Total beer sales fell 3.5% in 2010, with pubs bearing the brunt of the falls while supermarkets held firm.
Those are the findings from new research issued by the British Beer and Pub Association (BBPA), which blamed rises in beer tax.
Sales of beer in pubs were down 7.5%, compared to just 0.6% in shops.
Meanwhile the Government collected £257m less in tax revenues than at 2009 volumes.
The new figures leave no room for the Government to levy further planned beer tax hikes in the Budget, BBPA chief executive Brigid Simmonds said.
Pub beer sales have fallen by a dramatic 20.2% in the past three years.
Brigid Simmonds, BBPA chief executive, commented: "Huge tax rises are having a big impact on beer sales. The Government should abandon plans for above inflation hikes in beer tax in the Budget, as further rises are simply unsustainable.
"This has had a telling impact. Beer and pubs are vital for the economy, and pubs play a vital role in local communities. With beer the core seller in pubs, the Government needs to pursue more pub-friendly tax policies. This would create a win-win situation, with a boost for lower-strength, pub-based drinks like beer, and more revenues for the Treasury."
By Neil Gerrard
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