Misunderstandings and Myths : HSBD

High Strength Beer Duty has got the beer-blogs alight with indignation, with almost every blogger you can think of pitching in to cry "Down with this sort of thing".

I'd like to point out straight away that I agree with them -- HSBD is misconceived and does more to hobble the burgeoning brewing culture in the UK than it can ever hope to do with problem drinking.

However, I do think that in order to argue effectively against HSBD, we need to be careful to get our facts straight. The things I'm about to point out may seem trivial (and in the ongoing fight against increasing taxation and the anti-alcohol health lobby, they are), but every factual error that is perpetuated by proponents of beer is a sticking point the "other side" can spend precious time pointing at, claiming that the public are being misled, and generally discrediting those who repeat them.

Myth #1: Beers of 7.5% are subject to HSBD
This one's the most prevalent, and it's understandable that it's become the commonly accepted as until a few weeks ago there was no information available on whether 7.5% would be in the higher or lower bracket; it's standard practice for upper limits to be described as "not exceeding X%" and lower limits to be delineated as "exceeding X%", though, so those in the know should have been able to better predict the starting point.

To be absolutely clear : HSBD applies to beers of 7.6% and above.

Myth #2: Beers of 9% pay as much duty as wine at 15%
This simply isn't true. I'm not sure where it started, but I've seen it repeated far and wide.

Wine exceeding 5.5% and not exceeding 15% pays duty at £241.23 per hectolitre of product.
Beer exceeding 7.5% pays duty at £23.21 per hectolitre per cent of alcohol.

What's immediately obvious is that duty on wine and beer works quite differently : wine pays a flat rate based on volume, with categories defined by strength, while beer pays a rate directionally proportional to strength. (Spirits pay duty in the same way as beer, but expressed in a different way. Such are the mysterious ways of HMRC).

Now, to find the point at which beer pays more duty than wine, we need to do a little maths. The equation to determine how much duty is payable on a volume of beer is:

 Duty Payable = Volume x ABV x Rate

Now, if we plug in the numbers for 1 hectolitre of wine and rearrange the equation, through the magic of algebra we find that beer does not overtake wine of 15% until the beer exceeds 10.3% ABV (ie beers of 10.4% and above are more expensive duty-wise than wines of 15%).

However, breweries eligible for small brewers relief only pay half the basic rate, and so while they pay the full amount of HSBD (for a total rate of £13.93 per hectolitre per cent of alcohol), they don't pay more duty than 15% wine except on beer of 17.4% or greater, and 17.4% wine pays a higher rate again.

What renders this argument even more open to criticism is that it focusses on one end of the scale -- while a brewer pays about the same duty on his 10.3% triple imperial stout as a vintner does on his 15% Merlot, the vintner pays the same rate on his 5.6% made wine.

A handy graph

As can be seen from the graph, small brewers pay less than vintners (for the same volume of product) all the way up to 22%*

The reason I think it's important that we (ie those who oppose HSBD) stop using this argument is that it's terribly weak. It could just as easily be turned on its head and be used as an argument for lower duty for wine at 5.6% (or even higher duty for beer at that level). There is no worse enemy than an ally who makes bad arguments.

Rearranged for direct comparison

This graph shows that Wine generally pays much more duty per unit of alcohol than beer. Once we get to super-strengths, of course, beer from non-small brewers pays much more but talking about 15% wine ignores the other end of the spectrum.

What next?
We're all on the same side; none of us like the High Strength Beer Duty, but it doesn't serve any of us to get the facts wrong. I disagree with CAMRGB on a fundamental and daily basis, but one thing they've got right is the e-petition against the "October beer tax" as he terms it.

If you haven't already, go and sign it. It'll take two minutes and it might just make a difference.

*The graph stops there as wine pays spirit duty above 22%, and the HMRC website is contradictory on the subject of beers of that strength. Some pages say it too pays spirit duty, while the main page on beer duty is silent on the matter.

The truth is an adjunct sadly omitted

Channel 4 News ran a piece the other day with the subtitle "Small craft brewers claim they are being discriminated against by the Campaign for Real Ale".

The piece opens by airing it's prejudice and/or lack of knowledge, describing the lack of growth in the drinks industry as a whole as "as flat as a pint of ale". Anyone who actually knows anything about well-served ale will tell you about "good condition" and a flat pint doesn't have it, as "condition" in this context refers to the CO2 dissolved in the beer. By definition an ale in good condition is not flat.

