Brewery, said: “The introduction of Small Brewers Relief in 2002, combined with a revival of consumer interest in craft-brewed beers, has given the sector a huge boost. However, in recent years we have been seeing on average three to four new breweries opening every week whilst over 20 pubs close. Now there is an issue of economic sustainability.”
When the news broke, huge amounts of confusion emerged surrounding which breweries were associated with the SBDRC. Nottingham’s own Castle Rock brewery was part of a list but the brewery clarified that it never signed up.
“SBR is essential to independent brewing and our position is aligned with SIBAs in that reform should not negatively impact smaller brewers.” said Castle Rock. SIBA is the Society of Independent Brewers and has been working hard to fight the corner of the breweries affected by this issue. It began lobbying for the introduction of SBR at its formation.
Reacting to the news, James Calder, chief executive of SIBA says he is: “hugely disappointed that the government is reducing the threshold at which duty relief starts to taper from 5,000 hectolitres.” SIBA says 83% of members say it is ‘extremely important’ to their business, 5% ‘very important’ and a further 8% consider it ‘important’.
How will it affect Nottingham’s beer scene?
Well we spoke to a couple of Nottingham’s up and coming breweries to see how the proposed changes could affect their plans going forward.
When at full capacity, Neon Raptor, located in Sneinton Market, can produce just over 2,100HL. However, with growing demand for beer from around the world including Japan, Thailand and the US, Director of Neon Raptor, Joshua Mellor, isn’t overly put off.
“Our plan over the next few years is to increase our output and try to meet demand which hopefully will get us closer to 5,000HL. The change in cap doesn’t give us much choice. It’s that, or make less beer and disappoint customers for the sake of keeping our duty costs down.” said Mellor. “The extra cost in duty will hopefully be alleviated by being able to produce beer cheaper on a larger scale,” he added.
Meanwhile, over at cuckoo brewers, Liquid Light, things aren’t so easy having recently gone over the 2100ML when Magpie, Lazy Bay and Flipside are factored in. “In short it could make it very difficult to get a spot cuckooing at another brewery which would make what we have done over the last 3 years impossible. We have plans for expansion in the next year and it could affect how we choose to grow,” said Thom Stone, Head Brewer and Co-Owner. “The fact the curve is steeper and starts earlier now means you are seriously limited. We would be restricted to 2.7 brews a week average at the size we feel is comfortable for us. While this may sustain a small crew it would make it hard to jump to the next size up.
“This reform will benefit some of the biggest breweries in the UK allowing for them to expand further and faster, with more tied lines pushing small guys off the taps. Craft beer has a dedicated following which does help facilitate brewers to remain smaller but the vast majority of the most sought after breweries in the UK are considerably larger than 2100HL and will be hit hard by these changes.”
What can you do?
Apart from supporting our excellent local beer scene, which you no doubt already are, you can sign this petition if you oppose the proposed changes. It’s way over the 10,000 signature trigger to get a response from the government but still needs over 50,000 more for the issue to be considered for debate in Parliament.
This was set up by London’s Anspach & Hobday Brewery who said “'This is a big threat to small breweries around the country. Our small brewers have created better competition, consumer choice, jobs, local investment and strengthened local communities.”
Even as a consumer, you can also write to your local MP and SIBA has letter templates along with other resources here. Brewery owners may want to consider a SIBA membership.