Sunday, 11 December 2016

Beer in 1958 (part four)

It’s time to look at the financial aspect of the brewing industry. And by that I mostly mean tax.

For centuries, the tax on beer has formed a considerable part of its price. And, conversely, the tax on beer has been a vital source of revenue for the government. This was even more the case during the first half of the twentieth century, with two expensive World Wars that needed to be paid for.

“More efficient methods - the brewing industry invests from £8m. to £10m. a year in new plant, buildings, and vehicles, roughly a tenth of its net output — have kept the rise in the cost of making beer to below the rise in the prices of its main constituents and below the rise of prices in general. But prices of beer do not fully reflect this because of the great increase in excise duty, which averaged just over 2d. a pint before the war and now averages about 8d. In the cheapest mild (1s. 2d. a pint now. compared with 4d. until almost the eve of war in 1939) the duty represents almost half the price. According to the Census of Production, in 1951 it represented nearly two-thirds of the value of beer when dispatched from the brewery. The duty is based on the gravity of the malt extract before it is fermented.”
"Beer in Britain", 1960, pages 5 - 6.

Consolidation was responsible for some of the fall in the cost of production. We’ve already seen how average output per brewery rose by around 50% during the 1950’s.

Want to see if they’ve got their numbers right on the tax per pint? I have the odd number or two:

Beer tax 1939 - 1960
Year Bulk Barrels Std. Barrels Tax/Std. Brl Total Tax £ Tax/Bulk Brl. Av. sg tax pint
1939 24,674,992 18,364,156 80s 62,370,034 50s 7d 1040.9 2.11d
1940 25,366,782 18,738,619 80s / 104s 75,157,022 59s 3d 1040.6 2.47d
1940 104s /135s / 165s
1941 26,203,803 18,351,113 135s / 165s 133,450,205 101s 10d 1038.5 4.24d
1942 29,860,798 19,294,605 165s /240s 7.5d 157,254,430 105s 4d 1035.5 4.39d
1943 29,296,672 18,293,919 240s 7.5d / 281s 10.5d 209,584,343 143s 1d 1034.3 5.96d
1944 30,478,289 19,193,773 281s 10.5d / 286s 5.5d 263,170,703 172s 8d 1034.6 7.20d
1945 31,332,852 19,678,449 286s 5.5d 278,876,870 178s 1034.5 7.42d
1946 32,650,200 20,612,225 286s 5.5d 295,305,369 180s 11d 1034.7 7.54d
1947 29,261,398 17,343,690 286s 5.5d 250,350,829 171s 1d 1032.6 7.13d
1948 30,408,634 18,061,390 325s 5d 264,112,043 173s 9d 1032.7 7.24d
1949 26,990,144 16,409,937 364s 4.5d / 343s 4.5d 294,678,035 218s 4d 1033.4 9.10d
1950 26,513,997 16,337,315 343s 4.5d 263,088,673 198s 5d 1033.9 8.27d
1951 24,891,746 16,739,464 321s 249,146,244 200s 2d 1037 8.34d
1952 25,156,489 16,958,628 321s 248,165,812 197s 4d 1037.1 8.22d
1953 24,883,227 16,681,119 321s 243,372,425 195s 7d 1036.9 8.15d
1954 24,582,303 16,525,316 321s 242,031,712 196s 11d 1037 8.20d
1955 23,934,215 16,161,698 321s 237,452,121 198s 5d 1037.1 8.27d
1956 24,551,158 16,618,162 321s 243,682,807 198s 6d 1037.2 8.27d
1957 24,506,524 16,674,001 321s 245,374,441 200s 3d 1037.4 8.34d
1958 24,647,978 16,799,108 321s 246,077,234 199s 8d 1037.5 8.32d
1959 23,783,833 16,226,433 321s 238,722,997 200s 9d 1037.5 8.36d
1960 26,115,012 17,688,007 277s 5d 206,221,271 157s 11d 1037.3 6.58d
1955 Brewers' Almanack
1971 Brewers' Almanack
Brewers' Society Statistical Handbook 1988, p.7
Brewers' Society Statistical Handbook 1973, p.11

You can see that the tax did, indeed, come to about 8d per pint. Though this is for a beer of average strength, around 1037º. Ordinary Mild was around 1030-1032º and the tax on it would have been a little less.

Average tax per pint was 2d in 1939. But the cheapest 4d Milds had an OG well below the average of 1041º, usually around 1027º. The tax on a beer of that strength was 1.67d, still a considerable percentage of the retail price.

The rate of tax was remarkably stable: 321s from 1951 to 1959. And then something really unusual happened. Tax fell by almost 2d per pint.

“The scale of tax—which contributed £260m. to the Exchequer last year—is such that the tax rises steeply as beer is made stronger. Some brewers complain that this discourages the sale of the belter beers. But it is likely that the better beers nevertheless usually get a larger percentage of profit, and people do not seem as sensitive about their prices as they are about the price of the successor to the 4d. mild. If the tax is in its form and perhaps in its weight anomalous, it does not dismay the brewers or daunt the enterprise and initiative of this vigorous industry with its 3,000 brands of mild and bitter, pale ale and brown ale, lager, stout and stingo.”
"Beer in Britain", 1960, page 6.

A word of explanation. Tax was levied per standard barrel. A standard barrel being 36 gallons of beer with an OG of 1055º.  Stronger or weaker beers were taxed in proportion to that, so one of 1100º would be double the standard barrel rate, while one of 1027.5º would pay half. It makes strong beers expensive to brew, as the article says. Though before WW I, when the same tax system was in place, there were lots of strong beer about.

More about beer and money next.

No comments: