The British cider industry faces mounting pressure to abandon traditional apple-growing practices as tax increases, energy bills and packaging expenses squeeze profit margins, according to producers across Somerset. BBC News reports that several established cider makers are warning the sector may be forced to switch to imported concentrate and pulp to remain viable, threatening centuries-old orchards and rural livelihoods.
The government has responded by increasing the value of Small Producer Relief, which offers lower alcohol duty rates to qualifying smaller and medium-sized producers. However, industry figures argue that this support falls short of offsetting the cumulative impact of recent fiscal and operational pressures.
What costs are hitting cider makers hardest?
Higher alcohol duty, surging energy bills and increased packaging expenses are the primary drivers of financial strain. Matilda Temperley, director of Burrow Hill farm near Martock, highlighted the severity of the tax burden facing her operation. Her farm has cultivated apples for 300 years, yet she warned that the economics of traditional cider production are becoming untenable.
Temperley pointed out that cider produced at 6% alcohol faces a significantly higher tax rate than mass-produced alternatives, despite using the same raw materials. She stated that between now and February 2027, her business would experience a 61% increase in tax on standard 50-centilitre bottles. When combined with other cost pressures, she said the cumulative effect since 2020 amounts to a 90% rise in tax costs alone.
"The thing that will happen is that if you're a big cider maker, you're going to look to cut your costs and the only way to cut costs is to stop using British apples. That's a real tragedy because cider should be made from these beautiful orchards."
Isaac Stell, a financial analyst at Wealth Club in Bristol, explained the broader economic context. The recent budget, he noted, focused on raising revenue from areas other than the main rates of income tax, national insurance and VAT for working people. Cider producers are also contending with higher employer National Insurance contributions and increases in the minimum wage.
Stell warned that the cost burden will ultimately reach consumers. He observed that producers facing these additional expenses will pass them on to the pubs, clubs and restaurants that supply their products, and from there to an already financially stretched consumer base.
How does Small Producer Relief work and who benefits?
The government's support mechanism targets smaller cider makers through an expanded Small Producer Relief scheme. To qualify, a producer must manufacture no more than 4,500 hectolitres of pure alcohol annually, and eligible products must be below 8.5% alcohol by volume, with less than half of the producer's output made under licence, according to government guidance.
The relief preserves a full duty discount for the smallest cider makers producing up to 5 hectolitres of pure alcohol. The Budget 2026 allocated £10 million annually to make Small Producer Relief more generous, supporting more than 2,000 small alcohol producers across the UK, according to government publications.
However, a significant limitation exists: the government's own evaluation notes that smaller cider makers may struggle to benefit from Draught Relief because they typically sell in bottles and cans rather than draught, limiting access to one of the main duty concessions available to the sector.
Matt Gillett from Tricky's Cider in Low Ham acknowledged that his operation will qualify for Small Producer Relief, but he emphasised that the benefit will be modest given that alcohol duty represents a substantial portion of his monthly costs. Despite the financial pressures, Gillett remains committed to sourcing from local orchards rather than importing pulp or concentrate.
"We are a craft producer here in Somerset and are proud of the fact we take from local orchards, traditional orchards, and use the fruit that is available here in this county."
Are all cider makers struggling equally?
The impact of rising costs varies significantly depending on business size and market position. The Showerings family, known for producing Babycham, has operated in Shepton Mallet for more than 14 generations and has experienced substantial recent growth. Matthew Showering, the firm's managing director, reported that the business has expanded from 80 employees to approximately 350 over the past decade.
Showering stated that the company has performed well in recent years, producing drinks that are popular and growing in market share. While acknowledging the reality of rising costs, he expressed a preference for minimal government intervention, saying the company would rather the government remain as uninvolved as possible in business operations.
This contrasts with the experience of smaller, independent producers who lack the scale and market reach of larger operations. The broader hospitality sector has also been affected; a Worcester publican closed his seven-year-old pub in October 2026 after being overwhelmed by rising costs and declining customer spending, highlighting how cost pressures ripple through the supply chain from producers to retailers to consumers.
What is the government's position?
A Treasury spokesperson acknowledged that the cider industry makes a vital contribution to rural economies and communities. The statement noted that cider continues to benefit from significantly lower duty rates than other alcoholic drinks. The government framed its response as providing additional support by cutting costs for pubs and bars that are vital customers for the industry, with draught pints continuing to benefit from draught relief.
However, industry representatives argue that these measures do not adequately address the scale of the challenge. The combination of tax increases, energy costs and wage pressures creates a structural problem that targeted relief schemes cannot fully resolve, particularly for producers committed to using British-grown apples.
What happens next?
From 1 February 2027, alcohol-duty rates are scheduled to rise by 4.55% in line with the Retail Price Index. The revised Small Producer Relief discounts are also due to take effect on that date, according to government publications on alcohol duty changes. This timing means that any benefit from increased relief will be partially offset by the automatic duty uprating.
The cider industry will face a critical juncture in the coming months as producers decide whether to maintain traditional production methods or shift to lower-cost imported ingredients. The decisions made by individual cider makers will determine whether Britain's historic orchard heritage survives or whether the sector undergoes a fundamental transformation in how it sources its raw materials.
