Thursday, January 23, 2014

Italian Craft Beer Makes a Political Splash at RHEX

Once known as Pianeta Birra, the RHEX or Rimini Horeca Expo has grown and grown and grown. Horeca is the sector of the food service industry consisting of establishments which prepare and serve food and beverages. The word is an abbreviation of the words Hotel, Restaurant and Catering. However, growing pains are being felt by Italian craft brewers. A few companies pulled out of this year’s event, notably Interbrau who is the largest distributor of craft beer in Italy.

The 2014 RHEX, which is a festival devoted to food and ran from 18-22 January this year, includes 1,465 expositions, 110,750 visitors from around the world, 5,000 business meetings, 500 top buyers from 5 different continents with well over 1,000 journalists and bloggers covering events from frozen goods, hotel equipment, technology to interior design and of course, wine and craft beer. The ribbon-cutting ceremony was performed by the Minister of Economic Development, Flavio Zanon, an important note that wasn’t lost on Unionbirrai president, Simone Manetti.

At the RHEX, Manetti addressed the issue of revising the excise duty on beer that was imposed by parliament in October last year (see Pathetic Parliament on this blog). The issue was also discussed at a seminar hosted by Unionbirrai during the event.

From October 2013, the excise duty was increased from €2.35 to €2.70 with two more increases to be made in March 2014 and January 2015. As Manetti put it in his address to the conference, “Taxes will go up to €3.04, with an overall increase of 20.4 percent. The rules are not entirely satisfactory.”

Italian Craft beer taxes are byzantine. To put it simply, taxes are assessed on the wort as it leaves the brew kettle. The problem with being taxed on the wort at this step of the brewing process is the brewer is paying tax on the inevitable losses that occur in the later stages of brewing. Beer is lost during fermentation, dry-hopping, filtering (if used at all) and packaging, but the brewer has already paid a tax on that lost liquid. It would make more sense for them to pay tax on the final product sold to bars, restaurants and public.

Giulio Marini, a member of the Italian Parliament said at the conference, “Italy does not provide for reduced rates for micro-breweries under 5,000 hectoliters per year: these tax advantages are provided by 71 percent of the EU countries. Furthermore, in Italy excise taxes are not applied to wine, on the contrary to what happens with beer.”

Marini made his case that further simplifications need to be made, such as how to introduce a constant coefficient of performance of the wort so that companies won’t pay the excise tax on losses. He suggested Italy should follow the ‘much easier’ laws of other European countries.

Taxation has played an integral part in the development of beer styles. English breweries are taxed on alcohol content; thus, alcohol content has historically been lower in England. While Belgian brewers were taxed on the size of their mash tun; thus, alcohol levels weren’t a driving force in the evolution of their beer styles. Conforming to local taxes has been a key, little-recognized ingredient in the history of beer. How this will play out in Italy is still to be seen. For this fledgling beer community to thrive, Italy will need to get their tax laws in line with their competitors in the rest of the EU. But, It’s Italy. We’ll see.

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