Tuesday, 28 July 2015

Georges still

More from the chairman of Georges, speaking at the company’s annual meeting.

Let’s start with an obligatory part of every brewery chairman’s speech: a moan about the level of taxation on beer.

Price of Beer
Successive Chancellors of the Exchequer again and again turned to taxation beer as an easy source revenue. In less than one year, an additional 1d per pint was imposed twice, and there has been only one reduction of 1d per pint in recent years.

In our opinion, not nearly enough, it has proved, to make any real difference. Four and a quarter millions of this reduction had to be found by the wholesale trade. The price of beer to-day is consequently much too high owing to excessive taxation. Materials have also increased in price.”
Western Daily Press - Friday 27 January 1950, page 4.

As we’ve already seen, the tax on beer rose sharply during the war, but continued to rise after its end. It fell a little in 1950 and again in 1951, but remained at the high level of 321s per standard barrel for the rest of the 1950’s. In 1939 it had been 100s (with a 20s rebate per bulk barrel).* And brewers had complained then that it was ridiculously high.

More about the post-war boom in bottled beer:

“Extensions are also being carried out to enlarge the cold rooms in the bottling stores, and also new bottling units are being installed to cope with the ever increasing demand for bottled beer.

The output of bottled beer last month was a record for the brewery, and our weekly sales of bottle beer now exceed the cask.

I should like to emphasise again this year that the duty on beer is much too high, representing as it does nearly 7d on each pint of bitter ale. In the last ten years the duty has increased from 104s to 343s per standard barrel.”
Western Daily Press - Friday 27 January 1950, page 4.

Georges appear to have been doing better than average with their bottled beer. Or worse than average with their cask. Because despite a big increase in the proportion of bottled beer, cask still formed the majority of sales.  Bottled sales had risen from less than 5% of the total in 1900 to 25% in 1939 and 35% in 1954**.

7d of tax a pint is a lot when you consider that the retail price of Georges draught IPA in 1949 was 1s 5d or 17d***. I think he’s underestimating the tax. At 343s 4.5d per standard barrel****, the tax on a beer of the average gravity for 1949 (1033.43) comes to 8.7d*****. Close to 50% of the retail price.

All the shortages and restrictions must have been at best frustrating, at worst quite depressing. Here are some more:

Country Hotels Suffer
Messrs Crockers and our managed houses, of which only have 14, have not done well in recent years. Possibly the Catering and Wages Act, certain clauses of which one reads in the Press, from time to time, may be altered, is largely responsible for this.

The shortage of petrol may also partly responsible, especially in country hotels where there have been in many cases serious decreases in the number of visitors.”
Western Daily Press - Friday 27 January 1950, page 4.

The Catering and Wages Act comes in for a lot of criticism from brewers. It seems to have set some sort of minimum wages. Obviously breweries, who owned lots of pubs, employed, albeit indirectly, lots of people in the catering trade.

I wonder if it was just a shortage of petrol that damaged the trade of country hotels. Or was it because no-one had any spare cash?

This next passage is dead handy. Because it allows me to calculate something.

“The company's licensees are again to heartily congratulated on the efficient way in which they have conducted their houses, during the past 12 months, in spite of many restrictions and difficulties, which seem to increase rather than diminish. It is even more difficult than usual to forecast the future prospects of the company, as in these days of uncertainty much depends on taxation, the cost of living etc. Your directors do not consider that the output can be maintained, much less Increased, unless there is a really substantial reduction in the beer duty, already referred to; last year over £2.5 millions was paid this company in this tax alone

Brewers should allowed produce a beer which is at least 3d per pint cheaper and at the same time be allowed sufficient materials to increase the average gravity.”
Western Daily Press - Friday 27 January 1950, page 4.

That’s quite a depressing message: expect sales to go down, not up. Though the impact would probably also depend on the margins on beer in different types of packaging. If they had a better margin on bottled than cask, overall revenues might have been stable. Unfortunately, I’ve no idea if that was the case.

You can tell he was really unhappy about the high beer tax. That’s the third or fourth time he’s mentioned it. I’m really glad he mentioned how much tax they’d paid in 1949. It allows me to calculate how many barrels they brewed. The calculation is slightly complicated by the fact that the tax rose halfway through Georges financial year, in April 1949. Assuming half at each rate and that their average OG was the same as the national one, I make it 232,664 bulk barrels. To put that into context, it’s 0.86% of the 26,990,144 barrels brewed in the UK in 1949******.

That's me done with Georges. I'll have to look for some more annual meeting reports. I love me a whingeing chairman.

* Brewers' Almanack 1955, p. 50 and Brewers' Almanack 1962, p. 48.
** "Brewing Theory and Practice" by E. J. Jeffery, 1956, page 330.
*** Whitbread Gravity book held at the London Metropolitan Archives, document number LMA/4453/D/02/001.
**** Finance Act 1949.
***** Brewers' Almanack 1955, p. 50.
****** Brewers' Almanack 1955, p. 50.


Doug Warren said...

I'm sure whoever supplied beer to the slaves who built the pyramids moaned about how much tax his or her brewery paid.

It's tiresome to hear them whine as though the money comes out of their own pocket. It's useful to remind everyone that it's the beer drinkers who pay all that tax. Breweries merely remit what they have collected from their customers.

It would be nice to hope that brewery directors had the best interest of their customers at heart and that lower taxes would mean lower retail prices, no doubt increasing sales in the process.

A few years ago, the province of Alberta significantly lowered its beer tax. How many breweries passed on the saving to their customers? By how much?

None. Not a penny.

Ron Pattinson said...


lower taxes did mean more money for a brewery as sales would increase. You can see after WW II that when the tax went up sales went down and when it fell sales rose. And they did pass on tax reductions to the customer. though sometimes with a gun toi their head: the government told them it would only reduce the tax if brewers promised to cut prices accordingly.