Trade urges duty freeze as spirits sales drop

Recent data shows a ‘worrying’ decline in spirits sales in the UK as the trade pleas with the chancellor to freeze alcohol duty in his autumn budget this week.

UK chancellor Jeremy Hunt is due to announce his autumn statement on Wednesday 22 November.

Today (20 November), the Wine and Spirit Trade Association (WSTA) has revealed spirits sales have dropped by a fifth (approximately 20%) in the last 28 days. Wine has also seen a double-digit decline during the same period.

The ‘steep downturn’ in UK supermarkets and shops follows the biggest alcohol duty increase in almost 50 years, which was introduced by Hunt on 1 August 2023. For the first time, alcohol is taxed by strength.

While inflation has decreased, wine and spirits have seen an almost triple-digit increase in the last three months.

Miles Beale, chief executive of the WSTA, said: “We have long argued that duty rises are counterproductive and lead to reduced sales which means less revenue to the Exchequer. The most up-to-date sales shows starkly shows that consumers are still in the grip of a cost of living-of-living crisis and cannot afford to keep stretching their budgets just to be able to enjoy some of life’s little luxuries.

“We are asking the chancellor to stop, think and freeze alcohol duty. In August the Treasury introduced the largest alcohol tax hike for almost 50 years adding over 10% duty increase for spirits and over 20% increase for four out of every five wines of all wine sold in the UK.

“A further rise is damaging to British businesses, will pile on more misery for consumers resulting in less cash for the Exchequer.”

According to data from the Office of National Statistics (ONS), the average price of a bottle of vodka in September this year was £16.80 (US$20) – 14% more than the same month in 2022.

An average bottle of gin was priced at £17.01 (US$21), a 10% increase on 2022.

However, the WSTA noted that these figures do not paint the whole picture for the August duty rises, as not all stock sold in September would have included the new rate.

If a second hike is announced on Wednesday, the average price of a bottle of gin or vodka is expected to surpass £18 (US$22.50) for the first time.

Businesses at risk

Kathy Caton, managing director of Brighton Gin, said: “The rise of small-scale craft distilleries has been an amazing growth area over recent years, but is now at risk of serious crisis and decline.

“Many craft distillers don’t have the financial reserves to cope with the toxic combination of much higher costs, and declining sales while consumers deal with navigating the ongoing cost of living crisis.

“The August duty hike has had a very clear and damaging effect on sales. There have already been some very high-profile closures of distilleries within our sector and anecdotally.

“I know of many others who are considering shutting operations – if distilleries go bust, they won’t be contributing anything at all through taxes and duty.

“I would call on the chancellor to support and not suffocate what has been a British business success story but is now in danger of a serious contraction.”