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Drinks companies join forces to plea for duty suspension

Published:  23 March, 2020

An initial 32 drinks companies (all WSTA members) have joined forces to plea for a cash lifeline, calling collectively on the Chancellor to suspend duty.     

On behalf of the group of companies, the WSTA today sent a signed open letter to Rishi Sunak MP calling on a last-minute reprieve to pay their alcohol duty bills.

With less than 48 hours to go before the UK hospitality sector and its suppliers have to cough up millions of pounds in alcohol duty payments, the letter follows the WSTA’s call last week on Treasury officials to urgently suspend all alcohol duty for a period of at least six months following the escalation of the Coronavirus crisis.

Since then all pubs, bars and restaurants have been told to close and on Wednesday (25 March) UK wine and spirit companies across the country will have to pay substantial duty bills.

If government agree to an immediate duty suspension, for at least six months, its actions will save UK wine and spirit businesses an estimated £5.8bn, according to the WSTA.

Signed by 32 UK wine and spirits businesses, the letter showed the “breadth of the despair being felt throughout the industry”, said Miles Beale, chief executive, WSTA.  

“On Wednesday many of these companies will have to shell out millions of pounds to the government at a time when they have no income and many of them are unable to pay their staff wages,” he said.  

It was now time for the government to honour its promise ‘to do whatever it takes’ to help businesses, added Beale.    

“It is within the government’s power to give our great British pubs, bars, restaurants, their suppliers and alcohol retailers an immediate injection of cash that will save many from going under.

“If this doesn’t happen the Treasury’s next collection of duty takings will be considerably lower as many businesses won’t have the funds to adapt and survive.” 

While a dusty suspension would be particularly welcomed by the on-trade and their suppliers who now have lost all their trade, the WSTA has made it clear that whilst it may appear that off-trade retailers are enjoying a boom in wine and spirit sales, this is likely to be a result of stockpiling and is unlikely to be sustained.

Any duty waiver would not lead to supermarkets generating additional profits because the products they are selling now are already duty paid, the WSTA said. 

“Suspending duty for retailers would allow them to introduce flexibilities to offer support to their suppliers, for example by extending payment schedules; and to meet extra staff costs, warehousing and delivery demands over the forthcoming period.”

Simon Cairns, WSTA member and head of drinks at the Co-op, said: “Suspending duty payments will not only ease the immediate pressure on our suppliers’ finances, it will give us time to pull together as an industry and re-structure supply chains, put a specialist workforce in place and enable the industry to rapidly re-bound once the threat of Covid-19 has passed.”

Other trade associations in the field, including SWA, BBPA, UKH and NACM, have already all confirmed that they are backing the WSTA’s call for the six-month duty suspension.