Socialist Worker

Brewing up a monopoly

by David East
Issue No. 1802

DRINKERS WHO are looking forward to cheap beer in their locals during the World Cup will be left feeling bitter thanks to a government con-trick. In his budget speech Gordon Brown said that, to help small brewers, he would halve the duty or tax they pay on beer: 'A cut equal to 14 pence off each pint to be implemented for village pubs and small breweries in time for the World Cup.'

Village pubs are closing at the rate of six a week due to lack of public transport and cut-price supermarket booze. Any hard pressed country publicans expecting cheaper beer are in for a rude shock.

Brown's cut in duty applies only to tiny 'micro' breweries that produce less than five million pints a year. There are more than 400 micros in Britain, but their total annual production adds up to just 1 or 2 percent of beer production. Brown's tax cut does nothing to help struggling regional breweries and won't weaken the power of the giant global producers who dominate the beer supply. Small brewers have welcomed the tax reduction but few of them will cut their prices. Lower rates of duty will help them stay afloat and invest in better equipment.

Even if they can afford to cut the price of beer, the money will end up in the pockets of the owners of the big pub groups and won't be passed on to drinkers. Squeezed out

Government rumours before the budget suggested that Gordon Brown would introduce a European-style 'sliding scale' of duty. In major brewing countries like German, the more you brew the more tax you pay. But Brown is helping only the smallest micros in Britain and they have no control over pub prices. Regional brewers may be forced out of business. More than 40 breweries have closed in the past ten years. More may give up the ghost.

Brakspear of Henley-on-Thames, for example, is considering quitting brewing. The brewery is producing more beer than ever before but 70 percent of it goes to the so called 'free trade' controlled by such giant pub groups as Punch, Enterprise and Pubmaster.

The pub groups demand enormous discounts from brewers, as much as 50 percent off the price of a barrel of beer. The discounts aren't passed on to publicans or drinkers-they go straight into the pub groups' coffers. The global brewers can afford the discounts. If you're brewing millions of barrels a year, you can still make enormous profits.

But the regionals are being squeezed out, which means less choice for drinkers. Eight out of ten pints of beer brewed in Britain today come from just four giants-Scottish Courage, Interbrew of Belgium, Coors of America, and Carlsberg-Tetley, wholly owned by Carlsberg of Denmark.

Between them they control the brands Carling, Stella, Heineken, Kronenbourg, John Smith's, Tetley, Bass and Worthington. They have sweetheart deals with the pub groups and are happy to pay the discounts as long as their beers dominate the bars.

For the small brewers, the future is grim. If Brakspear gets out of brewing, others may follow. Brown's budget won't help regional brewers or hard pressed publicans because it doesn't tackle the monopoly power of the brewing giants and pub groups. And as the World Cup gets under way, there'll be no cheap beer to cheer your team with...or drown your sorrows.

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Sat 1 Jun 2002, 00:00 BST
Issue No. 1802
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