From Tuesday drinkers will see significant price rises on alcohol and the Prime Minister has described this “the most radical simplification of alcohol duties for over 140 years.”
The Chancellor Jeremy Hunt said in March during the Budget that from 1 August the alcohol freeze will end and inflation will therefore increase at 10.1%.
A bottle of wine will see the duty rise by 44p, combined with VAT this totals 53p consumers will pay.
Tax on Vodka or a bottle of gin will rise by around 90p and duty on cream sherry will go up 18% from £2.98 to £3.85 and port will go up by over £1.50.
The Wine and Spirit Trade Association (WSTA) chief executive Miles Beale said, “We are careering towards an extremely tough period for wine and spirit businesses with tax hikes and other costs, including a prolonged cost of living crisis for their consumers, persistently high inflation, especially for food and drink, and rocketing prices for glass, leaving little room for many businesses to turn a profit. Inevitably some won’t be able to stay afloat, with SMEs most at risk.
“Amongst all this pressure the Government has chosen to impose more inflationary misery on consumers on August 1, with the biggest single alcohol duty increase in almost 50 years.
“Ultimately, the Government’s new duty regime discriminates against premium spirits and wine more than other products.
“Wine from hotter countries, like new trade deal partner Australia, will be penalised most of all, because the grapes grown in hotter climates naturally produce higher alcohol wines.
“And, at the same time, you cannot reduce alcohol in wine like you can for some other products.
“Making wine isn’t an industrial process; reducing wine’s alcoholic content is limited, changes the product and is costly to carry out. Nor can the alcohol in full strength spirits be reduced for products such as gin, vodka and whisky where a minimum strength prescribed by law.
“In the end the Sunak-Hunt changes to wine duty will reduce consumer choice and push up prices.
“For spirits you can expect at least a £1 increase on a bottle of gin or vodka and a leap of £1 per bottle of wine when duty is increased by 20% (plus VAT).”
Scotch Whisky Association director of strategy Graeme Littlejohn said, “The 10.1% duty increase is a hammer blow for distillers and consumers.
“At a time when inflation has only just started to creep downwards, this tax increase will continue to fuel inflation and make it more difficult for the Scotch Whisky industry to invest in growth and job creation in Scotland and across the UK supply chain.
“Rather than choosing to back an industry which the UK government promised to support through the tax system, the Government has chosen to impose the largest duty increase in almost half a century, increasing the cost of every bottle of Scotch Whisky sold in the UK by almost a pound and taking the tax burden on the average priced bottle to 75%.
“In a further blow, distillers will now face a further competitive disadvantage in pubs, restaurants and bars by being unfairly excluded from tax breaks available to beer and cider.
“Pubs and other on-trade businesses are about far more than beer and cider.”