Spirits industry outraged at UK beer duty news

Despite UK Chancellor George Osborne ditching the controversial beer duty escalator, his refusal to do the same with wine and spirits has sparked outrage from the drinks industry.

The UK will continue to increase tax at a rate of 2% above inflation on wine and spirits, but not beer

The escalator will continue to increase tax on wine and spirits by 2% above inflation, as it has done so since its inception in 2008.

As such, the 5.3% increase outlined in today’s Budget means that the price of a bottle of wine will increase by 10p, and a litre bottle of spirits by 53p.

Since its introduction, wine duty has increased by 50% and spirits duty by 44%, adding a huge £2.38 onto a 700ml bottle of vodka.

Lobbying by beer and pub groups have successfully halted the escalator for beers, and prompted a tax reduction of 1p, but there has been no such luck for the rest of the alcohol industry.

Since the announcement at lunchtime drinks groups have been hitting back at the decision to favour a cut for beer over wine and spirits:

Diageo
“This move is disappointing,” a spokesperson said. “Cutting duty on beer while increasing it on spirits punishes the UK spirits industry for its success in this harsh economic climate. Scotch is the UK’s biggest food and drink export. This move risks that success.”

Wine and Spirit Trade Association
“This is bad news for the UK wine and spirits sector, with year on year duty increases hitting consumers and businesses hard,” added WSTA chief executive Miles Beale. “It makes little sense to single out beer, particularly as there is a legal precedent to suggest Government is unable to do so.

“If this was designed as a measure to support pubs it seems misplaced: over 41% of drinks sold in pubs are wine and spirits, contributing £9.4 billion per year.  The Chancellor’s decision ignores the growing value of the English wine industry and the UK spirits industry, which accounts for 18% of all jobs in the EU spirits industry.”

Scotch Whisky Association
“This is an unfair and incomprehensible attack on the Scotch Whisky industry in its domestic market, where it is a vital part of the Scottish and UK economy and where it supports many other businesses,” explained Gavin Hewitt, chief executive of the Scotch Whisky Association. “It penalises responsible drinkers who like a dram rather than a pint. There is no justification for spirits being taxed more heavily than beer.

“It also damages all the good work done to create fairer tax regimes overseas to provide a fairer playing field for Scotch Whisky. It hinders the government’s ambitions for an export-led recovery.”

Bibendum
“The Chancellor’s decision to end the beer escalator is a step in the right direction and we are very pleased he has listened to that argument,” said Michael Saunders, managing director of Bibendum Wine. “However, it is obviously disappointing that he has not extend this policy to wine and spirits. The truth is the alcohol escalator is all about tax revenue and does little to address wider issues such as health.

“What other industry has had to suffer a 50% increase in tax in just five years? What the government should be doing is focusing on educating people about drinking, whilst using the powers at its disposal to create jobs and stimulate growth in the all important hospitality sector. Today was yet another missed opportunity from Number 11.”