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.

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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.”

shaun.lowthorpe@archant.co.uk

6 comments

  • This is yet another example of a poorly thought-out tax which has the potential to clobber and destroy this successful business. Typical.

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    T Doff

    Wednesday, September 12, 2012

  • Could St.Peter's not create another company to buy the beer off the brewery and export it from that one? Surely that would be less drastic than stopping UK sales altogether and only exporting.

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    somebloke

    Wednesday, September 12, 2012

  • Right so here's an idea... Create a second company called St. Peter's France. St. Peter's UK can hire out its plant to allow the new one to brew beer for export to France (other breweries do this already, sharing their kit to brew their own beers). Both companies come under their current progressive duty threshold and each pay a lower rate of tax. Further companies can be created for other target countries. There - I solved their problem and they can owe me a pint!

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    somebloke

    Wednesday, September 12, 2012

  • @somebloke-good idea, but Mr. Cordy says that the tax is levied on total production, including that for overseas sales. It would seem that even if they sold it to an export division, it would still be counted as part of total production. Even if the production were split into home and export, the total beer and duty would be the same. The sensible thing would be for them to do as you suggest and for the Government to disregard from total production that beer made for or sold to the export company.

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    T Doff

    Wednesday, September 12, 2012

  • I've tried their beer, I prefer Innis & Gunns meself

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    expat

    Thursday, September 13, 2012

  • I think Innis & Gunn are a 'beer company' rather than a brewery. They contract out their brewing, which is a bit like the idea in my previous post. I like their beer (in small doses) too.

    Report this comment

    somebloke

    Thursday, September 13, 2012

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