Gin and whisky-makers say the “disastrous” 10.1% increase in alcohol duty has “sucked the life out of a boom industry” one year on from its introduction.
Alcohol duty hikes in August last year were the largest in almost 50 years, adding 20% to excise duty on more than 85% of all wines on the UK market and 10.1% to duty paid on full strength spirits.
According to ONS data, the average price of a bottle of red wine is up 8% to £7.85 on last year, while a bottle of gin is up 6% to £17.11 and fortified wine has risen by 17% to £11.67.
Gin and whisky producers said the sector was a boom sector until being hit with the triple whammy of Covid, the cost of business and then the increase in excise duty.
They say the duty increase has led to £132 million less revenue for the Treasury, according to the government’s own receipts, while 70% of distilleries in the UK fear for their ability to invest in their business as a result of the increase.
Liam Hirt, from Circumstance Distillery in Bristol, said: “The business has been going for 10 years and we have grown from one man operating in the basement of his house to a five-man team with two sites that export internationally.
“The 10.1% hike in duty has had a serious impact on the business. We already had price shocks from energy prices and the increase in cost of raw material after Brexit and the pandemic so couldn’t absorb the increase. Sales have taken a sizeable hit as on trade and off trade have also seen costs rise and consumers squeezed.
“It’s very simple really. The current tax regime is weighted significantly in the favour of beer and cider which means it is very difficult for spirits to compete, particularly in the on trade. There is no good reason why a unit of alcohol in spirits is taxed much, much more than a unit of alcohol in beer or cider.”
Neema Rai, the owner of London’s Tamesis Dock pub and spokeswoman for the UK Spirits Alliance, said: “The previous Chancellor’s alcohol duty hike saw the Treasury lose money. The new Chancellor has a choice. She must be bold and back spirits.
“Pubs are more than just pints, we need to be proud of our heritage and back our gins, whiskys, craft distillers and cocktail creators. Cutting alcohol duty in the Budget will ensure pubs can survive and help customers in a cost-of-living crisis.”
Mark Kent, chief executive of the Scotch Whisky Association, said: “A year on and it’s clear the 10.1% hike in excise duty on Scotch Whisky has been a disaster. It’s hurt business and penalised consumers. Most crucially for Rachel Reeves, duty revenue to the Treasury is down £132 million – money that could and should have been available to support public services.
“The Chancellor has the opportunity to get back on track in the Budget on October 30. She should reduce the tax burden and, in doing so, reverse the impact of the biggest tax increase on spirits in 40 years, generate more revenue for the public finances, and back growth.
“She should back Scotland and back Scotch producers to the hilt, as the Prime Minister has promised to do.”
