American brewing in the 1930’s – tax and costs

You’re in for a real number fest today. The original text has several tables to which I’ve added a few more of my own. There aren’t going to be a great number or words. Personally, I think words are greatly overrated.

We’ll start with tax.

“The Internal Revenue receipts for malt liquor taxes for the calendar year 1935 were as follows:—

	Dollars.	£ Sterling.
Licence fees paid to the Government by brewers, wholesale and retail dealers	4,412,701.84	900,551
Tax paid by brewers to U.S. Government	226,119,065.81	44,105,932
	230,531,767.65	45,006,483

Journal of the Institute of Brewing, Volume 42, Issue 5, September-October 1936, page 416.

40-odd million quid sounds like a lot of tax. Until you put it into context. Guess how much tax British brewers paid in 1936? £55,451,926*. But they taxed the hell out of beer back then. Still do, now I come to think about it.

Now onto costs:

“Cost of Beer in America.—According to a study made by the United States Brewers' Association of costs at forty-four breweries, the following figures are typical but do not include State Revenue taxes, delivery costs, interest or discounts:—

		Approximate per English barrel.
	Dollars American barrel	£ s. d.
Cost of production	3.932	1 2 6
Selling	1.440	8 3
Administration	0.834	5 0
Federal tax	5.0	1 8 6
	11.206	£3 4 3

Journal of the Institute of Brewing, Volume 42, Issue 5, September-October 1936, pages 416 - 417.

One handy feature of brewing records of the interwar period is the inclusion of prices and costs. Courage lists costs particularly well, even calculating the cost per barrel:

Production cost (including tax) of Courage beers in January 1936
Beer	OG	cost
KKK	1072.8	£6 11s 7d
XXX	1053.1	£4 9s 10d
X	1031.1	£2 8s 11d
C	1027.8	£1 19s 6d
Source:
Courage brewing record held at the London Metropolitan Archives, document number ACC/2305/08/262.

The beer we need to concentrate on is XXX as that’s the closest in strength to American beers. If we just take the cost of production and tax for the American beer, it comes to a total of £2 11s. Or not much more than half the cost of XXX. The difference is even bigger as the Courage figures don’t include labour costs, just materials and tax. It’s clear that beer was far cheaper to produce in the USA.

Why? The materials costs may give us a clue

“The cost of the principal brewing materials are lower than in this country, figures from
market reports in December, 1935, being as follows, with approximate British equivalents:—

	American prices.	British equivalents.
Barley	60-80 c. per bushel, 48 lb.	23s.-30s. 448 lb.
Malt	1$ per bushel, 34 lb.	40s. per quarter
Hops (American)	10-20 c. per lb.	46s.-92s. cwt.
(imported)	50 c.- 1$ lb.	£11-23 cwt.
Corn sugars	2.5-3.5 $ 100 lb.	11s. 6d.- 15s.6d.cwt
Grits	1.85-2.5 $ 100 lb.	8s.- 11s. 6d. cwt.
Rice	2.5$ 100 lb.	11s. 6d. cwt.

The import duty on hops is 24 cents per lb. or about £5 10s. per cwt., and that on
malt 14 cents per bushel of 34 lb. or about 6s. per quarter.”
Journal of the Institute of Brewing, Volume 42, Issue 5, September-October 1936, page 417.

How much cheaper were raw materials in the US? Lots.

UK materials costs in 1936
PA malt	59s-68s per quarter
UK hops	225s - 261s per cwt
flaked maize	8s per cwt
invert sugar	29s - 30s per cwt
Source:
Barclay Perkins brewing record held at the London Metropolitan Archives, document number ACC/2305/01/621.

Malt was 50% cheaper, sugar and hops less than half the price. Only maize was oddly slightly more expensive in the US. Don’t understand that one.

“A rough average price for beer is $15 per American barrel or about 80s. per British barrel, while beer retails in 12-oz. bottles at 3 bottles for 25 cents or about 1s.”
Journal of the Institute of Brewing, Volume 42, Issue 5, September-October 1936, page 417.

Let’s see how that stacks up with British prices:

Wholesale price of Whitbread draught beers in 1936
Beer	gravity	price
Porter	1029.9	94s
Stout	1046.9	134s
Light Ale	1028.4	76s
X Ale	1035.6	94s
Pale Ale	1048.2	134s
33	1060.6	140s
Sources:
Whitbread brewing records held at the London Metropolitan Archives, document numbers LMA/4453/D/01/102 and LMA/4453/D/09/125.
Whitbread wholesale price list.

The closest in gravity to American beers are Stout, Pale Ale and 33 – which 56s to 60s more.

The retail prices of bottle beers show the exact opposite:

Retail price of Whitbread bottled beers in 1936
Beer	gravity	price 3 X 12 oz (cents)
London Stout	1046.9	24
India Pale Ale	1037.6	21
Double Brown	1053.3	27
Sources:
Whitbread brewing records held at the London Metropolitan Archives, document numbers LMA/4453/D/01/102 and LMA/4453/D/09/125.
Whitbread wholesale price list.

Bizarrely, British bottled beer was only about a third of the price of US equivalents. British beer, despite being more expensive to produce and more heavily-taxed, was only slightly more expensive than US equivalents. Why should that be? I think it’s because the retailer’s profit margin in Britain was tiny.

Next time we’ll be looking at the beers being brewed in the US.





* 1955 Brewers' Almanack.