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Guinness maker blames alcohol tax for rise in weaker beers

Guinness

Guinness

The drinks giant behind Guinness has blamed Jeremy Hunt for the growing trend among brewers to reduce the alcohol content in their beer in order to pay less tax.

Nuno Teles, managing director at Diageo GB, which also owns Smirnoff Vodka and Johnnie Walker whisky, said “disproportionate” taxation enforced by the Treasury was encouraging the “wrong behaviours” among drinks companies.

He said: “Changing the alcohol content in beers because of a reaction to the tax, I don’t think it’s the right approach. I put myself on the side of the consumer – why should the consumer be now confronted with [this] because of taxation?

“I think it’s very sad to see the Government taking advantage of duty the way they are. I don’t think by increasing the taxation, you’re going to boost the economy.”

Nuno Teles

Nuno Teles says it is ‘very sad to see the Government taking advantage of duty the way they are’ – Rachel Adam

Alcohol duty is calculated based on the percentage of alcohol in the final product. This means cutting the alcohol by volume (abv) is an easy way to make savings at a time when the cost of brewing and distilling has soared.

The rate of alcohol duty went up by 10.1pc in August.

Brands including Carlsberg, Old Speckled Hen, and Leffe Blonde have cut the alcohol content in their beers in the last year. A Leffe spokesman said it made the change to “better suit the consumer palate”.

The practice of making drinks weaker has been dubbed “drinkflation” because it is similar to the so-called shrinkflation seen on supermarket shelves, where products get smaller but prices rise or remain the same.

Alcohol manufacturers are now calling on the Chancellor not to raise alcohol taxes again in the Autumn Statement.

The Wine & Spirit Trade Association (WSTA) has claimed another tax rise could lead to higher prices and hinder efforts to reduce inflation. Many retailers raised their prices when duty went up in August.

Drinkflation has also proved controversial among hospitality industry bosses.

Simon Emeny, chief executive of Fuller’s, has said the 178 year-old pub company would avoid stocking beers that have had their strength reduced, while JD Wetherspoon boss Tim Martin has called it a “big mistake”.

Diageo itself lowered the strength of its Tanqueray gin in March from 43.1pc to 41.3pc.

A spokesman said this was done before it was announced that duty would go up in March, and said it was done to bring the gin in line with the strength of other Tanqueray products.

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