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By shaun lowthorpe, business editor
Wednesday, September 12, 2012
The boss of Bungay-based St Peter’s Brewery has warned that the company may be forced to become an export-only business and remove its beers from UK shops and pubs unless the government rethinks how a beer duty – designed to help smaller breweries – is calculated.
Colin Cordy, managing director of St Peter’s said that anomalies in the way that the government’s Progressive Beer Duty (PDR) was calculated meant that the brewery was being severely punished because of the success of its exports.
Ironically, the duty was introduced to help smaller breweries get off the ground by allowing them to pay less tax until they reached a certain threshold, but Mr Cordy said St Peter’s had been caught out because the duty was levied on total production, including sales overseas, which otherwise would be duty free.
Mr Cordy, who has raised the issue with Waveney MP Peter Aldous, said that the firm – which has sales of more than £4.1m and exports 45pc of its beer –may no longer be able to afford to sell its beer in this country.
“Since the company began trading in 2006, St. Peter’s has always been active exporters of our products and, at inception, selling our beer in overseas markets was a key reason for the business being set-up,” he said.
“Our efforts to increase exports –thus supporting the government’s current overseas trade initiative – have been successful, and now almost 50pc of our volume is exported.
“Our success was recognised in 2006 when we were recipients of the Queen’s Award for Enterprise: International Trade.
“As far as we know, our sales to export markets are the highest percentage of production of any English Brewery.
“And yet, it is this very success in international markets that is causing us to struggle to maintain a competitive presence in UK supermarkets, pubs and other licensed establishments,” he added.
“This is because the rate of beer duty we pay is based on our total production, including the beer that we ship duty-free to export markets.
“This means that we are paying a lot more duty than other brewers with similar sized UK trade to ourselves and also our ability to compete with bigger breweries that have significant economies of scale benefits is severely affected.
“As far as St Peter’s Brewery is concerned, we believe that all production exported should be excluded from PDR so that we end up with a beer duty tax rate for products sold in the UK at the same rate as other brewers with a similar sized UK trade as ourselves.
“Such a change would enable us to remain competitive in the UK, thereby protecting the employment of the 30-plus local people who work for us.
“If this cannot be achieved then an option is for us to concentrate wholly on export sales, which would result in the government receiving no duty income from our sales [£800,000 last year and will be near £1m this year] and also the loss of much needed jobs in this rural area.”
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