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25-03-2010, 16:22
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Right, time to work out duty increases in real terms. So lets take a 4.5% ale - Pedigree, for example.


The current duty rate on beer is 16.47 per hectolitre per cent of alcohol in the beer (source (http://www.hmrc.gov.uk/budget2009/bn86.pdf)).
1 Hectolitre = just under 176 pints.
So the duty on a pint of Pedigree would be:


16.47 * 4.5 / 176


As long as my understanding of that phrase 'per hectolitre per cent of alcohol' is correct.


So a pint of Pedigree has 42pence of duty paid on it.


Now for the landlord maths. Taking 42p as the duty of a pint, a firkin contains 72 pints. So thats 30.24 duty on a firkin. But I work my costings based on 68 pints - allowing for 4 pints of wastage/tasters/ullage/oversized glasses. This I'll be reviewing shortly, going off barralage reports from Marstons and what the till tells me I've sold. Plus a pinch of salt. Anyway, back to the maths:


30.24 paid, 68 pints sold. That's 44p duty a pint. I currently sell Pedigree at 3 a pint (more on that later). At 3, VAT = 45p. So on a 3 pint, 89p is tax. Without thinking of NI or any other taxes.


So duty has now gone up 5%. 16.47 * 1.05 = 17.29


17.29 * 4.5 / 176 = 44p


44 * 72 / 68 = 47p
or 31.68 a firkin


I won't know how much extra Marstons will charge for Pedigree, but it's fair to say it won't be the 1.44 increase in duty, because NMW, NI and fuel duty has all gone up. But assuming the worst, given I haven't increased prices when the VAT came back up, nor on the other products that have had brewery increases, lets say I follow CAMRA and put 20p on a pint (again, I'll talk about actual price increases in a later blog)


So now a pint costs 3.20. VAT on 3.20 = 48p
Duty = 47p a pint


A pint at 3.20 sees the customer paying 95p in tax, again without NI or other taxes being covered.


To summarise, the duty on Pedigree will increase by 3p a pint. When you look at it like that, it can be hard to see what the fuss is. What the media don't tell you is that the additional costs of that pint being stored, poured and presented have also increased. Each outlet is different. So come Monday morning, some pubs will have the price the same. Some will add 20p. Some 3p. I'm nervously looking forward to seeing the price increases on cask, because with a shake up of other products and prices on the bar, you may just find that it doesn't change at my place. I really hope so, because apart from anything else, like many licensees, I pay full price for when I have a pint at the bar. It would send out the wrong signals to the staff and customers if I didn't. And I enjoy a pint of well-kept Pedigree.


Cheers



A couple of notes:


1) All prices have been rounded, up or down as per convention, to the nearest whole penny


2) If any of my maths is incorrect, please let me know. I'm new to this, and still learning. More importantly I'm still willing to learn. So speak up if you can help - thanks.
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