Wine and spirit businesses have again called on the chancellor to freeze alcohol duty at the Autumn Statement, citing data that shows a “worrying decline in sales”.
The Wine and Spirit Trade Association (WSTA) today said it has been shown unpublished off trade sales figures which show a drop of around 20% in spirit sales in the last 28 days, and a double-digit drop for wine during the same period.
Despite an overall drop in inflation, wine and spirits have seen “nearly a triple digit increase” in the last three months, the WSTA said.
“We have long argued that duty rises are counterproductive and lead to reduced sales which means less revenue to the Exchequer,” said WSTA chief executive Miles Beale. “The most up-to-date sales starkly show that consumers are still in the grip of a cost of living crisis and cannot afford to keep stretching their budgets just to be able to enjoy some of life’s little luxuries.
“We are asking the chancellor to stop, think and freeze alcohol duty. In August the Treasury introduced the largest alcohol tax hike for almost 50 years adding over 10% duty increase for spirits and over 20% increase for 4 out of every 5 wines of all wine sold in the UK. A further rise is damaging to British businesses, will pile on more misery for consumers resulting in less cash for the Exchequer.”
Steve Finlan, chief executive of the Wine Society, said purchasing is down, prices are up and “on top of the shambles of aborted deposit and return and failing PRN glass recycling schemes it feels like an assault on the industry for no net gain”.
“Jeremy Hunt said this was a budget for growth, instead his actions will cause misery for 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.”
Simon Doyle, general manager of Concha y Toro Europe, added that alcohol duty increases are a tax on the consumer.
“We’ve seen very high levels of inflation this year, and in wine prices most of that inflation is being driven by the recent duty increase,” he said. “Excise duty is a fixed cost that is also subject to VAT, so it disproportionately affects shoppers at the lower end of the market. 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 of 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.”
Kathy Caton, managing director of Brighton Gin, said the rise of small-scale craft distilleries has been an “amazing growth area” over recent years, but is now at risk of decline.
“Many craft distillers don’t have the financial reserves to cope with the toxic combination of much higher costs, and declining sales while consumers deal with navigating the ongoing cost of living crisis,” Caton said. “The August duty hike has had a very clear and damaging effect on sales. There have already been some very high-profile closures of distilleries within our sector and anecdotally I know of many others who are considering shutting operations – if distilleries go bust, they won’t be contributing anything at all through taxes and duty. I would call on the chancellor to support and not suffocate what has been a British business success story but is now in danger of a serious contraction.”
According to the WSTA, if Hunt chooses to increase duty by RPI, currently 8.9%, when added to the increases on August 1, this would result in cumulative excise duty increases of 68p on a bottle of wine, £1.50 on a bottle of spirits and £1.67 on a bottle of port.
“The budget busting duty hike would mean the chancellor has announced a 30% increase in wine duty and 20% increase in spirit duty, in the space of six months,” the WSTA added.
There is still time to write to your MP before November 22. To download a free letter template from the WSTA, click here.