New Alcohol Duty to Lift Light Beer (Mar 2023)

The Chancellor Jeremy Hunt announces new lower rates of Alcohol Duty

With the trend for healthier drinking on the rise, yesterday's Budget looks to be a game-changer for moderate drinkers. It may have caused headlines and headaches for wine fans but the new, reduced rate for lower-alcohol beers should dramatically influence the beer market. From August, the Alcohol Duty on a 3% beer will be 56% less than on a 6% beer. A huge difference.

New Govt Alcohol Duty Rates from Aug 2023 (click link to view rates)

The new, reduced rate applies to drinks in the 1.2%-3.4% ABV range. The government clearly has the nation's health in mind, using price incentives to persuade drinkers to choose lower-alcohol products. So far, so sensible but wait...where are these low-alcohol beers? Take a look at supermarket shelves or the local pub and low-alcohol beers are almost nowhere to be found. This is a result of the confusing definition of 'No & Low' alcohol and its ABV thresholds.

Under current industry regulations, a 'no-alcohol' beer must be 0.5% ABV and below, while to quality as 'low-alcohol, a beer can be no more than 1.2%. The conflation in the phrase 'No & Low' has confused consumers and led to an absence of low-alcohol beers. This is because a 1% ABV beer is neither fish nor fowl. It doesn't provide a 'no alcohol' option and yet lacks sufficient alcohol to carry the flavour, body, and satisfaction of a 'real beer'. Who'd brew one?

Where’s the low-alcohol beer?

It is notable that the new lower rate applies to beers in the 1.2%-3.5% range. There is currently no industry-approved definition of beers in this ABV range. Being above 1.2% means they can't be called 'low alcohol'. So what do we call them? Lower-alcohol? How does the industry market a new, cheaper, healthier beer without a category to define it by? We'd suggest the term 'Light Beer' to articulate both lower alcohol and, importantly, lower calories. 

It can be no surprise that with the exception of brands such as Small Beer and Genius Brewing, no one has focused on beers with 2%-3% ABV. Interestingly, the likes of Bud Light and Tennents Light at 3.5%, don't qualify for the reduced rate. Will we see them reformulate? The commercial rationale is compelling. 

The trend for moderate, healthier drinking has gone mainstream but how can the consumer benefit when there are so few suitable beers? How should the industry and regulators react?  

At Genius Brewing, we've championed lower-alcohol, light beers since our launch in 2018. Growth in No & Low beers shows the demand for healthier options but it could be argued that no-alcohol beers are no more a healthier alternative than an apple juice - most beer drinkers want some 'booze', just less. This is where low-alcohol, low-calorie, light beers fill the yawning gap between no-alcohol and 'full fat' choices.

Light beers dominate the US beer market

In the US, the three biggest selling brands are all light beers and where the US leads the UK often follows. The new Duty rates should help drive NPD of more low-alcohol brands and products. But how do we then promote them?

The obvious solution is to break the confusing 'No & Low' segment into two separate categories: No-alcohol and Low-alcohol (or preferable 'light beer'). An ABV threshold of 0.5% for No-alcohol would reflect the current market landscape and consumer understanding. A new category of Low-alcohol would have an ABV ceiling of 3.4% to align with the Duty rate. 

Rather like milk with its choice of skimmed, semi-skimmed, and full-fat, beer drinkers would clearly understand their options across no-alcohol, low-alcohol, and 'full fat' regular beers. A whole new category of 'Light / Low-alcohol' beer should spring to life giving beer lovers a diverse range of truly pleasurable, cheaper, healthier options.