Popular Brewer Waters Down Beer To Pay Lower Alcohol Taxes

A Dutch brewery that specializes in beers and pale lagers has diluted its alcohol in an apparent effort to take advantage of new tax rules in the United Kingdom.

Grolsch Premium Pilsner decreased its alcohol by volume (abv) from 4 percent to 3.4 percent in an effort to reap the benefits of new tax rules offering a discount on weaker brews, according to Grocer.

The reduction will reportedly save its brewer nearly 23 pence for every 14.8-ounce can of Grolsch's beer sold, Metro reported.

The U.K.'s duty rates are as follows: beer with an abv of 3.4 percent or less is taxed at $12.04 per liter of alcohol, while beer with an abv of at least 3.5 percent (but less than 8.5 percent) is taxed at $27.29 per liter.

This isn't the first time Grolsch changed the alcohol content of the popular pale lager. In 2020, Grolsch Premium Pilsner was relaunched through Ashai UK, a brewery that specializes in beers and ciders, with an abv of 4 percent.

The new tax rules come right in time as 'drinkflation,' the phenomenon where beers are made weaker with less alcohol content while their prices increase or remain the same, wreaks havoc on lagers in the U.K.

Breweries are trying to recoup losses from operating complex supply chains while maintaining profitable growth amid inflation.

According to an alcohol research group at the University of Sheffield, lowering alcohol percentages by 0.35 percent could save breweries nearly $325 million Metro reported.

Grolsch's sales have been declining in the U.K. It saw a 2.9 percent revenue increase last year to $684 million but pre-tax losses increased more than two-fold, according to government records.

A spokeswoman for Asahi UK told Grocer that Grolsch has "learnt a lot" about "consumer preferences and evolving consumption trends."

"Following much analysis, we decided to reformulate Grolsch to a new abv of 3.4 percent, which went into market earlier this year," she went on to say. "We are confident this still delivers an excellent premium beer that will appeal to a broad range of consumers."

Other brands are also weakening their beers. Dark Star Hophead, another Ashai-owned lager, was diluted from 3.8 to 3.4 percent abv in the summer. Bud Light, Carlsberg Danish Pilsner, and John Smith's Extra Smooth also followed suit.

The original brew, which had an abv of 5 percent, was discontinued over a decade ago.