Taxes are Watering Down Your Beer

Inflation in the UK isn't boding well for the nation's high population of beer drinkers.

Austerity measures that have descended upon the nation in the midst of the European financial crisis are hitting industries hard, and now the beer industry is starting to feel the pressure.

Dutch company Heineken announced it would reduce the alcohol content in its John Smith's Extra Smooth from 3.8 percent to 3.6 percent.

Duties are lower on beers with lower alcohol content, an aim from the government to reduce a growing alcohol problem, which drove Heineken's decision.

But it turns out the duty cut isn't enough. The price for a pint of the beer will also rise by 2.5 percent...after the alcohol content is reduced.

Heineken claims that this will do nothing to affect the quality of its brew.

From the Financial Times:

“Extensive research conducted with retailers and consumers consistently confirmed that a 0.2 per cent reduction in [alcohol content] does not compromise on the taste and quality,” a Heineken UK spokesman said, adding that the company would invest cost savings “in the brewing and marketing of John Smith's”.

A spokesman for the British Beer and Pub Association agrees with these statements. Though he doesn't think many other brands will follow John Smith's lead, his association has found that British beer drinkers have developed a taste for these weaker brews.

But real life beer sellers disagree. A Grimethorpe working men's club near the John Smith brewery is less than thrilled, and owners are taking a stand. Club secretary Philip Evans told the Financial Times:

“The brewery wants to weaken the beer and raise the price. We are going to sit the rep down and tell him it either goes down or it goes out.”

It turns out beer prices have been on the rise for quite a while. A beer duty that kicked in in 2008 has caused the price of beer to grow 2 percent above inflation annually since then.

A similar issue has become prevalent in the U.S., though with a non-alcoholic beverage. Coffee makers are switching their beans from the high quality Arabica beans to cheaper, more bitter Robusta. The move is also driven by inflation, and the change is apparent in the flavor.

Will British beer drinkers notice as well? If nothing else, they're sure to notice the tug on their wallets.

John Smith's Extra Smooth could become a thing of the past...