How Do You Like Them Apples?

Posted on July 9, 2012

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Hot on heels of Lambrini launching a cider and Stella Cidre and Gaymers extending into Pear variants, Carlsberg are the latest to enter the UK cider market with the launch of Somersby Cider.

According to the launch release Somersby will not be served over ice ( a somewhat obvious dig at a well known Irish cider brand perhaps?) although this does seem at odds with their website that tells you to drink it over ice – they maybe have some work to do aligning the European position. Carlsberg have said Somersby is a “crisp, refreshing cider with no sweeteners, flavours or preservatives”, which targets consumers who find the “current, established, mainstream ciders in the UK, both artificial and astringent”. I can’t comment on that having not tasted it but looking at their advertising it doesn’t feel like they’re doing anything new and revolutionary with their Lord Somersby character every bit as obnoxious and dated as Bombardier’s William Bedford.

This not a new brand for Carlsberg having launched in Denmark in 2008 and is already available in 22 countries. According to Mintel, the UK cider market is recording double-digit growth, with volume sales rising 24% between 2006 and 2011, showing value up from £1.7bn to £2.4bn so it’s no surprise that another big brewer is seeking to capitalise on the opportunity.

So why is Cider having such a renaissance? One reason is that brands like Magners have helped it shake its “tramp juice” reputation by making it more premium but there is another reason that doesn’t get the press it should and something, as a beer lover, I am increasingly angry about. 4.5% ABV Cider attracts a duty rate of £37.68 per hectolitre whereas a 4.5% ABV beer would attract a duty rate of £19.51 per hectolitre per cent of alcohol in the beer, a massive £87.80 per hectolitre. Or in more simple terms Somersby Cider is only paying 21p per pint in duty and if Carlsberg were to invest in launching a new beer instead at the same ABV they’d be paying 50p per pint in duty. By launching a cider Carslberg are securing an extra 29p per pint in the value chain. Suddenly it seems a lot less to do with giving drinkers what they want and a lot more to do with exploiting an outdated duty system for commercial gain, no wonder the big brewers are awful quiet on the need to align beer and cider duty!

What’s worse is that if nothing is done to abolish the duty escalator then, at a flat 2% increase above inflation, the gap will continue to widen and it will become more and more attractive for brewers and pubs to turn all their efforts to cider.  A sad prediction indeed for our great British Beer industry.

Cider has a lower rate of duty to protect small apple growers and artisan cider makers, and rightly so. As with Progressive Beer Duty that allows smaller breweries to pay less tax on their product and has birthed the boom in craft breweries, smaller cider producers should benefit from the same duty break while subjecting the bigger producers to the same duty rates as major breweries. Today’s cider industry is very different from when the escalator was introduced, with the vast majority of UK cider sales now being efficiently manufactured by two multinational drinks companies, accounting for more than 8 in every 10 pints of cider sold in Britain’s pubs.

When you’re signing to Save Your Pint (and I hope you have) remember you’re petitioning for a lot more than relief for beer but to give beer the opportunity to compete on an even playing field.  Similar products, targeting the same audience should be subject to duty at the same rate, especially when the same price is being charged to the drinker.  Currently the big multi national cider producers are benefiting from an outdated tax system encouraging beer drinkers to switch brands and exacerbating the decline in beer sales. In fact, 70% of new cider volume in 2009 came as a direct switch from lager. 

It’s time the Government did as much to support the beer industry as they do cider makers and addressed this out dated tax legacy of a bygone era. Make sure you have your say.

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