British distillers have spoken up after the Prime Minister doubled down on his claim that the sector is faced with a “great problem” of whether they can produce enough to meet demand.
In his speech at the British Chambers of Commerce speech this morning (26 June), Keir Starmer said: “I’ve spoken to some of our whisky and gin distillers about the India deal. And they’ve told me that their concern now is whether they can produce enough to meet the demand. What a great problem to have.”
Some however, were less than impressed with the remarks.
Karl Mason, director of Masons Gin in Aiskew, North Yorkshire, and a UK Spirits Alliance spokesperson, said the Prime Minister’s “nonsense narrative turns a blind eye to the very regulatory and tax barriers his own government continues to impose on the spirits sector. The punishing tax burden we face at home makes it virtually impossible to invest in export growth. When 70% of a bottle of gin is swallowed by tax, small and medium distillers aren’t just struggling to grow, they’re fighting to survive.”
The UK Spirits Alliance, which represents almost 300 gin, vodka, rum and whisky makers, points to the growing list of burdens currently stifling the industry. While distillers are keen to take advantage of new trade deals, the regulatory environment in the UK remains challenging, particularly when it comes to tax rises from successive governments.
A 3.65% increase in excise duty, announced in Rachel Reeves’ Budget last year, came into effect in February. This followed a 10.1% increase imposed by the previous government in 2023. UK spirits such as gin, rum and Scotch are the highest-taxed category of alcohol in the UK, with over 70% of the cost of an average bottle claimed by HMRC.
“Without reform to our domestic tax regime, talk of trade deals is meaningless. The government can sign as many agreements as it likes, but they won’t touch the ground unless distillers are given the space to stand on it. Our sector deserves more than empty promises – it deserves a chance to compete,” Mason said.
The sector has also been experiencing a decline in business confidence due to inflationary pressures, trade barriers and the introduction of new packaging fees. Misrepresentations of the sector by government isn’t helping, argues the UK Spirits Alliance.
This is backed up by its poll of pubs, carried out ahead of the Autumn Budget, which showed that one in four have a distiller supplier that has gone out of business. A survey of distillers following the 2023 duty increase also found that 70% of distilleries in the UK fear for their ability to invest in their business.
