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British pubs are put at risk by Chancellor’s plan to penalise alcohol

General | 12 October, 2018

Philip Hammond is being urged to scrap planned tax rises to support the home grown English and Welsh wine industry.

Frustrated English wine producers have put their concerns over Government’s lack of support for the industry in a letter to the Chancellor and Environment Secretary Michael Gove calling for a freeze on wine duty.

In the letter signed by 13 of the WSTA English wine members says the significant tax burden is restricting growth and is damaging to rural communities.

The English and Welsh wine industry are currently reaping the benefits of the record heatwave this summer which has provided near perfect grape growing conditions.

In the last ten years the area of planted vines has more than doubled with a record-breaking one million vines planted in each of the last two years and even more due in 2018.

However, the celebrations surrounding a bumper harvest are set to be overshadowed by bad news from the Chancellor next month if he goes ahead with planned 3.4% duty rise in line with inflation.

Thanks to this year’s plentiful harvest the Chancellor is set to receive an extra boost in Treasury coffers when the 2018 vintage goes on sale.

Britain’s biggest wine producers want to understand why the Government insists on taxing what we do best most heavily.

Miles Beale, Chief Executive of the Wine and Spirit Trade Association said:

The Wine and Spirit Trade Association are calling on the Chancellor to back British pubs and scrap his punitive plan to raise alcohol duty.

Wine and spirit sales in UK pubs account for 36% of the value of alcohol sold, worth almost £6 billion to pubs which is an increase of some £270 million, up 5% on last year.

The great British pub has seen a huge increase in sales of sparkling wine and gin in recent years thanks to the popularity of sparkling wine and the ginaissance.

In the last five years Brits have bought over 24 million bottles of sparkling wine worth over £600 million in British pubs. Five years ago, pub goers spent less than £200 million on fizz.

It’s a similar story for gin which brought in around £620 million to pubs last year, £190 million more than the previous year. The gin menu is now a common feature in British pubs with most bars choosing to stock a range of different gin brands.

Research by CGA Strategy on behalf of WSTA shows that, on average, 4 new spirit brands were added to the back bar since 2013, meaning that there is now on average 36 spirit brands behind the bar of a typical pub.

Brits’ love affair with gin has meant that in the last 12 months the juniper-based spirit has accounted for over half of all value growth in UK pubs. Gin sales in pubs grew by an astounding £190 million compared to beer sales which grew by an extra £58 million.

Despite the boost gin and fizz has brought UK pubs continue to remain at threat of closure stifled by the UK’s excessively high duty rates.

Landlords across the country have had to dig deep to pay huge duty bills, totalling over £820 million on wine and spirits alone, into the Treasury coffers. This is the equivalent of almost £17,000 per pub.

The total duty collected from British pubs in the last 21 months has hit £2.1 billion. But there is worse news to come for the pub trade – if Philip Hammond increases the already excessively high duty rates on alcohol, pubs across the country stand to lose an extra £28m next year – £558 per pub.

The WSTA recently commissioned a study by one of the world’s biggest accounting firms, EY who concluded that a freeze to alcohol duty is “the most favourable outcome for the UK economy”.

In November the Chancellor put a freeze on duty and received an extra £380 million in between February and August, up 6% on the same period the year before.

Philip Hammond’s planned 3.4% rise in line with inflation would undermine an industry already facing a tough time with CAMRA estimating an average of 18 pubs closing a week.
A further 3.4% duty rise would add another 7p on a bottle of still wine, 9p on a bottle of sparkling and 26p to a bottle of spirits.

The WSTA are calling on Philip Hammond to echo his actions from the November Budget and freeze alcohol duty to support the historic British pub following a spate of closures.

During his Budget speech in November, the Chancellor said: “Recognising the pressure on household budgets and backing our Great British Pubs, duties on other ciders, wine, spirits and on beer will be frozen.”

The UK alcohol industry is one of the most heavily taxed in Europe, as we are stung by the third highest duty rates for wine and fourth highest duty rate for spirits across the EU.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association said:

“The Chancellor can once again show his support for the great British pub by scrapping his plans to raise already punitive duty rate.

“Wine and spirits are increasingly vital to the prosperity of our historic British pubs with wine and spirt duty accounting for more than a third of annual pub sales. We are calling on Philip Hammond to recognise the importance of wine and spirit industry and help save our British pubs by freezing duty, allowing them to reinvest and stay in business.

“It is proven that freezing alcohol duty has brought in more revenue for the Treasury coffers, not less. So a duty freeze makes sense for everyone – from the Chancellor, to pub and bar owners, and consumers.”

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