Beer market flooded

BEER drinkers have switched to cheaper, imported brands because of changes to the alcohol duty system, costing the Government millions of dollars in lost revenue.

The changes introduced in last year's Budget have led to beers from America, South Africa and Europe flooding the market.

Although the new system was promoted as revenue neutral, the Government admitted it expected to lose $271 million in the first year.

In the 12 months up to March this year, the revised estimate for alcohol duty was $1.01 billion, compared with $1.2 billion the year before the system was altered.

'The new system was devised to be revenue neutral on the basis that consumption patterns remained the same,' said Principal Assistant Secretary for the Treasury Alan Siu Yu-bun.

'But several factors have changed, including retail market development and consumer trends towards the lower end of the market.

'The new duty system makes it more economical to import products from outside and therefore there is more consumer choice having regard to value for money. It is of benefit to the consumer.' While cheaper beer is good news for the consumer, local brewers claimed the new system unfairly favoured importers because of the way tax was calculated.

The duty system was changed in March 1994 from a flat-rate basis for beers to a percentage of its value. But local brewers claimed importers enjoyed tax exemptions for certain production costs, allowing them to sell cheaper beer.

'There has been a fantastic increase in imported inexpensive beer in Hong Hong at retail level,' said Flemming With-Seidelin, Carlsberg general manager in Hong Kong.

'We told the Government the system was open to abuse and we've been proved right. Imported beers are having a field day.' A check on prices at supermarkets revealed a wide gap between the price of most imports and leading local brands.

Cans of locally brewed Carlsberg and San Miguel (330 ml) cost on average $6.40 and $5.30 respectively, although one leading store was offering San Miguel at $4.90.

By contrast, most imported beers cost far less. American import Pig's Eye Pilsner (355 ml) was on the shelves at $2.90, South African Castle (340 ml) $2.90 and Skol from Holland (330 ml) $2.60.