My first post of the year and I chose to talk about the one that just finished. 2016 was talked about as the worst year ever. Politicians, the EU, liberals have all come in for a serious bit of a kicking this year. Icons such as Muhammad Ali and David Bowie passed on. As if that wasn’t enough, we said goodbye to George Michael, Carrie Fisher and Debbie Reynolds before year’s end.
A great many people may be adding REM’s “It’s the end of the world as we know it (and I feel fine)” to their Spotify playlists. The thing is, they obviously don’t feel fine. That’s their prerogative. More than a few could be found whining, whinging and wallowing into their beer over the past couple of months.
Fatalists could always turn to the appropriately named Fin du Monde. Over the past six years, this Québécois Tripel has been making inroads into the US beer market. First in bottles, it’s becoming more and more prevalent on tap. It certainly helps if your brewery’s owned by Japanese brewing giant, Sapporo.
Of course, craft beer hardliners pour scorn on such tie-ups and mourn each new acquisition by macro-breweries. Each is viewed as nudging them closer to the end of the world. It’s a kind of “once they’re gone, they’re gone!” mentality. Some of course are more likely to be “missed” than others. Lagunitas and Camden Town are two that enthusiasts are wrestling with their consciences over. Pilsner Urquell still tastes great. It was owned by SAB Miller but following 2016’s mega merger with AB InBev, the iconic Czech brewery was sold Asahi. Some great beer can survive such takeovers.
Unibroue’s Fin du Monde pours a hazy yellow and golden colour. Initially, it has a good frothy head which gives way to a thin band of bubbles that permeate the sides of the glass. A rich blend of banana, clove & orange peel best describe the aroma. Pleasant orange citrus notes encapsulate the flavour. Effervescent and dry occupy the mind prior to a bitter and slightly warming finish.
Post-Brexit anxiety has seen a rise in Irish passport applications from the UK. An influx of businesses and people is likely. Similar nervousness in the US may cause a spike in people moving north – for four years at least. Remember the George W Bush years? So it’s perhaps no bad thing to mention that Canadian beer’s not too shabby. Although, Americans might like to know our beer’s not bad either and the winters are a whole lot milder.
Budget Day usually causes a little angst for the beer industry. Always fearful that the ‘old reliables’ would be hit, brewers and drinkers alike expect bad news. Recent budgets have eased this worry, somewhat. The only tax increase in Budget 2017 involved a pack of cigarettes going up by 50 cent.
Excise on alcohol is too high by European standards. Yet, it remains stagnant. This became a common theme throughout Budget 2017. It acknowledged a lot of problems but did little to solve them. This budget is very much the product of political circumstance than economic necessity.
Token but limited gestures were the order of the day. Minor cuts to the Universal Social Charge will do nothing for consumer spending. Issues around housing affordability and availability in large urban areas will continue to take an ever increasing slice of wages, hitting discretionary spending more and more. A ‘sugar’ tax appears to be on the way but it’s not expected until April 2018 by the earliest. Well, not until Britain introduces one first.
Of course there was acknowledgement by the Minister for Finance, Michael Noonan TD of the “real risk to the economy”, namely Brexit. Government judged it “prudent” to retain 9% VAT rate to continue to attract British visitors. More needs to be done to protect exports in light of this. Irish breweries have been increasing their sales in the UK but the strong Euro will only see prices rise in the British market. Sterling has lost 23% of its value against the Euro since the Brexit vote. The question is will we see more beers from Northern Ireland and across the Irish Sea making a big push here?
Another big disappointment for brewers came in the lack of positive changes for entrepreneurs. Yes, tax equalisation for the self-employed with PAYE workers by 2018 is well on the way with the credit being increased from €550 to €950. In addition, the 20% capital gains tax was reduced to 10% on disposal of assists up to €1m in chargeable gains. This would only come into play if craft brewers wanted to sell up. However, this is nowhere near comparable with the scheme in the UK where it’s ten times the Irish limit.
Talking of UK start-up schemes, Government gave a commitment to introduce a share ownership scheme in the next budget. This had been called for over the past number of years and the lack of progress has been contentious. Employee share ownership schemes have been a feature of brewing in the US, particularly for attracting and retaining staff, especially brewers. There’s a scheme in the UK so why does it take so long to introduce one in Ireland? There are a number of breweries likely to look at this scheme when it commences.
For craft beer, in particular, there was change to the excise duty relief. This had been flagged by Michael Creed TD, Minister for Agriculture, Food and the Marine over the past month. The qualifying limit for excise duty relief was increased by a third to 40,000 hectolitres.
The special relief reducing the standard rate of Alcohol Products Tax by 50% on beers produced in microbreweries which produce not more than 30,000 hectolitres per annum is being extended to apply to microbreweries which produce not more than 40,000 hectolitres per annum – Budget 2017
There are only a few breweries close to the 30,000 hectolitre threshold. You could probably count them on one hand and still have a couple of fingers left over. This increase may be symbolic and tokenistic. It is likely to have little impact on the sector, particularly in the short-term. Yet, it’s the third year in a row that the excise relief scheme has featured in the budget. It is official recognition by Government that the sector is growing and is an important part of our manufacturing base.
