Trade groups have begun lobbying government for a freeze to wine, spirit and beer duty ahead of the budget on 22 November, saying any further increases would harm post-Brexit trade deal opportunities.
It’s estimated that a further projected inflationary rise of 3.4% would add another 7p on a bottle of wine and 26p on a bottle of spirits. In March’s budget the rise of 3.9% added 8p to an average priced bottle of wine and 30p on a bottle of spirits.
The looming hike in duty causes real concerns for UK wine importers who fear the unappealing duty regime will hamper trade negotiations and damage future investments, according to the Wine and Spirit Trade Association (WSTA), who said the government are gearing up for the second 'punishment' budget in a year.
'Mixed messages from government'
'We are hearing very mixed messages from government,' Miles Beale, chief executive of the WSTA, said. 'On the one hand Liam Fox is championing the importance of imports to the UK. At the same time Philip Hammond is revving up to hit us with a second inflation busting hike in seven months in alcohol duty – making the UK less attractive to importers.
'Don't be fooled into thinking that when the Chancellor announces "no change" to alcohol duty plans that he is doing everyone a favour. No change means that duty on all alcohol will rise in line with RPI inflation which in March meant a rise of 3.9%.
'Next month we are set to see yet another 3.4% added to the staggering amount British consumers already pay in wine and spirit duty. Whether it’s English vineyards, new start-up distilleries, producers, distributors or retailers, there are hundreds of British businesses that will be hit hard by another such increase.'
The wine and spirit trade with the EU is worth almost £4.5 billion to the UK. In 2016 the UK traded £2.2 billion of spirits with the EU and traded just shy of £2.3 billion in wine. Overall plans for an inflationary rise, in a second Budget in November, would cost the wine and spirit industry around £220m in new tax liabilities, says the WSTA.
Ade McKeon, general manager UKIR of Accolade Wines, the UK’s biggest wine company, said: 'Since the referendum, Accolade Wines has had to face a combination of serious challenges in the UK. As an international wine company we have to consider our investment decisions carefully.'
The budget impact on beer
The beer industry too is calling for a reduction in the duty it pays. British Beer and Pub Association (BBPA) chief executive Brigid Simmonds said: 'Government plans for further beer tax rises are unsustainable, and showing MPs the scale of concern in their own constituencies is essential if we are to persuade them to make this issue a priority.'
The BBPA has launched an infographics campaign via social media under the #cutbeertax, to encourage industry staff, and consumers to support a cut in beer duty. The campaign website, www.cutbeertax.co.uk, includes a tool to allow users to email their local MPs asking them to back the campaign.