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Spirits sales down 20% after August hikes

To strengthen its case, the Wine and Spirit Trade Association (WSTA) has revealed previously unpublished off-trade sales figures, showing a 20% decline in spirit sales and a double-digit drop for wine in the last 28 days.

The drop-off in wine and spirits sales, predominantly in UK supermarkets coincides with the largest alcohol duty increase in almost 50 years imposed by chancellor Jeremy Hunt on 1 August. 

• Read more: Alcohol Duty - ‘One tax rise in a year is alarming, two is unacceptable’
  

UK firms are now extremely concerned that a second duty increase at the Autumn Statement will further threaten the survival of some businesses.

Despite an overall drop in inflation wine and spirits have seen nearly a triple-digit increase in the last three months.

Miles Beale, CEO of the WSTA, said: “We have long argued that duty rises are counterproductive and lead to reduced sales which means less revenue to the exchequer. The most up-to-date sales starkly show that consumers are still in the grip of a cost-of-living crisis and cannot afford to keep stretching their budgets just to be able to enjoy some of life’s little luxuries.

“We are asking the chancellor to stop, think and freeze alcohol duty. In August the treasury introduced the largest alcohol tax hike for almost 50 years adding over 10% duty increase for spirits and over 20% increase for 4 out of every 5 wines of all wine sold in the UK. A further rise is damaging to British businesses, will pile on more misery for consumers resulting in less cash for the exchequer.” 

If Jeremy Hunt increases duty by RPI, currently 8.9%, the cumulative excise duty increases since August would be 68p on a bottle of wine, £1.50 on a bottle of spirits and £1.67 on a bottle of port.

The hikes would amount to a 30% increase in wine duty and a 20% increase in spirit duty, in the space of six months.

If consumers were expected to pay for a second duty rise this year the average price of a bottle of red wine is expected to go over £8 for the first time. And the average price of a bottle of gin or vodka is expected to exceed £18 for the first time.

Kathy Caton, MD of Brighton Gin, said: “The rise of small-scale craft distilleries has been an amazing growth area over recent years, but is now at risk of serious crisis and decline. Many craft distillers don't have the financial reserves to cope with the toxic combination of much higher costs, and declining sales while consumers deal with navigating the ongoing cost of living crisis. 

“The August duty hike has had a very clear and damaging effect on sales. There have already been some very high-profile closures of distilleries within our sector and anecdotally I know of many others who are considering shutting operations – if distilleries go bust, they won't be contributing anything at all through taxes and duty. I would call on the chancellor to support and not suffocate what has been a British business success story but is now in danger of a serious contraction.”

• Miles Beale
• WSTA
• Rishi Sunak
• Jeremy Hunt
• Duty hikes
• Kathy Caton
• Brighton Gin