Chin up, at least you're not in Russia

Milking the cash cow dry

Wherever you find them, brewers tend to be a whingey lot. “With good reason,” they’ll tell you. “Look at the hammering we get from the government.” And it’s a fair point. Pretty much universally, the beer industry is viewed simultaneously as cash cow and social menace.

“Citizens, drink less,” thunder the world’s powerful in unison. (The only dissenting voice, characteristically, seems to be that of North Korea’s Kim Yong Il, who’s apparently all for the hapless souls under his rule sousing their considerable sorrows away in the state’s only lager, Pride of Pyongyang). “But what you do drink you’ll have to pay more for; a lot more. Thank you very much.”

But the cash cow is drying up. The relentless ramping up of beer duties by governments ever sweatier about yawning budget deficits (the UK’s record fiscal black hole is nearing the £200 billion mark, an eye-watering 18% of GDP) is proving counter-productive. The world over, tax hikes are accelerating the decline of beer sales; the closure of pubs and breweries; job cuts; the loss of revenue.

The moans of brewers can be heard the world over, in both mature and developing markets. In Finland, home to Europe’s most heavily taxed brewers, the industry is on its back; government coffers are emptying as drinkers stock up on cheaper beer from neighbouring Estonia. The policy is serving no one.

Sales of Thai beer, taxed unfavourably compared to traditional white spirits, have taken a battering since the downturn. Thailand’s largest drinks group ThaiBev saw a third of its beer sales wiped out in the first nine months of last year. In Japan sales of beer, taxed according to malt content, are at an all-time low. It’s telling that only the ‘near-beer’ – malt-free, hence less taxed – sector is in growth.

Undoubtedly, brewers have much to bemoan. But it’s not all bad: progressive beer duties have surely had a hand in the boom in craft brewery openings in Britain; when the economic storm passes, growth will surely return to markets such as Thailand; opportunities for new, premium offerings in the world’s mature markets abound.

And look at it in this way; at least you’re not brewing beer in Russia (apologies if you are). Here beer is in turn demonised and libelled – it will give you breasts (if you’re a man); a moustache (if you’re a woman); it’s spiked with ethanol, etc – and then slapped with a tripling of duties. In Russia, they’re not so much trying to milk the cow dry, as take it out the back and put a bolt through its head.