It’s not all about tax, however. Government could do much more to support craft beer in Ireland. It could tackle the issue of on/off sales on brewery premises by introducing special tap-room licences. Local authorities could look at removing planning and commercial rates restrictions to encourage manufacturing in their respective areas. They could also develop local food and drink marketing campaigns and festivals. Bord Bia could roll-out a specific craft beer marketing strategy to unlock export markets and identify mechanisms to allow Irish breweries to exploit them. Fáilte Ireland could assist in developing food trails that feature craft beer. These are just some ideas but no doubt there’s countless more out there.
Wow, what an election that proved to be over there in Britain. I had an eerie feeling that it could prove to be ’92 all over again for Labour. In certain areas it was even worse. While they retain control of every former mining area, they ‘lost’ Scotland. The SNP, the real surprising force, now occupies the third party spot, previously held by the Liberal Democrats in Westminster. And with 56 out of a total of 59 seats, they are the undisputed party of Scotland. Whereas UKIP and the Green Party received 15% of the popular vote, they only managed one MP each. In an election full of surprises, few expected the Conservatives to win an outright majority. However, this could prove to be a pyrrhic victory. Without the Lib Dem crutch, they could find themselves at the mercy of their Eurosceptic wing.
Last month, I featured a piece on what the election could do for beer (British general election 2015: political pint scoring). Now in its aftermath it is time to look at what is likely to happen. The Queen’s Speech to parliament contained few bills that would have direct impact on the British beer industry. This is hardly surprising, as the Tories wish to remain silent on the issue of Minimum Unit Pricing, for the time being at least. It could be back on the agenda pending the outcome of the legal challenge to the Scottish equivalent.
In a move that will boost consumer demand generally but will spill over to beer, the Treasury will not increase income tax rates, VAT and national insurance before 2020 at the earliest (i.e. not before the next general election, providing it goes full-term). What is unknown is whether George Osbourne will reduce excise duty for a fourth consecutive time. There is a second 2015 budget scheduled for July 8. But this emergency budget is likely to focus on measures to reduce the deficit. We may have to wait until Budget 2016 before seeing any additional moves on excise. Britain needs to address the legacy of the duty escalator, which caused excise to increase by 42% between 2008 and 2012.
The British political scene is marked by “buzzword” overkill. This could be observed when the British monarch confirmed that her government will be doing the hokey cokey on the Brussels dancefloor in the lead up to an “in-out referendum” to be held by the end of 2017. Speculation is mounting that it is likely to be held sometime in the autumn of next year. Cameron won’t want this issue to completely dominate the national agenda and the longer it drags on, the less stable his government could be. The deal he will seek to do with Brussels will focus primarily on regulatory issues and possible opt-outs. These discussions and the subsequent referendum may attract a negative sentiment towards British imports across the EU, but this is likely to be over-stated. What is likely to happen is that more sectors of the British economy will publicly acknowledge the importance of the EU for their business. The brewing industry could well be one of them. While its practitioners may not agree with all aspects of labelling regulation, a move on the origins, ingredients and ownership issues would be supported by the likes of the Campaign for Real Ale (CAMRA). So too would dealing with certain issues as part of the EU-US trade deal, the Trans-Atlantic Investment Partnership.
A new Enterprise Bill will be introduced to Parliament with the objective of cutting £10bn worth of red tape. We can expect to see plenty of bizarre regulations appearing over the coming months to illustrate the types of reforms that will be introduced, such as the removal of fines for “No Smoking” signs being the wrong size or in the wrong font. The main beneficiaries of this bill will be small businesses, which includes virtually all breweries in Britain. Business rates are to be reformed and a Small Business Conciliation Service will be introduced. This will be a low-cost mechanism for solving disputes (e.g. payments) and could bring benefits to the supply-chain dependent industry that is brewing. Energy costs are also likely to be addressed but as part of a separate bill.
Devolution is back on the agenda, with added powers promised for Scotland and Wales. Expect to hear a lot about “metro regions” and the “northern powerhouse” (buzzword overkill?) as regional administration is reformed and new directly-elected mayors introduced. Pub goers can expect more integrated public transport across cities and not just London, apparently. Holyrood has recently agreed to commission a study into the tied-pub sector in Scotland to provide evidence on what changes need to occur. However, it remains to be seen whether any changes can be introduced ahead of next year’s Scottish parliamentary elections.
CAMRA ran an effective campaign in the run-up to the general election and sought pledges from candidates to “support well-run community pubs”, “promote Britain’s 1,300 breweries” and “represent pub goers and beer drinkers”. Over 10,000 of its members contacted their local candidates to support these issues. The organisation received pledges from 1,162 candidates, of whom 211 were returned to Parliament. This means 32.5% of the MPs in Westminster have committed to supporting the beer industry. As the table below shows, this support is spread right across the board, with less than a third of the ruling Conservative Party pledging their commitment to beer. Oddly, UKIP’s sole MP, Douglas Carswell didn’t sign up to the campaign. This is in spite of UKIP incorporating these priorities in its manifesto, along with other issues close to CAMRA’s heart. Perhaps he had enough of Nigel Farage’s endless “pint-ops” for Britain?
But it’s early days and naturally it’s difficult to predict with any great certainty what the political landscape will look like next year let alone in five years’ time. What will happen to the likes of Nigel Farage? Will he finally be allowed to resign as UKIP’s leader? Obviously, alcohol will continue to be linked to health and crime policies by all parties. Regardless, I think “pint-ops” will be here to stay and the All-Party Parliamentary Beer Group will have some new faces.