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Scotch distillers expect energy bills to double

More than a quarter (27%) of Scotch whisky distillers believe energy costs will double in 2023, a survey has revealed.

Scotch Whisky
The Scotch Whisky Association is calling for alcohol duty to be frozen beyond 1 August

Trade body the Scotch Whisky Association (SWA) surveyed its members, and found 72% expect their energy costs to rise this year, despite 53% having already seen prices increase in the last 12 months.

The SWA also highlighted that distilleries are exempt from the government’s Energy Bill Relief Scheme.

Two-thirds of distillers also believe rising costs could be intensified by UK chancellor Jeremy Hunt announcing an increase in alcohol excise duty in the budget on 15 March.

Hunt confirmed duty would remain frozen until 1 August when a new system for alcohol tax comes into force. Hunt previously reversed the freeze announced by his predecessor, Kwasi Kwarteng.

Mark Kent, chief executive of the SWA, said: “The government provided much needed certainty in December by extending the duty freeze. It was the right decision then and would be the right decision in the March Budget.

“Only a few months on from the extension of the freeze, the economic challenges our members and the businesses they rely upon face are not going away.

“Unlike other parts of the alcohol industry, distillers have been left out in the cold and unable to access the government’s business energy relief scheme, so any rise in duty would further compound the pressures they currently face in paying rising energy costs.”

The SWA is calling on the chancellor to freeze alcohol duty beyond 1 August to help the industry as it adapts to the new tax system.

The trade body said an increase could harm business investment and the hospitality sector during the cost-of-living crisis.

Kent continued: “Our message to the chancellor is clear – increasing duty would be the wrong decision and the wrong time.

“By freezing duty the government can support Scotch and avoid unnecessarily fuelling inflation at a time when there are already significant pressures on businesses and households, and consumers.”

A survey conducted by the SWA in August found 57% of distillers saw energy costs increase by more than 10%, with 29% witnessing their energy prices double.

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