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Alcohol Duty: ‘One tax rise in a year is alarming, two is unacceptable’

Published:  17 November, 2023

Ahead of the Autumn Statement on 22 November, senior figures in the wine industry are voicing their concerns amidst fears of a second alcohol duty rise in the space of four months.

In August the chancellor announced the largest alcohol tax hike for almost 50 years, presiding over a 20% duty increase for all wines between 11.5% to 14.5% abv. These new duty rates were met with widespread condemnation across the drinks industry and put the UK alongside Sweden and Ireland with the highest tax per bottle of wine in Europe.

Now, to add insult to already considerable injury, the government is proposing an additional 8.9% increase, in line with inflation, in addition to the 20% rise for wine in August. 

Many members of the trade have asked the government to reconsider, including Steve Finlan, CEO of The Wine Society, a business which notably didn’t increase its prices following the first duty hikes.

“These hikes represent an assault on consumers, wine retailers and wine producers and threaten the survival of many businesses at a time when consumer confidence is slowly returning. One tax rise in a year is alarming, two is unacceptable. We ask the government to reconsider,” said Finlan.

Meanwhile, the GM of one of the UK’s biggest-selling wine brands, Concha y Toro, has described the rumoured hikes, first revealed by The Times, as a “stealth tax on the worse off”.

“Excise duty is a fixed cost that is also subject to VAT, so it disproportionately affects shoppers at the lower end of the market,” said Simon Doyle, GM at Concha y Toro Europe.

“Wine has been an affordable luxury for many – but those couple of glasses at the end of a working week will become even more expensive. 61% of a bottle of wine bought at £6 already goes to the government in tax (excise £2.67, plus £1 VAT). A further increase will likely mean over two-thirds of a bottle bought at £6 will be made up of tax in one form or another,” Doyle added.

According to the latest NielsenIQ figures, the average price of a bottle of wine in the UK has risen from £6.36 a year ago, to £6.95, just two months after the August duty increase. A further increase of 8.9% would take the average bottle price to well over £7 a bottle.

The spirits sector was hit with a 10% hike in August, a further hike in accordance with RPI will almost double that, adding £1.50 to the price of a bottle of spirits.

In response, the UK Spirits Alliance (UKSA), which represents more than 280 small and independent distilleries has launched an advertising campaign (pictured above) at Westminster tube station with the message, “80% of a bottle of gin is tax. Support our pubs, support British spirits”.

The UKSA has also called for a duty freeze ahead of next week’s Statement.

“The chancellor should ensure a fair approach across the industry, and freeze duty on all drinks enjoyed by consumers, rather than simply a beer and a cider pulled in a pub. The Brexit Pubs Guarantee not only does little to support pubs, bars and restaurants but also penalises adult customers who might prefer a gin and tonic, or a spritz over a beer or a cider,” a UKSA statement read.