Wine prices to rise as tax changes loom

By James Bayley

Published: 04 October, 2024

Wine prices are set to increase as UK retailers brace for significant changes to wine taxation starting February 2025. Businesses warn that the new system will require six-figure investments to handle the administrative burden, with potential annual costs also running into similar sums.

Majestic, Laithwaites, The Wine Society and Cambridge Wine Merchants are among the retailers informing their customers that the upcoming tax regime will lead to price hikes. The changes will eliminate the current flat rate of £2.67 for wines between 11.5% and 14.5% abv, introducing up to 30 different rates based on alcohol strength. This means the duty on a 14.5% abv bottle will rise to £3.09.

The Wine and Spirit Trade Association (WSTA) and leading retailers have called for the government to retain the existing easement, arguing that removing it will burden businesses and increase costs for consumers. “Businesses like ours will need to invest six-figure sums just to develop the systems required to handle the new approach, with ongoing administrative costs likely to run into similar sums on an annual basis,” said Majestic and Cambridge Wine Merchants in a joint statement to customers.

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Miles Beale, chief executive of the WSTA, commented: “This week we see a bleak warning from wine retailers who are so concerned about the impact of unnecessary and costly red tape due to come into force next year, that they feel it is only right that their customers know that more price rises are coming down the line.”

Steve Finlan, CEO of The Wine Society, added: “If the new government is serious about listening to business then they must recognise an entire industry united against the proposed new duty regime. It should be simple to extend the current easement and then enter into meaningful dialogue to find a solution that works for government, business and consumers.”

Retailers are also worried that some wine products may disappear from the UK market entirely due to the increased complexity of exporting to Britain. “Smaller, family-run vineyards producing incredible wines are unlikely to change processes that have been in place for generations just to suit the UK market,” the joint statement warned.

John Colley, CEO of Majestic, emphasised the wider impact: “Removing the wine easement will disproportionately hit small businesses – including the 900 independent wine merchants operating across the UK. This will restrict growth and threaten livelihoods at a time when we should be doing everything we can to support our high streets.”

UK alcohol sales have already declined following last year’s record tax hike, which led to a £1.3bn drop in revenues to the exchequer. Industry leaders argue that keeping the current system would support business growth and stability without costing the government.

With less than four months before the policy changes take effect, the industry is urging the government to reconsider its stance at the upcoming Budget on 30 October, highlighting that failure to act could damage the UK’s position as one of the world’s top wine importers.

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