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Will progressive beer duty really help UK small breweries? a case study in profit appropriation

Will progressive beer duty really help UK small breweries? a case study in profit appropriation Both the Campaign for Real Ale (CAMRA) and the Society of Independent Brewers (SIBA) argue that barriers to market access in the UK brewing industry disadvantage small brewers. They have been actively campaigning for a number of years for a tax concession (progressive beer duty or PBD) to alleviate the situation of small brewers. This paper argues that the disadvantages faced by small brewers are due to a complex monopsony in the beer industry, where the power of the distribution segment of the value chain is paramount. It outlines a model of the structure of the UK beer industry, and undertakes two types of empirical analysis to test the potential impact of PBD on the small brewery sector. The paper finds that control over distribution is the key to profitability and survival in the beer industry, and that small brewers with such control are most likely to benefit from PBD. The findings, however, also have relevance to the position of any small business facing a powerful distribution segment. Finally, for the issue of policy development, the paper indicates that the potential outcomes of a policy change may not be entirely those intended. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Small Business and Enterprise Development Emerald Publishing

Will progressive beer duty really help UK small breweries? a case study in profit appropriation

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References (12)

Publisher
Emerald Publishing
Copyright
Copyright © 2001 MCB UP Ltd. All rights reserved.
ISSN
1462-6004
DOI
10.1108/EUM0000000006828
Publisher site
See Article on Publisher Site

Abstract

Both the Campaign for Real Ale (CAMRA) and the Society of Independent Brewers (SIBA) argue that barriers to market access in the UK brewing industry disadvantage small brewers. They have been actively campaigning for a number of years for a tax concession (progressive beer duty or PBD) to alleviate the situation of small brewers. This paper argues that the disadvantages faced by small brewers are due to a complex monopsony in the beer industry, where the power of the distribution segment of the value chain is paramount. It outlines a model of the structure of the UK beer industry, and undertakes two types of empirical analysis to test the potential impact of PBD on the small brewery sector. The paper finds that control over distribution is the key to profitability and survival in the beer industry, and that small brewers with such control are most likely to benefit from PBD. The findings, however, also have relevance to the position of any small business facing a powerful distribution segment. Finally, for the issue of policy development, the paper indicates that the potential outcomes of a policy change may not be entirely those intended.

Journal

Journal of Small Business and Enterprise Development – Emerald Publishing

Published: Dec 1, 2001

Keywords: Brewing industry; Taxation; Small firms; Value chain; Distribution

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