Patrons at beloved U.K. watering holes like the popular Wetherspoon pub chain may soon find themselves wondering if their favorite pint of ale is weaker than they last remember.
Welcome to a new phenomenon Brits have dubbed “drinkflation,” a fresh variation on the ills of “shrinkflation.” This describes how food and beverages may stay the same nominal price, but the serving size drops—think, for example, fewer potato chips and more air in a bag of Walkers Prawn Cocktail–flavored crisps, or in some cases almost all air.
Yet rather than beers getting smaller—a tall order given the ubiquity of the country’s customary pint glass—it’s the amount of alcohol that is shrinking in size.
Brands from Foster’s, sold in the U.K. by Heineken, and Greene King have reduced the concentration often by two- or three-tenths of a percent, according to CNN.
Brewers have been beset by price inflation for key raw materials like barley, with Heineken already warning in November of “unprecendented cost increases” as the country continues to struggle with the effects of Brexit that further exacerbate global pricing pressures.
Not only did the country leave the European Union, its single largest trading partner right on its doorstep, but it downgraded its relationship with the economic bloc to one not even commensurate with Turkey. By opting to leave both the EU single market and the European Customs Union, the U.K. has been hit by shortages in everything from fruit pickers to slaughterhouse workers to lorry drivers. This has further compounded the inflation so acutely felt across the rest of the world.
Higher taxes for beer producers
As a result of these partially self-inflicted supply shocks, U.K. consumer prices continue to rise at a red-hot pace last measured in April at 8.7% versus 7.6% in Germany and 4.9% in the United States.
The Bank of England is expected to hike rates this week a 13th straight time as a consequence, to a 15-year high of 4.75%, according to Reuters.
“It is obviously challenging for all the central banks, but I think the U.K. is uniquely challenged,” a former BoE official told the newswire.
There is, however, another factor driving drinkflation. With the country’s finances shaken first by the pandemic, then a war in Europe, and finally its own disastrous mini-budget in September, the new government’s treasury chancellor elected to raise the excise duties on all alcoholic beverages.
From August, beers, wine, and spirits will now be taxed more heavily the greater the amount of alcohol. The Alcohol Duty Review aims to make the existing system “less administratively burdensome” on businesses, according to the government.
But it is also expected to rake in an additional annual tax take of £2.7billion ($3.4 billion) in four years on top of the current forecast £13.1 billion ($16.6 billion) for the current fiscal 2023–24 year.
By reducing the concentration of alcohol in a beer by just 0.35 percentage points, researchers at the University of Sheffield in England estimate, brewers can save an estimated £250 million ($318 million) in duties levied.
Cutting the alcohol by volume “lowers the [tax] we pay without noticeably affecting the beer’s flavor,” a spokesperson for Greene King, makers of the popular Old Speckled Hen pale ale, told CNN on Monday.
