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Budget 2014 Live Updates: Trade celebrates the end of duty escalator

Published:  19 March, 2014

The trade has united to welcome Chancellor George Osborne's announcement that he is ending the duty escalator for alcohol and freezing spirits duty.

The trade has welcomed Chancellor George Osborne's announcement ending the duty escalator for alcohol and freezing spirits duty.

The duty on wine will still rise in line with inflation, expected to be around 3%. Changes usually take place the weekend following the Budget announcement. The Chancellor has also agreed to freeze the duty on Scotch whisky and cider and cut the duty on beer by 1p per pint.

March 20


Tim Wilson, Managing Director of the Wilson Drinks Report, said : "The robust campaigns by the drinks industry trade associations (including "Call Time on Duty" led by the WSTA with support from the SWA and TPA) have been rewarded with some welcome relief on alcohol duty. The surprise cut in beer duty is nominal, as it was last year, but it is perhaps a more symbolic acknowledgement of falling duty receipts for beer as volumes continue to decline. It will be interesting to see which brewers and retailers pass on the cut to drinkers, as many chose instead to take last year's duty cut to boost their own margins.

"The scrapping of the Alcohol Duty Escalator for cider, wines and spirits has also got a big thumbs up from the industry, as retailers and manufacturers face the challenge of a steady decline in alcohol consumption across most categories.

"One reason why wine may have been treated differently to beer, spirits and cider is that almost all of the wine drunk in the UK is imported, unlike the other categories where the majority of volume is brewed or produced in the UK. This is consistent with other parts of Chancellor Osborne's Budget message around an increased focus on manufacturing."

"One perhaps surprising aspect of the duty rates announced in the Budget was a freeze on duty for strong cider (7.5% - 8.5% ABV) - in the past this category has been singled out by the Government in its desire to reduce irresponsible drinking."


Paul Schaafsma, general manager UK & Ireland for Accolade Wines, said: "The scrapping of the duty escalator is great news for the drinks industry in the UK. Accolade has been a firm supporter of the 'Call Time On Duty' campaign, and whilst we would have liked to have seen a complete freeze on wine duty, we are delighted by the Chancellor's move and its implications for the trade and consumers. The removal of the duty escalator will enable us to work with our retail partners to ensure the consumer gets real value, because now HMRC are not taking a disproportionate and constantly increasing cut."


David Forde, UK managing director, Heineken:

"I will be raising a cold pint to the Chancellor. His announcement on cider and beer duty will be cheered at breweries, pubs, bars and living rooms across the UK. By freezing cider duty and again reducing beer duty - he sends a clear message that brewing, cider making and the great British pub are important to the UK's economy."


March 19


Nick Mantella, UK managing director of Codorniu Raventos, said: "Anything was going to be too much based on year-on-year increases. It may only by £0.06 a bottle but by the time it hits the shelf it's worth double and three times that on a restaurant wine list with margin and VAT that someone has to pay. It puts more pressure on businesses. Of course it is less than it couls have been and it means the Call Time on Duty campaign did get heard to a certain level."


Ben Smith, communications director for Concha y Toro (UK), said: "This news is timely from Concha y Toro's perspective, as we look to up our investment in this market as part of our longer term strategy. There is little doubt that had it not been for the well co-ordinated and relentless challenging of MPs and other influencers within the Treasury from the WSTA team and across the trade, our appeals for lenience in duty increases would have once again fallen on deaf ears."

Robin Copestick, managing director of Copestick Murray, sounded an altogether more cautious note: "While I have no doubt that abandoning the duty escalator is good for the UK wine industry and the UK wine consumers I think we need an element of caution before opening a celebratory bottle tonight.

"When I was contacted by the lobbyists about scrapping the escalator I dutifully wrote to my MP and attended a meeting at The House of Commons. I was trying to support the industry that has been so good to me despite the fact that I had some reservations about what everyone was trying to achieve.

"These reservations stem from the painful memories of the early part of this decade when nominal duty increases were immediately followed by retailers requests/demands that suppliers and brand owners swallow the duty increase to leave price points and the retailers margin intact. This meant that for many years prices from producers to retailers decreased, prices on the shelf remained constant and retailers margins were untouched. Great news for the consumers, retailers and also for the Chancellor's target to manage inflation but terrible news for the suppliers and producers. It was wholly unsustainable and not good for the industry as a whole.

"This period of very low duty increases was the beginning of a huge degree of suspicion from producers about the UK industry and I hope that we don't return to those days. When the escalator was introduced the increase in duty was so significant that it had to be passed onto the consumer. Not good for the consumers but it meant the industry started to become more sustainable again.

"Despite the escalator now being scrapped the annual duty increase is still a consumer tax and needs to be treated as such." 


Paul Bartlett, chair of the National Association of Cider Makers said: 

"We are very happy to toast George Osborne this evening with a delicious glass of cider. It is great news that the Chancellor has abandoned the duty escalator and frozen duty on cider this year in recognition of the important role that cider makers play in their local, rural communities as well as the impact on growers and cider makers from the winter storms and rain.

"Responsible drinkers will be able to enjoy British cider as the cycle of continual above inflation increases is now broken. This common sense decision will be celebrated by nearly 500 producers across the country as it protects the investment they have made over many years to grow the industry and support the rural community - as well as supporting thousands of jobs.

"We hope this decision signals a period of sustained support from government for a great British success story."

