In case it has passed you by, there is a move afoot by the health lobby to persuade Chancellor Hammond to change the duty paid on cider. The recommendation of Fiona Bruce MP is that a new duty band is created for cider in the ABV range 5.5%-7.5% alcohol. The aim is to reduce the harm caused by the consumption of high-strength so-called ‘white ciders’. These are typically 7.5% ABV and low-price (£3.00-£3.50 per 3-litre bottle).
While we applaud any strategies aimed at reducing the harmful effects of alcohol in society, we do not believe this measure would resolve the problem its aiming at. However, it would have the unintended consequence of wiping out many small traditional craft cider makers whose products almost always fall into this ABV band.
Why is Traditional Cider So Strong and Is It a Health Threat?
Traditional craft cider is usually made from a very high percentage of fresh-pressed apple juice. That means the resulting strength of the cider is dictated by how much sugar is present in the apples at harvest time. Our ciders usually range from 5.5%-7.5% ABV or thereabouts. We follow these methods not in order to make strong booze, but because we believe in following traditional cider making methods, utilising our passion, our skill and the season’s harvest to make drinks of outstanding flavour and character. The very concept of diluting all that hard-won flavour with water is anathema to most traditional craft cider makers. We are the original English wine makers – traditional cider is made using the ethic of wine production. We tease our subtle and varied flavours from fruit and fruit alone.
So why isn’t traditional craft cider a target for alcohol abusers? Despite rumors to the contrary, craft cider isn’t a cheap commodity to make. Using fresh fruit once a year, extended maturation periods and vast storage requirements make real cider a very expensive product to make. We calculate that our costs per litre of liquid produced are around 15-20 times higher than the liquid turned out by industrial makers that’s made from concentrate, and delivered to the outside world in a matter of days.
Traditional craft cider isn’t abused because it’s a high-price craft product – not exactly the target of problem drinkers. Even the MP Fiona Bruce who is asking for the duty changes recognises that.
Cider’s Current Duty Regime
First of all, there is no doubt that cider does enjoy a beneficial duty regime when compared to other alcohol. This recognises the extremely long investment cycles of growers planting orchards, the amenity (and incidental economic) value of orchard landscapes, and historically the amount of space and storage required when making cider annually from fresh fruit.
The majority of high-volume industrial cider makers use concentrate in cider making – that’s a fact. But they also tend to grow fruit themselves, or contract other UK growers to produce it, from which they make their concentrate, so they can rightfully benefit from the cider duty breaks. They also act as responsible citizens, driving down overall alcohol units in society, employing many people in usually rural locations and generally ‘doing their bit’. They also very rarely stray into making products over around the 5% ABV mark.
Makers of white ‘cider’, on the other hand, seem to be hell-bent on using their economies of scale, and the recent availability of extremely cheap globally produced concentrate to cynically market very cheap alcohol units – which, of course, are highly likely to become the target of alcohol abusers. They’re exploiting cider’s advantageous duty rate while not planting any orchards or even using domestically produced concentrate.
To put a few numbers around that… A recent survey of NACM and affiliate organisation memberships revealed that ciders over 6% ABV represented a single-digit percentage of overall production – the actual number escapes me for now. But of that high-ABV output, white cider made up over 80% of the total output.
Possible Realistic Solutions to White Cider
Minimum Unit Pricing or MUP (as the Scottish Government is going to introduce) could minimse the damage from white cider. And it wouldn’t affect small traditional craft cider makers because our products are already way above the price per alcohol unit being bandied around. But it is hugely politically unpopular. The problem is that any extra revenue from MUP is generally scooped up by retailers, rather than Treasury, so Governments are unpopular because they are increasing the price of alcohol, but they get no additional revenue benefit. It’s a Lose/Lose for them.
On other possible routes to alleviate a duty increase for traditional craft makers, while we are still a member of the EU, it wouldn’t be legal for the UK to define a duty regime based on either the size of a producer’s output or where its raw materials come from. This has all been closely examined in the past. So while small brewers do enjoy a reduced duty rate regime based on the volume of their output, that’s because it was negotiated into the EU Duty Structures at the time of their inception – something which would be nigh-on impossible to retrospectively introduce for smaller cider makers at this stage. That will change after Brexit.
It would, however, be possible for Treasury to write a new definition of cider in Notice 162 (the duty bible for cider makers) which specified a different – and higher – juice content threshold. Currently, to qualify for cider duty, any alcoholic drink produced must contain a minimum of 35% apple or pear juice. This can be achieved by watering down concentrate to a specified sugar content if desired.
Our recommendation depends on the timing of any proposed new legislation. If we’re talking about something happening in April 2018 – before we leave the EU – we would be calling for the current 35% juice definition (even when achieved by re-hydrating concentrate) to continue for all cider under 5.5% ABV so the bigger, more responsible (and, let’s face it, economically important) cider makers aren’t unduly affected. However, if we are concerned about high-strength drinks being sold cheaply, let’s make sure any measure hits its target. We would propose a change to the Notice 162 Cider Definition for any cider over 5.5% ABV requiring a minimum juice content of, say, 80%-85% and that apple juice concentrate must not be used in its manufacture. This measure would eliminate 7.5% white cider altogether – it would either be hugely expensive to make (this we know from personal experience), or would attract Made Wine duty of £8.65 per 3L bottle. Duty and VAT alone on 3L of white cider would amount to £10.38!
If, however, Chancellor Hammond is considering postponing any possible measure to counter white cider until after Brexit, it may be the case that a new duty regime for cider could be drawn up, and one not defined by EU law. In that scenario, we’d like to see a duty relief scheme for smaller duty-paying traditional craft cider makers based on volume produced – similar to the scheme enjoyed by small brewers.
The Cider Duty revenue proportion coming from traditional craft makers – most of whom will be making products over 6% – while almost crippling to the makers, is infinitesimally small to Treasury. If the survival of such an important cultural tradition means foregoing a tiny slice of that, then it has to be worth it – the incidental economic tourism benefits alone of traditional craft cider are probably more valuable. We also play a hugely important role in promoting the rest of the industrial cider making industry.
We believe that as an industry, cider needs to stand together, but in this particular instance it seems the smaller traditional craft makers are looking increasingly like collateral damage in a war that the big industrial makers should never have allowed to happen. There does come a time when traditional craft cider makers have to stand up for their own survival, control their own message and suggest a way forward. That way we may be able to ensure the continuing survival of the original English wine that we are all so passionate about making. If this duty increase goes ahead without some kind of exemption for traditional craft cider makers, it’s no exaggeration to say we may see wholesale business closures among the craft cider making community in the UK.