Gin distillers urge chancellor to freeze spirits duty

26th October, 2017 by Nicola Carruthers

Gin producers have joined forces with the Wine and Spirit Trade Association to call for the UK chancellor to freeze spirits duty in the November budget.

GIn Nielsen CGA Strategy

17 gin producers have teamed up with the WSTA to call for the UK government to freeze spirit duty

The WSTA, along with 21 gin distillers, have written to chancellor Philip Hammond and the secretary of state for Business, Energy and Industrial Strategy, Greg Clark, to raise serious concerns over a planned increase to spirits duty, which will see another 26p added to the price of a bottle.

According to the trade body, gin duties collected in the UK will go up by around £25 million on last year if duty is raised again for the second time this year. During the March budget, Hammond increased spirit duty by inflation at 3.9%, which added 30p to an average priced bottle of spirits.

The increases are part of a government policy planned to last for the duration of this parliament, which means the government is set to rake in £2 billion from British gin over the next five years. The WSTA has calculated that if the government goes ahead with duty hikes, then tax on a bottle of gin will go up by over a pound from £8.05 in 2017 to a predicted £9.13 by 2021.

Gin distillers are warning that the tax burden will “stifle the growth” of start-up producers.

“In 2016 Summerhall Distillery paid 31% of its annual turnover in duty alone. Our bottles retail at £29.95 which means that 45% of the money spent on a bottle of Pickering’s gin goes on duty and VAT,” said Matthew Gammell, co-founder of Pickering’s Gin.

“These hugely unfair tax burdens mean that cash flow is severely restricted when a business like ours is trying to grow. The current proposed increase in duty of 3.4% would mean an increase in duty of £24,500 which for us is the equivalent of another employee. We would like to continue to grow and help boost the British economy but it is becoming increasingly tough to remain competitive in the marketplace.”

Alex Wolpert, founder of the East London Liquor Company, said: “We absolutely support a freeze to spirit duty, particularly as this is an opportunistic second increase this year at a time the government knows only too well that alcohol sales increase considerably over the festive period; duty already accounts for approximately 40% of our bottle price. With the current economic landscape, including the cost of living increasing and wages at an all-time low, the consumer ends up being the one to foot the chancellor’s duty increase, perpetuating the problem of the public’s expendable income being further reduced.”

Miles Beale, chief executive of the Wine and Spirit Trade Association, said: “We have seen a rapid growth in the number of distilleries in the UK and a new wave of UK and spirit makers are turning their hand to gin production in a bid to keep up with the thirst for new gin experiences.”

In December last year, UK gin sales exceeded £1 billion for the first time, six months ahead of forecasts, according to WSTA.

In the last five years, the number of distilleries in the UK has more than doubled to 273, with 40 opening in 2016 alone. In England, 84 distilleries have opened in the last five years.

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