The impact of Brexit in the form of a weaker pound and higher inflation will add to an already complicated trading landscape for UK breweries.

A hard Brexit will prove to be critically damaging to the industry, especially as the EU accounts for 63% of the UK’s total beer exports.

British beer exports rose by 6% over 2016, boosted by a 500% and a 417% increase in beer exports to China and India, respectively, according to the British Beer and Pub Association (BBPA) and statistics published by HMRC. This is much faster than beer export growth in the EU, which only grew by 5%.

In China, the beer market is maturing with a five-year CAGR forecast of 0.9%, however opportunities are opening up within the premium beer segment, an area which UK beer producers are tapping into to try and capture the interest of Chinese consumers; this is evidenced in GlobalData’s 2016 consumer research in that 59% of Chinese consumers associate high quality food/drink products with European countries.

Demand for British beer can also be attributed to pictures of Chinese President Xi Jinping drinking beer with former Prime Minister David Cameron back in 2015.

"British beer exports rose by 6% over 2016, boosted by a 500% and a 417% increase in beer exports to China and India, respectively."

To further exploit these international opportunities, the BBPA urged the government to reduce the historically high beer duty rates for alcohol manufactured in or imported into the UK, and abolish the planned inflationary increase in duty in the March 2017 Budget, but to no avail.

As of 13 March, UK duty rates on all alcohol increased by September 2016’s predicted  Retail Price Index (RPI) inflation of 3.9%, adding an extra 2p per pint of beer to an already heavy tax burden; the tax on beer has now risen by 43% over the past decade.

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This may prove to be a missed opportunity for the government, as the high rate of beer duty stands in the way of further investment by beer producers to foster non-EU exports showing significant promise.

To prepare for the UK’s exit from the EU, the BBPA is devising an export strategy that highlights the need to build on existing technology systems already in place to ensure an efficient trade flow and emphasises the importance of a tariff-free deal with the EU.

The latter of these may prove to be more difficult given that many EU members have made it clear that it must be worse for the UK outside of the single market, otherwise incentives to stay inside the EU will diminish.

However, the UK beer market is of utmost importance for EU beer producers, and a hard Brexit would be highly detrimental for the beer industry in the EU as well as the UK. It is essential that all parties co-operate over the next two years to establish a reasonable deal for industry while ensuring the integrity of the European Union, otherwise it will be a lose-lose outcome for all involved.