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Australian wine producers lobby UK government over proposed duty reform

Published:  24 January, 2022

Australian wine producers have joined forces with Wine Drinkers UK, a collection of leading wine lovers, makers and sellers, to lobby the Chancellor to rethink his proposed alcohol duty reform.

Although a major trade deal was successfully negotiated between the two countries in December 2021, winegrowers have complained that proposed duty hikes on higher abv wines will make Australian labels a more expensive proposition in the UK, reversing a potential benefit of the deal.

In terms of market share, Australian wines are the most popular in the UK retail sector, with brands like Jacob’s Creek maintaining an impressive sales momentum.

But the antipodeans are warning the £26m benefit from the trade deal is being replaced by £70m of costs. They believe that the new duty system will add 40p to a bottle of Australian red, as many brands have an average alcohol level of 13.5%.

Tony Battaglene, chief executive of industry lobby group Australian Grape and Wine, commented: “It is unfortunate that the result of the free trade agreement will be directly impacted by this (tax). We are hoping they will look at it and come to a better solution. At the moment, it is very concerning.

“This will discriminate against red wine imports. We estimate it will add 40p to the price of a bottle, and that’s a lot when you’re talking about a wine that is £5.”

A spokesperson from Treasury Wine Estates added: “We understand it will wipe out the £26 million benefit for Australian wine growers agreed upon in the recent UK/Australia Free Trade Agreement, replacing it with £70 million of costs and diminish future growth prospects in the largest export market for Australian wine growers and UK consumers. The new duty could add up to 40 pence to a bottle of Australian wine for UK customers.”

A spokesperson for Wine drinkers UK noted that the duty reforms will likely affect wines from South Africa, the US, New Zealand and Argentina, due to the, on average, higher alcohol levels.

“It’s a far cry from when Chancellor Rishi Sunak boasted of ‘taking advantage of leaving the EU’ when he announced the biggest reform of alcohol duties for more than 150 years in his October budget statement,” a spokesperson said.

“Under current Treasury proposals, duty is set to increase on wine with alcohol content above 11.5%, which means wine from hotter countries like Australia will be taxed more because their grapes naturally produce more alcoholic wine, cancelling out the benefits of the free trade agreement.”