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11-12-2016, 08:06
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It’s time to look at the financial aspect of the brewing industry. And by that I mostly mean tax.

For centuries, the tax on beer has formed a considerable part of its price. And, conversely, the tax on beer has been a vital source of revenue for the government. This was even more the case during the first half of the twentieth century, with two expensive World Wars that needed to be paid for.


“More efficient methods - the brewing industry invests from £8m. to £10m. a year in new plant, buildings, and vehicles, roughly a tenth of its net output — have kept the rise in the cost of making beer to below the rise in the prices of its main constituents and below the rise of prices in general. But prices of beer do not fully reflect this because of the great increase in excise duty, which averaged just over 2d. a pint before the war and now averages about 8d. In the cheapest mild (1s. 2d. a pint now. compared with 4d. until almost the eve of war in 1939) the duty represents almost half the price. According to the Census of Production, in 1951 it represented nearly two-thirds of the value of beer when dispatched from the brewery. The duty is based on the gravity of the malt extract before it is fermented.”
"Beer in Britain", 1960, pages 5 - 6.
Consolidation was responsible for some of the fall in the cost of production. We’ve already seen how average output per brewery rose by around 50% during the 1950’s.

Want to see if they’ve got their numbers right on the tax per pint? I have the odd number or two:



Beer tax 1939 - 1960


Year
Bulk Barrels
Std. Barrels
Tax/Std. Brl
Total Tax £
Tax/Bulk Brl.
Av. sg
tax pint


1939
24,674,992
18,364,156
80s
62,370,034
50s 7d
1040.9
2.11d


1940
25,366,782
18,738,619
80s / 104s
75,157,022
59s 3d
1040.6
2.47d


1940


104s /135s / 165s






1941
26,203,803
18,351,113
135s / 165s
133,450,205
101s 10d
1038.5
4.24d


1942
29,860,798
19,294,605
165s /240s 7.5d
157,254,430
105s 4d
1035.5
4.39d


1943
29,296,672
18,293,919
240s 7.5d / 281s 10.5d
209,584,343
143s 1d
1034.3
5.96d


1944
30,478,289
19,193,773
281s 10.5d / 286s 5.5d
263,170,703
172s 8d
1034.6
7.20d


1945
31,332,852
19,678,449
286s 5.5d
278,876,870
178s
1034.5
7.42d


1946
32,650,200
20,612,225
286s 5.5d
295,305,369
180s 11d
1034.7
7.54d


1947
29,261,398
17,343,690
286s 5.5d
250,350,829
171s 1d
1032.6
7.13d


1948
30,408,634
18,061,390
325s 5d
264,112,043
173s 9d
1032.7
7.24d


1949
26,990,144
16,409,937
364s 4.5d / 343s 4.5d
294,678,035
218s 4d
1033.4
9.10d


1950
26,513,997
16,337,315
343s 4.5d
263,088,673
198s 5d
1033.9
8.27d


1951
24,891,746
16,739,464
321s
249,146,244
200s 2d
1037
8.34d


1952
25,156,489
16,958,628
321s
248,165,812
197s 4d
1037.1
8.22d


1953
24,883,227
16,681,119
321s
243,372,425
195s 7d
1036.9
8.15d


1954
24,582,303
16,525,316
321s
242,031,712
196s 11d
1037
8.20d


1955
23,934,215
16,161,698
321s
237,452,121
198s 5d
1037.1
8.27d


1956
24,551,158
16,618,162
321s
243,682,807
198s 6d
1037.2
8.27d


1957
24,506,524
16,674,001
321s
245,374,441
200s 3d
1037.4
8.34d


1958
24,647,978
16,799,108
321s
246,077,234
199s 8d
1037.5
8.32d


1959
23,783,833
16,226,433
321s
238,722,997
200s 9d
1037.5
8.36d


1960
26,115,012
17,688,007
277s 5d
206,221,271
157s 11d
1037.3
6.58d


Sources:


1955 Brewers' Almanack


1971 Brewers' Almanack


Brewers' Society Statistical Handbook 1988, p.7


Brewers' Society Statistical Handbook 1973, p.11




You can see that the tax did, indeed, come to about 8d per pint. Though this is for a beer of average strength, around 1037º. Ordinary Mild was around 1030-1032º and the tax on it would have been a little less.

Average tax per pint was 2d in 1939. But the cheapest 4d Milds had an OG well below the average of 1041º, usually around 1027º. The tax on a beer of that strength was 1.67d, still a considerable percentage of the retail price.

The rate of tax was remarkably stable: 321s from 1951 to 1959. And then something really unusual happened. Tax fell by almost 2d per pint.


“The scale of tax—which contributed £260m. to the Exchequer last year—is such that the tax rises steeply as beer is made stronger. Some brewers complain that this discourages the sale of the belter beers. But it is likely that the better beers nevertheless usually get a larger percentage of profit, and people do not seem as sensitive about their prices as they are about the price of the successor to the 4d. mild. If the tax is in its form and perhaps in its weight anomalous, it does not dismay the brewers or daunt the enterprise and initiative of this vigorous industry with its 3,000 brands of mild and bitter, pale ale and brown ale, lager, stout and stingo.”
"Beer in Britain", 1960, page 6.
A word of explanation. Tax was levied per standard barrel. A standard barrel being 36 gallons of beer with an OG of 1055º. Stronger or weaker beers were taxed in proportion to that, so one of 1100º would be double the standard barrel rate, while one of 1027.5º would pay half. It makes strong beers expensive to brew, as the article says. Though before WW I, when the same tax system was in place, there were lots of strong beer about.

More about beer and money next.

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