Chancellor Jeremy Hunt has announced an end to the blanket freeze on alcohol duty, leading to significant price increases for wine and spirits from 1 August. The duty will rise in line with inflation at 10.1%, adding approximately 15p to the cost of a typical bottle of budget wine, according to industry estimates. The move has been described as a 'historic blow' by the Scotch Whisky Association.
In his Budget, Hunt promised a 'Brexit pubs guarantee' by increasing the draught relief discount from 5% to 9.2%, which will reduce the duty on draught beer by 11p compared to supermarket beer. However, wine and whisky producers were left dismayed by the combination of inflationary duty increases and planned reforms that will raise levies on higher-strength drinks.
The Wine & Spirits Trade Association (WSTA) warned that a bottle of wine over 12.5% ABV could rise by 44p, vodka by 76p, and port by £1.30. In contrast, some drinks will see price reductions, including a 14p cut on a 5% pre-mixed G&T and 7p off sparkling wine at 12% ABV. The government has promised transitional arrangements for the hardest-hit products.
WSTA chief executive Miles Beale criticised the 'crippling' rises, warning they would fuel inflation and damage British businesses in the hospitality supply chain still recovering from the pandemic. Wine importer Daniel Lambert suggested the overall impact could reduce Treasury revenue from wine sales.
The Scotch Whisky Association's chief executive Mark Kent called on MPs to reject the rise, stating it breaks the UK government's commitment to support Scotch whisky. He added that the tax hike adds to pressures on the sector. Meanwhile, Hunt avoided a repeat of the 2021 beer duty blunder, when then chancellor Rishi Sunak and Boris Johnson posed with ineligible kegs.
