Alcohol duty increase ‘historic blow’ to wine and whisky industry

Chancellor Jeremy Hunt signals end of blanket alcohol duty freeze, which will send levies – and prices – soaring

The price of a bottle of wine could increase by 44p from this summer after the chancellor opted to freeze taxes on beer but signalled punishing increases for wine and whisky.

Jeremy Hunt promised a “Brexit pubs guarantee” in his budget, with the discount rising from 5% to 9.2%, although the chancellor offered scant detail on a longer-term pledge of a “Brexit pub guarantee”.

The duty cut will shave 11p off draught beer compared with beer sold in supermarkets. “British ale is warm but the duty on a pint is frozen,” the chancellor quipped.

Wine and whisky producers failed to see the funny side as they were left reeling by a double-whammy of soaring duties, warning the chancellor’s plans would “stifle British business”.

A blanket alcohol duty freeze will end on 1 August, meaning levies will rise in line with inflation at 10.1%. The effect on prices will be coupled with increased duty on higher strength drinks planned as part of reforms of alcohol duty unveiled in 2021.

This will mean a 44p increase in the price of a bottle of wine with an ABV of more than 12.5%, according to the Wine & Spirits Trade Association (WSTA), while a bottle of vodka could rise by 76p and port lovers will be £1.30 out of pocket per bottle.

A smaller number of drinks will go down in price, including 14p off a 5% pre-mixed can of G&T and 7p off sparkling wine at 12%, while the government has said there will be transitional arrangements for the hardest-hit products.

Nevertheless, the WSTA chief executive, Miles Beale, warned that the “crippling” rises in the price of most drinks would further fuel inflation.

“It will heap more misery on consumers. And it will damage British business, especially those in the hospitality supply chain, who are still trying to recover from the pandemic.”

Wine importer Daniel Lambert said the overall impact would be less revenue for the Treasury from wine sales.

Quite simply this is the problem when you let people that don’t drink get control. This level of tax increase will REDUCE the overall yield for government tax receipts for wine. So it’s bad for the consumer, bad for business, bad for inflation and bad for government.

— Daniel Lambert (Wines). 🇪🇺🇫🇷🏴󠁧󠁢󠁷󠁬󠁳󠁿🍇🥂 (@DanielLambert29) March 15, 2023

The Scottish Whisky Association said inflationary duty increase would deal a “historic blow” to the industry.

“We have been clear with the UK government that increasing duty would be the wrong decision at the wrong time, so it is deeply disappointing that one of Scotland’s largest and longest-standing industries has been treated in this way,” said the SWA chief executive, Mark Kent.

Kent issued a rallying cry to Scotch-loving MPs to “reject” the rise, adding: “This tax hike just adds to the pressures on the sector and breaks the UK government’s commitment to support Scotch.”

While Hunt failed to win over wine and spirits firms, he avoided a repeat of the beer blunder made by then chancellor Rishi Sunak and prime minister Boris Johnson in 2021, when draught relief on beer was first announced.

During a photocall to promote the cut, the pair posed with 30-litre kegs that were not, at the time, eligible for the relief.


Rob Davies

The GuardianTramp

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