Irish microbrewery tax cut recognises beer trend
products tax for microbreweries, comes at a time when Europeans are
drinking more beer from small breweries than ever before, writes
Kim Hunter Gordon.
The decision to support breweries that produce up to 20,000 hectolitres per annum follows a budget proposal submitted by the Irish Brewer's Association and Trinity College Dublin economist Constantin Gurdgiev. The document pushed for the move, demonstrating that similar changes in Britain had led to the investment in and growth of what has become a "diverse and healthy brewing industry".
Rudolph Delooz-Croswarem, from The Brewer's of Europe association based in Brussels, spoke to BeverageDaily.com. "In Europe", he said, "we are going back to traditional methods, and people want to drink a local beer. Whilst European beer production is going down as a whole, small breweries are producing more - new ones keep being created. The big brewers are going to emerging foreign markets."
In Ireland, the move will help nurture the successful beers of the future. "Over the last 10 years Ireland has been hugely successful in attracting outside investment, but not in developing its home grown industries," said Gurdgiev. "Removing these overheads will create skilled jobs and give Irish microbreweries a chance to grow."
Brewer Cuilan Loughnane told the Irish Times that yesterday was "the best day" in his working life. "I'm the smallest brewery in the country, there's just myself. I did have one other guy but I had to let him go. I rang him straight away after the budget and asked him to come back. That's what this means for me." 800 skilled jobs are expected to be created in Ireland over the next five years.
Microbrewers will also be able to invest more in distribution contracts and marketing. But, Trinity College's Gurdgiev told BeverageDaily.com that he thought small beers would be less likely to pose competition for the ubiquitous Guinness than "with the influx of foreign, branded lagers that have began to dominate city centre trade in Ireland over the last three to four years." He also said "there is real a growth in pubs in Ireland that want a larger range of beers to complement their food menu."
Iain Low, spokesperson for the Campaign for Real Ale (CAMRA) in Britain, welcomed the Irish government's decision but said that " the big three stouts - Beamish, Murphy's and Guinness - have had such a tight grip on the Irish beer market, that the few Irish microbreweries that do exist have had to sell their products on the UK market."
Gurdgiev's budget proposal claimed that since the advent of microbrewing, larger brewers in the US had had to compete by using fewer additives and diversifying their product lines. Low hopes that the big three Irish stouts will have to do the same. "Guinness used to produce a delicious Porter, and until recently exported bottled ale to Britain. They actually still sell a very good stout in Belgium, but the cheap dark fizzy liquid that we know is poor by comparison."
Progressive beer tax complies with EU guidelines and has been in place for a long time in countries such as Belgium and Germany. It was introduced to the UK in 2002. The result in all countries has been to encourage a varied marketplace of small to medium-size breweries growing in niche markets at home and abroad.
In Belgium, which is Europe's fourth largest beer exporter, 46 per cent of production leaves the country. Given that InBev's Stella Artois is brewed under licence abroad, most of this 7 million hectolitres have therefore come from small to medium-sized brewers. Even those that are owned by larger companies, such as Hoegaarden and Leffe, have gained their market value as specialist, regional products.
Iain Low, from CAMRA, was reserved over his predictions of how the beer market will evolve over the next decade. "We have seen massive consolidation at the top [Interbrew and Ambev this August merged to create InBev, the world's largest brewer] and there is certainly growth at the bottom. I just hope that the middle players, such as, in the UK, Adnams and Greene King, will be able to work out where there markets lie and continue to sell a high quality beer, at home and to other markets."
