8 things brewers should do to prepare for a no deal scenario
The Treasury have launched a questionnaire to all brewers, reviewing SBR.
SIBA, the Society of Independent Brewers, was established in 1980 to represent the interests of the growing number of independent breweries in Britain.
An ‘Assured Independent British Craft Brewer’ is a brewery which has agreed to abide by SIBA’s Food Safety & Quality standard – meaning you get a beer of the highest quality, crafted with the utmost care.
What is Small Breweries’ Relief?
Small Breweries’ Relief, or SBR, (sometimes known as progressive beer duty) allows small brewers to pay a more proportional rate of duty on their beer. This allows small professional brewing businesses to compete with global brewers who dominate the marketplace. A brewer up to 5,000 hectolitres (hl) of production per year pays 50% of the standard duty rate. 5,000hl is around 880,000 pints of beer. Above 5,000hl a year, the rate at which brewers pay on the standard duty rate tapers down until 60,000hl – whereby the full standard duty rate is applied.
Why did Government introduce SBR?
SBR was introduced in 2002. SIBA began lobbying for the introduction SBR at its formation, back in 1980 and this was successful after 20 years of hard work.
At the time, Government introduced SBR for 3 main reasons:
The future of small breweries’ relief
Since its introduction in 2002, British independent craft brewing has been transformed. But the reasons for SBR’s introduction are as valid today as they were back in 2002. But now, we have a vibrant, exciting, innovative brewing scene in the UK which leads the world.
SIBA recognises that SBR has been responsible for this transformation and the growth in our sector, but also recognises that SBR could be improved. We believe tweaks can be made to an already winning formula to improve the sustainability of British independent craft brewing and now is the time to press these to Government.
Defending small brewers
SIBA is resolute that no brewer should lose any duty relief as the result of any reform. SIBA will continue to defend SBR at current levels whilst lobbying for positive reform. Small Breweries’ Relief at current levels is essential to the future – 83% of SIBA members say it is ‘extremely important’ to their business, 5% ‘very important’ and a further 8% consider it ‘important’.
After lengthy discussions with industry bodies and SIBA members, the beer sector is now united in supporting:
How to reform the scheme
Once a brewer reaches 5,000hl of production, the rate at which duty relief is withdrawn on every extra barrel produced is rapid. This is referred to as the ‘cliff edge’ within SBR and can act as a significant deterrent to growing a business. As our model (link above) shows, SIBA is now asking Government for this ‘cliff edge’ to be smoothed, removing the cliff edge and incentivising brewers to grow.
The Small Brewers Duty Reform Coalition (SBDRC) argue that in order to smooth the curve above 5,000hl, there needs to be reform below 5,000hl. SIBA does not believe there exists an economic, political or moral rationale for withdrawing any relief to any brewer below 5,000hl and we will continue to defend SBR at current levels below 5,000hl. To remove relief for brewers below 5,000hl would result in the closure of many brewing businesses across the UK. This would be unacceptable to both politicians and consumers, and be contrary to the original intention of SBR – as a progressive beer duty.
SIBA’s model for reform predicts an impact on Treasury of around £9.2m a year on a scheme that already sees Treasury forgo around £80m a year of beer duty revenue. Proposals from the SBDRC estimate a cost of Treasury of around £10m per year.
SIBA will engage fully with the Treasury review and continue to gather as much support as possible from across the brewing industry.
If you support SIBA’s proposals for SBR reform, please register your support here: