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Are you running a small brewery where you produce 60,000 hectolitres or less of beer a year? If so, you may qualify to receive small brewery duty relief – a way to reduce the duty you pay on your brewed products and increase your profitability.

So what conditions do you need to meet to claim small brewery relief? And how do you manage your brewery to really make the most of this drop in duty payments?

How does small brewery relief work?

This is progressive brewery relief for brewers producing smaller amounts of beer. So it’s aimed at giving a financial boost to smaller breweries and helping to reduce the inherent costs associated with paying duty on your products.

In fact, if you’re a micro brewery producing below 5,000 hectolitres, you’ll receive 50% duty relief (e.g. 26p per pint for a 5% ABV beer). That’s a cost reduction that’s well worth looking into at the early stages of running your business.

To qualify, you must brew:

  • No more than a combined total of 60,000 hectolitres of beer in your brewery and any connected breweries.
  • Less than half of the beer produced in your brewery/breweries in the last year may have been produced under licence.

Duty is progressively removed up to 60,000 hectolitres, so it’s important to have a great understanding of how the scale of your production process links in with the duty you’ll be liable for.

Understanding your margins as you scale

If you’ve created a winning product range of quality beers, and your sales are bringing in increased revenues, it’s likely that you’ll look to grow the business and scale up your production volumes.

But a word of caution if this is your current business plan. Economies of scale from increased production don’t match the scale of duty relief, so you need to really understand your margins as the brewery expands and your volumes increase.

‘Squeezed margins’ can have a profound effect on the profitability of the brewery as you grow the business. And this is where your skills as a brewery manager will need to be expanded, so you’re always considering the impact of scale against costs.

A great way to keep on top of your costs, margins, duty and volumes is to put the technology to work and use the available cloud tools to manage your numbers.

  • Move to Xero online accounting software to manage your finance processes and create a sound financial hub for the brewery.
  • Use CrunchBoards business intelligence software to create forecasts and ‘boards’ that show your product range, associated margins and the related duty as you scale the production process.
  • Talk to us about your goals for the brewery and let us advice you on the best long-term strategic plan for maximising production and minimising duty.

Book a free forecasting consultation 

Brewing is an industry where variations in material costs can be highly unpredictable, and where seasonal factors can have such a huge impact on sales and production. So accurate, insightful forecasting can be a godsend as a smaller-scale brewer.

Combining the power of cloud solutions with Square Mile’s hands-on experience of the brewery sector gives you a winning way to understand your business model and how growth, scaling and increased production will transform your profitability.

Book a free forecasting consultation with us and don’t let your growing brewery get caught out with squeezed margins.

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