SCOTLAND’S nascent craft spirits industry has issued a call for duty rebate similar to the tax break that is credited with playing a key role in the explosion of the craft beer sector in the past decade.
Fledgling industry body the Scottish Craft Distillers Association argues that the Small Breweries’ Relief Scheme introduced by the then Labour Government in 2002 has been pivotal to the renaissance of the UK brewing industry.
The progressive tax system hands duty breaks to brewers who produce no more than 60,000 hectolitres per year, with reductions starting at 50 per cent for those brewing 5,000 hectolitres or less.
The tax benefit is believed to be a key reason why the craft brewing industry is now flourishing in Scotland, where there are now in excess of 50 craft brewers.
Former Chancellor Gordon Brown was able to introduce the measure under a derogated power from the European Union.
The Scottish Craft Distillers’ Association said the introduction of similar breaks for small spirits producers would stimulate the growth of the sector, as well as provide it with protection from potential imitators.
The body was established a year ago and now has nearly 20 members, including a host of recently-launched distillery businesses.
Several of its members, including the Glasgow Distillery Company, The Shetland Distillery Company and Arbikie Distilling, are initially focusing on producing white spirits such as vodka and gin. That is because they must wait a minimum three years before spirit distilled as whisky can be legally brought to market as Scotch.
Paul Miller of craft brewer and distiller Eden Mill, who is working on the campaign for the association, said: “If the duty rebate could be applied to genuinely small batch distillers it would energise and stimulate the market, make it attractive to new entrants, and give consumers more choice.
“Our view is that this is can ensure that the authenticity and integrity of the industry is maintained.
“We believe it can really stimulate the same growth in the industry as we have seen in craft brewing.”
“There are parallels in the US, where they are looking to introduce something similar in certain states.”
Mr Miller, who established Eden nearly three years ago, said the craft spirits body had still to decide the specific extent of duty rebate the industry will lobby for. At this stage it is chiefly concerned with gaining support for the principle at this stage.
He notes that the argument is not just about achieving a tax benefit for producers, but in giving protection to craft distillers against manufacturers which might seek to present spirits made using industrial processes as craft.
There is currently no legal definition of what constitutes a craft distiller, but Mr Miller said it covers producers who do make spirits in small batches and are strict about the type of ingredients used in the process.
“For us with whisky, a small batch starts with a single batch of barley... it goes into the mash tun and comes out in a hogshead of whisky,” he said.
The Scottish Craft Distillers’ Association ultimately hopes to achieve the kind of protection that food and drinks such as Parma ham, Champagne and Stornoway black pudding enjoy, which dictate that such products can only assume their name if they are produced in specific geographical locations.
Mr Miller, who spent around a decade in senior brewing roles with Molson Coors, said the craft brewing scene in Scotland has grown as consumers have looked to the US, where the “progressive craft brewing industry has been taken to a new level.” He noted that the Scottish industry has also been boosted by the highly-regarded courses in brewing and distilling at Edinburgh’s Heriot-Watt University, which have produced many graduates now playing key roles in Scottish businesses.
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