Moving on from failed similes, we discover that unfortunately the article started as it meant to proceed. We're told that the pale ale on screen isn't recognised by CAMRA as being real, "because Camden will sell it in kegs, rather than the casks CAMRA insists on". Oh dear. This sentence alone renders the name  of the Channel 4 News' Teams Twitter account ironic.

CAMRA's policy on real ale is not defined by container, and deliberately so. Camden should feel free to sell its beer in kegs, and that beer may well be real ale; if it isn't, then it isn't the keg that's the problem, it's the lack of secondary fermentation in that keg, or the CO2 and/or nitrogen applied at the point of dispense.

We're then introduced to Jasper Cuppaidge, who opens with, "If their campaign is for real ale, then surely it should be a lot more broader [sic]". I'll leave finding the flaw with this assertion as an exercise for the reader.

Jasper goes on to ask why brewers can't make a "decent lager, keg or bottled beer". The cheap shot would be to echo the question. "I don't know Jasper, why can't you make a decent lager, keg, or bottled beer?" But I'm above that. Just.

The more mature answer is that CAMRA aren't stopping anyone, and all of the above can be "real ale"*. Harviestoun make a wonderful "real" lager, Schiehallion. The organisers of GBBF were willing to have Brewdog beers in kegs. CAMRA actively promote real ale in a bottle. Heck, even Cobra produce a beer that as far as I can tell ticks both the "lager" and "bottled" boxes, and would be considered real ale.

It's deeply frustrating and upsetting to see people working in the industry display such an ignorance** of the matters at hand, and especially for them to hone that ignorance into a weapon with which to attack the largest consumer body in the industry, a body without which there's a strong chance the industry they work in would be a mere shadow of its current self.

It would have been nice to get through another blog entry without BrewDog, but the next interviewee is James Watt, who obfuscates in trademark style. I urge you to watch the clip to get the full soap-box experience, transcribing the quote to text robs it of its preachy tone.

"they're imposing distinctions which no longer apply. They can get real ale in a keg which they refuse to embrace but the production method is exactly the same as the cask ale, it's just the method of dispense is different."

Once again, there's misrepresentation of CAMRA's position. If the beer in the keg is real ale, then CAMRA do embrace it. BrewDog's appearance at GBBF would have depended on it being so (had the problem of container size been resolved, and had the brewery paid their fees).

The "difference" in method of dispense alluded to is the application of extraneous CO2 and/or nitrogen, which is intrinsic to the definition of real ale; if these gases are applied then the product is no longer real ale, even if it's from a cask.
Whether applying CO2 is a good or a bad thing is the subject of long debate, but James' dismissal of it is telling. One of the things CAMRA and BrewDog do actually agree on is that method of dispense makes a difference, they just happen to be on opposite sides of the fence (or bar) on the issue -- dismissing it as an afterthought in his well-rehearsed attack shows that James isn't interested in serious debate, only in pushing his own agenda.

Jamie Goode then tells us that the production methods aren't the same, so I suppose nobody knows.

Mike Benner, Chief Executive of CAMRA, is given a few short seconds as right to reply, and tells us that CAMRA have no problem with breweries producing beers other than real ale, but that they shouldn't rely on CAMRA to promote it. While I agree that it is odd to attack the Campaign for Real Ale for not supporting beer that isn't real ale (this is where you collect your prize for finding the flaw in Jasper's opening comment earlier), I don't think repeating the mantra is particularly helpful.
While CAMRA is first and foremost about real ale and should continue to be so, I think it needs to recognise that as a consumer organisation of its size its opinions and actions have significant implications for the whole industry. Simply ignoring "craft" isn't going to make it go away, and news articles like this are own-goals in terms of PR.

It's sad that on one of the few occasions beer makes it into the national media it's to perpetuate myths and entrench ignorance about the state of brewing. There was virtually nothing of factual worth expressed in all three and a half minutes on a prominent news programme, and that's deeply disappointing.
It's clear that some brewers are genuinely hurt or bewildered by CAMRA's position, and the Campaign needs to get better at communicating its message.

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*with the caveat that "keg" refer to the container, and not filtration, pasteurisation, or other process resulting in a "dead" product or one with insufficient viable yeast and/or nutrients for secondary fermentation to occur in that keg.

**I'm assuming it is ignorance, because the alternative is too ugly to consider.