Wine and spirit businesses share a collective sigh of relief over alcohol tax freeze

Alcohol Duty Review | 22 November, 2023

Chancellor provides a little Christmas cheer – the WSTA says let’s make this freeze last all year!

The Wine and Spirit Trade Association has welcomed a freeze to alcohol duty, saying it comes as “a huge relief” to a sector that has “taken a battering”.

British businesses were bracing themselves for a second duty increase at the Autumn Statement which would have come as a punishing blow hot on the heels of the Government’s new alcohol duty regime – brought in on August 1 – which introduced the largest alcohol tax rise for almost 50 years.

The WSTA and its members were able to provide compelling evidence that a tax freeze would bolster British businesses and at the same time benefit Treasury coffers.

The Chancellor’s decision to freeze excise duty comes at a time when wine and spirits have seen a nearly triple digit increase in inflation in the last three months. The sector is also experiencing dramatically increased supply chain costs and an astronomic increase in the glass recycling fees.

The WSTA is calling on Government to lock in the freeze, for the rest of this Parliament, to support businesses and help prevent rocketing prices for cash strapped consumers.

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

“The alcohol duty freeze comes as a huge relief to wine and spirit businesses and the hospitality sector who have taken a battering over the last few years. We are extremely relieved that the Government – and Exchequer Secretary, Gareth Davies in particular – has listened to our pleas not to hit wine and spirit businesses and consumers with another painful duty increase.

Following the introduction of an entirely new alcohol tax regime and huge hike in August, the latest data shows a worrying decline in sales, which concerns businesses of all sizes and which would result in less revenue for the Exchequer. A second duty rise would have been disastrous.

We are pleased that the frustrations of consumers, who are fed up with never ending price rises, and of businesses struggling with the cost and complexities of the new system have been heeded. These are ongoing concerns about the impact of the new regime, which need to be kept under review. We implore the Chancellor and his team to lock in the freeze until at least the end of this Parliament. This will keep people in jobs and mean consumers will still be able to enjoy a drink at a price they can afford.”

Ed Baker, Managing Director of Kingsland Drinks, said:

“At Kingsland Drinks, we are relieved that the Chancellor has decided to not hamstring the UK wine and spirits sector further by a further Excise increase.  The August 1st increases are making the UK consumer pay some of the highest alcohol taxes in Europe which are now filtering through to higher pricing for them and lower sales for us; an additional rise would have damaged our industry even further.”

Kathy Caton, Managing Director of Brighton Gin, said:

“What a great relief for us and our fellow craft distillers that duty has been frozen – we’re operating in such a challenging environment currently, but this is definitely a fillip to the industry. 

The August duty hike has had a very clear and damaging effect on sales. There have already been some very high-profile closures of businesses in our sector and a second duty rise could have seen more distilleries go bust.

With the vast majority of our customers being within the hospitality industry and us being publicans ourselves, we’re really glad that the hospitality sector and its suppliers are being supported.”

Simon Doyle, General Manager at Concha y Toro Europe, said:

“In response to the Chancellor’s request to manage inflation, our industry has worked tirelessly to mitigate genuine material, transport, legislative and service charge cost increases to keep wine prices as affordable as possible. As a result of this hard work, the average price of wine has only risen by the 21% increase in excise duty levied by the Chancellor himself on 1st August.

It is therefore a relief that the Chancellor has decided not to increase duty any further in his Autumn statement. We are grateful for this and the tireless efforts of the WSTA in representing the challenges that our industry faces to the Treasury.”

According to ONS data for average prices on items in your shopping basket in September 2023:

The average price of a bottle of red wine is £7.72 – (ONS price increase data for last year is unavailable)
The average price of a bottle of vodka is £16.80 – up 14% on last year.
The average price of a bottle of gin is £17.01 – up 10% on last year.
The average price of a bottle of fortified wine is £11.53 – up 17% on last year.

These average bottle prices do not however include the full impact of the August duty rises – as not all the stock sold in August and September would have included the new duty rates.

A second duty rise would have pushed the average price of a bottle of red wine set to go up to over £8 for the first time. And the average price of a bottle of gin or vodka is expected to exceed £18 for the first time.