Bottled beers originating in the UK for export to the Irish market would be adversely affected as would beer imported into the UK for onward transfer to the Irish market.
A recent parliamentary enquiry into beer tax fraud in the UK heard from Gary Haigh, Managing Director of Miller Brands UK, that importers would have to look to stop importing some 2,000 of the 2,200 beer brands shipped into the UK each year.
Brands that his company would have to stop importing included Peroni Gran Reserva, Peroni Red and “… we would have a very close look at the Pilsner Urquell brand” he told a panel of MPs at the enquiry.
“We would stop supplying bottles to the Channel Islands and we would also stop supplying Peroni Nastro Azzurro and Pilsner Urquell into the Republic of Ireland.”
The extra cost of putting duty stamps on some but not on others would create complexity, he stated. “I think it’s going to create bureaucracy and I think it’s going to bring a range of unintended consequences and a reduction in consumer choice,” he told the enquiry.
“It’s a very real and concerning issue for us and other brewers in the UK,” added Jonathan Bennett, Head of Corporate Affairs at Miller Brands UK, when contacted by Drinks Industry Ireland, “Much will depend on the detail of any forthcoming implantation – if this is the route the Government chooses. I do not think however that the measures proposed in the consultation are proportionate and in the UK it’s likely that such measures as fiscal marks would make import/export more challenging.
“These difficulties have been seen in other countries such as Turkey where the introduction of fiscal stamps has been a barrier to imports further protecting the dominant market position of the main brewer,” he continued, “Implementing fiscal marks in the UK would reduce consumer choice. Of the 5,400 beers sold in the UK around 40 per cent (2,200) are imported.”
Ireland and the UK have enjoyed a uniquely positive trading relationship for many years which the Irish Brewers Association values greatly.
“The IBA is concerned that the proposed mark would be likely to restrict access to the UK for our members and lead to a loss of sales to this important market,” explained IBA Senior Executive Tom Burke, “It would be necessary to ensure that each bottle or can was marked ‘UK Duty Paid’ in the specified manner. This fiscal mark could either be incorporated in the bottle label or can design or applied as a free-standing mark when the beer had entered the UK. Either option would present major practical difficulties and cost and would be disproportionate since it would place a greater burden on imported- as compared with domestic-beer.”
He continued, “It is likely that volumes of beer supplied to the UK whilst important in the context of our national brewers would simply not be cost-effective as a unique bottle/can design would be required for each market where a single design is used today”.
“To incorporate a fiscal mark on the bottle or can design during packaging, our brewers would need to very accurately forecast sales to the UK. This may be difficult to do particularly in an uncertain market. This would mean that opportunities to export to the UK could not be fulfilled if the brewer did not hold sufficient stock bearing a UK fiscal mark. Conversely, if exports to the UK fell below expectations, a brewer may be left with an excess of UK-marked product, which could not be sold domestically."
There would clearly be logistical issues in producing and holding a separate stock of beer for export to the UK, which could lead to increased warehousing and transport costs and reduced line efficiency, he pointed out.
“However, perhaps the largest single cost would be to UK importers who would need to open secondary packaging to check that UK duty paid marks had correctly been applied to each bottle or can intended for sale within the UK market. These importers would inevitably suffer increased breakages and would incur additional costs – resealing packaging or replacing packaging damaged during inspection. This cost could very well be high enough to make the beer uncompetitive in the UK market. If brewers exported beer to the UK without the UK mark, it would have to be applied before the product could be sold. This would be impracticable and so expensive that it would not be cost effective resulting in lost sales.
“The brewers, national governments and the EC have invested a huge amount of money, time and effort in the introduction of the new Excise Movement Control System. The system was designed to secure movement of goods with effective monitoring and checks implemented during movements. The additional requirements, as proposed in this consultation, raise questions about the overlap with EMCS and the rationale in investing in EMCS in the first place,” he concluded.
The IBA has made a submission to the UK consultation.