On new investment and export announcements: "Many cider makers have and will to continue to invest significantly in their businesses, hence the announcement on the Annual Investment Allowance is welcomed, as is the support UK manufacturers seeking to export. UK cider makers account for over half of all cider produced in the world and British businesses are very active seeking to grow export markets, so this might present a terrific opportuntity for producers and the UK economy."


Michael Saunders, managing director of Bibendum, said:

"I am delighted that the Government has listened to the WSTA's Call Time on Duty Campaign and scrapped the Alcohol Duty Escalator  - and the coordination of the trade has been fantastic. Many congratulations to Miles Beale and the team.

"That said, the decision to increase wine duty in line with inflation is still disappointing and whilst we welcome the announcement to cut beer duty, the Chancellor's claim that this will help pubs is misplaced. Nearly a fifth of all drinks sales in pubs are wine and this new increased duty rate will have a real impact on business.

"With the duty escalator now a thing of the past, the government now needs to move forward and engage with business, creating policies that are good for jobs and good for the economy."


Details just in from Budget document: the rate of RPI inflation will be 2.5%. What's more duty rates on spirits and most ciders will be frozen in cash terms this year, while duty on wine and high strength sparkling cider will increase by RPI from March 24, 2014.


Andrew Cowan, country director for Diageo Great Britain, said: "The Chancellor has today given a huge boost to one of Britain's most successful industries. From Scotch whisky to London Gin, British spirits are admired and enjoyed around the world. In freeing the industry from a debilitating tax policy the Government has given a show of support for these quality products. That will benefit the industry not just at home but also help us as we fly the flag for British business across the world."

David Frost, Scotch Whisky Association chief executive, said: "This show of support for distillers from the coalition government will be warmly welcomed across the Scotch whisky industry.

"We are delighted that the Chancellor and the chief secretary to the Treasury listened to our case for scrapping the unfair alcohol duty escalator and freezing whisky duty. It is a move that supports hard-pressed consumers, a major manufacturing and export industry and the wider hospitality sector.

"This fairer tax treatment in the UK, the third biggest market for Scotch whisky, also sends the right signal on excise policy to the governments of the 200 countries to which we export. So its effects will be felt around the world."


James Lowman, chief executive of Association of Convenience Stores said:

"We welcome the scrapping of the alcohol duty escalator and the decision to reduce beer duty by 1p, which will benefit consumers and reduce some of the pressure on local shops losing trade to the illegal market. However, there remains a significant illegal market in alcohol products, and we will continue to press for more focus on catching illegal sellers and tougher penalties once they are caught."

Gillian Walters, sales and marketing director at Cobevco:

"The removal of the duty escalator on alcohol is an important step for the industry. UK duty rates on wine are currently some of the highest in Europe which, in our view, only serves to penalise responsible drinkers, as well as producers and merchants.

 "This move has given the wine industry a great opportunity to pave the way for a return of producers that have been priced out of the UK in recent years."



Jonathan Isaby, chief executive of TaxPayers' Alliance, who joined with the WSTA and SWA in the Call Time on Duty campaign, said: "This is a good day for ordinary drinkers across the country. It is also a good day for the many small businesses that they support.

"The Call Time on Duty Campaign has consistently argued that the Alcohol Duty Escalator was bad for consumers, for business and for the economy. We applaud the Chancellor for taking the decision to get rid of it." 


Wine and Spirit Trade Association chief executive Miles Beale said: "It is great news that our Call Time on Duty campaign has been successful. This will be widely welcomed by consumers and businesses across the UK. 

"The Chancellor's decision to scrap the alcohol duty escalator a year early and freeze alcohol duty for spirits is fantastic news and will be widely welcomed by consumers and businesses. The move will help British pubs, bars, and restaurants up and down the country, and will boost jobs and investment in the great British drinks industry and in the hospitality sector more widely. 

"While we would have liked to have seen a complete freeze on wine duty, the WSTA and our Call Time on Duty campaign partners applauds the Chancellor's decision to scrap the escalator and will be raising a toast to George Osborne."


Mike Benner, the chief executive of the Campaign for Real Ale, said: "CAMRA is delighted to see the Chancellor implementing an unprecedented second consecutive cut of a penny in beer duty. This is not only about keeping the price of a pint affordable in British pubs but helping an industry which has been in overall decline continue on its long road to recovery. CAMRA cares greatly about the future of the Great British pub and it is clear from this Budget announcement that the Government do too.

"Keeping the price of a pint affordable is vital for the long-term health of the pub sector and CAMRA would hope this latest vote of confidence in British pubs will go some way to slowing the rate of closures, by encouraging more people to make use of their local this summer.

"No doubt many of CAMRA's 160,000 members will be raising a glass to the Chancellor this evening to toast another brilliant Budget for British beer drinkers."


Brigid Simmonds, chief executive of the British Beer & Pub Association, said: "This is fantastic news, and George Osborne is again the toast of Britain's brewers, pubs and pubgoers.  It will protect over 7,000 jobs over two years, mostly jobs of younger people in Britain's pubs.  

"It also shows that the government has understood our case, that taxes on British beer had become far too high, and action was long overdue.

"I hope this becomes a trend in future budgets for this British-made, lower-strength drink."

 * If you would like to comment on the Budget then please email or you can send your message through Twitter on @HarpersWine.