Craft distillers drive gin growth in UK

Craft distillers in the UK are driving sales of British gin, although the category’s potential in its home market is limited due to a “punitive” tax regime.

Spencerfield Spirits operates a small gin distillery beneath the Rutland’s Hotel in Edinburgh

Emerging numbers of independent distillers across the UK, coupled with the growth of premium brands, have boosted sales of gin by 9.6% in the past year.

The industry has grown so fiercely in recent years that British gin now accounts for 20% of the category worldwide.

The figures, obtained from CGA Strategy and Nielsen and quoted in research by the Wine and Spirit Trade Association (WSTA), predict that British gin will drive growth of 13 million litres for the category every year.

However, the WSTA has claimed the UK’s high rates of excise tax, which accounts for 79% of the price of a bottle of gin, is holding back the growth of craft distillers.

Miles Beale, CEO of the WSTA, said: “Gin has such a fantastic history and it is great to see elements of that woven into the artisan gin distillers operating in the UK and in London today. But these small, often family-owned companies cannot afford to invest in their businesses under the current tax regime for spirits.”

The WSTA, along with the Scotch Whisky Association (SWA) is calling on the UK government to deliver a 2% tax cut in the next Budget on 18 March through its campaign, Drop the Duty.

“A 2% drop in alcohol duty would lead to industry-wide investment and job creation, allowing this country’s gin companies to get on with what they do best – crafting delicious and creative new gins for us, and for the rest of the world,” added Beale.

The campaign has received support from numerous independent distilleries, as well as retailers, across the country.

Tom Warner, co-founder of Warner Edwards, said: “We take real pleasure in creating beautiful, artisan spirits, but the tax regime here in the UK is one of our biggest chokepoints as a business. Our small size allows us to craft creative and unusual gins but it also leaves us vulnerable to the market and a 2% cut would offer us some of the safety we need.”

The sentiment is felt across the country, with distillers in England and Scotland in particular voicing their concerns over the rate of tax.

Alex Nicol, CEO of Edinburgh-based Spencerfield Spirit Company, said: “As a craft, family-run distiller in the UK, we feel the strain of the current levels of alcohol taxation on our business. We recently invested in a new still and have the potential to grow, but can only really expand if the Government delivers a drop in alcohol duty.

“We believe that if small distillers were given a tax cut to invest more in future growth, they would be able to thrive. The government needs to stop and listen if it is serious about the potential growth of small gin distilleries.”

The UK has the fourth-highest rate of excise tax on spirits within the EU, behind Sweden, Finland and Ireland.

Click here to discover our pick of the top 10 UK craft gin brands.