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Exclusive: Hallgarten to hold duty rise in bid to ease pain for trade customers

Published:  25 May, 2023

Faced with a significant duty rise from 1 August, many in the business of selling wine are bracing themselves for a new round of pain. Unwilling to pass on price rises to cash-strapped customers, but needing to protect already thin margins, this unpopular hike in tax is understandably the talk of the trade. And all of this is to happen at a time when implementation will impact on hospitality outlets, forcing a reorganisation of wine lists during the crucial summer trading period.

Step up Hallgarten & Novum Wines, which is taking what it describes as the “extraordinary step” of offering a reprieve to its trade customers by allowing them to hold prices across the peak summer period.

The scheme, revealed exclusively to Harpers by MD Andrew Bewes, will credit accounts for the duty increase (some 44p per bottle, excluding VAT) on August sales of a core selection of 148 wines, targeting the “sharp end” of sales, on wines typically under £30-£35 on restaurant lists and on retail shelves at up to £12.50-£14.

    • Read more: Government has “failed” the industry – now extend alcohol duty relief

The aim is to allow trade customers to fix list prices at pre-duty hike levels until September, avoiding the need to re-train staff, reproduce lists and marketing materials, and potentially have to adjust stockholding during a time when businesses also hard-pressed for staff and need to focus on delivering sales and service.

“We are talking about a horrendous level of duty change coming in August – and another in 2025, which will probably be even more cataclysmic – but since HMRC announced the changes, we have all been concentrated on fighting them,” Bewes told Harpers.

“But we’re all in the same boat and we’ve turned our attention away from [fighting], to the challenges presented by implementing these changes, which we now need to face.

“It’s pretty unusual to have changes mid-year. Traditionally, it was April, then moved to February, but [those changes] gave a lot of notice, whereas this is coming in right in the middle of summer and that has significant implications for customers and suppliers.”

Bewes added that changing a list is “not as simple as changing a few figures”, being instead a “massive burden” over the peak summer period, just when most in hospitality are flat out.

Hallgarten intends to partly fund the scheme by clearing additional stocks in July, generating what it describes as “finite” amounts to support the stopgap until September, but while also recognising that many hospitality business do not have the available cash (or space) to stock up ahead of 1 August and thus soften the blow.

“In my 39 years working in the trade, I don’t remember ever having to impose price rises of the level the trade is now facing… it will have unintended consequences, leaving hospitality businesses facing stark choices, and I don’t think the government has thought about this in any shape or form,” said Bewes.

Echoing a complaint of others in the trade, Hallgarten’s MD concluded with the dry observation that: “We already spend well over a million a month on duty and it’s our biggest selling product by quite a long way.”

The hope for the trade now – and with fresh ears in the form of Sir Graham Brady MP stepping up to chair the Wine & Spirits APPG – is that the government listens and considers the absurdity of trying to implement the proposed abv-linked duty escalator, which has been pushed back to 2025, rather than continue to pummel a trade that generates £49bn in economic activity for the UK (WSTA figures).

Those wishing to make their voice heard can urge the government to take action with the help of the WSTA’s Alcohol Excise Duty Review Campaign Hub.