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UK wine industry backs calls for alcohol duty cut

Published:  16 February, 2015

The UK's growing wine industry has called for the Chancellor to cut the high rate of alcohol duty rate by 2% in the upcoming Budget.

The UK is the sixth largest wine market globally and worth £17.3 billion to the British economy, according to research by EY, with wine now the UK's most popular alcoholic drink.

Smaller producers, distributors and retailers say cutting the duty would stimulate the economy to the tune of £1 billion as well as reducing the deficit.

English wine is gaining global recognition for its top quality, but producers argue that the current tax system makes it unable to compete fairly with its European contemporaries.

Chapel Down, KentChapel Down is backing calls for a reduced duty rate

Frazer Thompson, chief executive at Chapel Down Winery in Kent, said: "We produced about a million bottles of still and sparkling wine last year, we are a significant employer and investor in Kent, and are making an ever growing and valuable economic contribution to the UK economy. Yet the current level of duty and tax we contribute to the exchequer - up to 45% per bottle in our case but 60% of the average priced bottle of wine in the UK- is out of all proportion to other EU countries. It is a significant limitation to our speed of growth and a dampener on investment that reduces the amount of money we can spend in expanding our facilities and employing more people.

"This is an important issue that stretches beyond our own production. It is felt by all those along the supply chain as well as those who consume our products. The government needs to recognise the growing importance of the English wine industry to enable greater sustainable growth and generate more jobs."

Peter Richards MW, wine expert of BBC's Saturday Kitchen, said the "punitive tax regime is limiting our ability to enjoy the fantastic wines that this country has to offer. It also acts as a brake on jobs, earnings and tax revenue from a growth sector in our local economy. We're starting to make some amazing home-grown wine as well as artisan spirits, and we need to let this grow rather than strangling it with an unfair tax burden".

Wine retailers are also joining the calls for a reduced duty rate. John Charnock, UK managing director at Jascots, said: "We hold a large proportion of our stock 'duty-paid' so that we can send wines to our customers at short notice. As such, the huge duty costs in the UK have a very damaging effect on our cash-flow and we frequently pay duty weeks, if not months, before selling and being paid for it. For our customers in the hugely precarious hospitality sector, a 2% cut in duty would translate to an enhanced margin of somewhere between £0.30 and £0.50 per bottle (at average sale price for a typical restaurant). Ultimately a 2% drop in duty would help us to retain and develop our valued employees, hire new staff and to continue to deliver an excellent service to a vital sector of the UK economy."

Hal Wilson, managing director at Cambridge Wines, agreed: "With 50 members of staff and eight retail centres, we are a significant local employer, but it has been extremely tough to prosper over the last five years, thanks to a punitive tax regime."

He said the 2% cut would "help us get back to the levels of growth we experienced in the past" and benefit the entire hospitality sector.

WSTA chief executive Miles Beale said: "The home-grown UK wine industry has emerged as an increasingly important industry in recent years with the potential for expansive growth in the next decade and beyond. However, this growth will be stunted if current levels of duty remain the same.

"Small companies working in the industry lack the necessary support and backing from the Government. These are organisations which can often operate on a small scale with highly skilled employees, but which have the potential to make a significant contribution to the economy, job creation and skills.

"This is why we are calling on the Chancellor to cut duty on wine at the next Budget, which will not only boost jobs and growth but also generate more than £1 billion for the public finances."

Find out more about the Drop the Duty campaign here.