The Chancellor has once again failed to listen to industry and instead has chosen to make everyone suffer at the Autumn Budget.
The Government’s “typically disappointing and shortsighted decision” to increase alcohol duty by RPI will perpetuate the economy’s “doom loop”, a deflated Wine and Spirit Trade Association (WSTA) warned today.
The new tax raid on alcohol will damage British business, lead to higher prices for consumers and a reduction in sales, which in turn drains Treasury funds.
With RPI set at 3.66% duty will go up by 11p on a bottle of Prosecco, 13p on a bottle of red wine and 38p for a bottle of gin from 1 February next year.
When the duty increases kick in next year wine and spirit prices will have risen by almost £1 a bottle in a year, taking into account the ongoing burden of duty rises, the new waste packaging tax and VAT.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association, said:
“This Budget has been dubbed a death by a thousand cuts, and for wine and spirit businesses those cuts run deep. Our members are still reeling from the tax hikes introduced in February, and the additional burden of the costly new glass tax, known as EPR. Coupled with rises in National Insurance, increases to the minimum wage and business rates, it is no surprise that wine and spirit producers – along with our beleaguered hospitality sector – feel under sustained attack.
The Government’s typically disappointing and shortsighted decision to raise alcohol duty yet again will only prolong the doom loop. Despite the OBR at last acknowledging higher prices lead to a decline in receipts, the Government fails to recognise that its own policy is driving up those prices. Amazingly, the Treasury continues to press ahead with its ill-founded plan to pile further duty increases on alcohol.
Prices will rise once more for consumers, British businesses will suffer, and Treasury receipts will continue to fall – forecast to be £700 million lower than last year and £1.1 billion lower than was forecast in March.”
Despite evidence which shows that following a series of punishing tax hikes alcohol sales have been in steady decline since 2023, the Treasury has failed to take action to freeze alcohol duty and break the doom loop.
The OBR has been forced to revise down its estimates. Alcohol duty receipts are now forecast to be £700 million lower in 2025/26 than in 2024/25 and £1.1 billion lower than the OBR had forecast in March.
John Colley, Executive Chair and CEO of Majestic Wine Group, said:
“It is bitterly disappointing that the Government has again chosen to ignore warnings from businesses across the wine, retail and hospitality sectors by pressing ahead with what will be another damaging increase in alcohol duty.
“The retail and hospitality sectors are already under immense pressure, yet the Government continues to dismiss our concerns and increase the tax burden on businesses. The decisions the Chancellor has made today will only hamper investment, which is critical to driving growth in our sector.
“We would urge the Government to start listening to the WSTA, the BRC and UK Hospitality, and engage with them in a meaningful way that creates growth opportunities for businesses and our economy.”
The table below shows examples of duty increases for popular mid-priced brands available in a UK supermarket based on a 3.66% RPI increase. As VAT is levied on duty, the price increase is greater than just the duty increase.
The WSTA is the UK organisation for the wine and spirit industry, representing over 300 companies producing, importing, transporting and selling wine and spirits. The WSTA works with its members to promote responsible production, marketing, and sale of alcohol.
