UK distilleries press chancellor for alcohol duty cut

Ten spirits makers in the UK have urged chancellor Jeremy Hunt for an alcohol duty cut in the upcoming spring budget.

The distilleries detailed that the current duty is unsustainable, for both them and for hospitality venues in the UK – as one-third of all drinks served in hospitality settings are spirits.

The businesses in the open letter include Downton, Griffiths Brothers, Puddingstone, Spirit of the Downs, Cooper King, Thunderflower, Batch, Stockport, Silent Pool and Atlantic Spirit.

The group emphasised that Britain’s hospitality sector is “currently in crisis”, with many businesses in the UK – particularly small businesses – having to consider their futures. Last year, Scotland posted record pub closure numbers, while in England, licensed venues dipped below the 100,000 mark for the first time since 2023.

While alcohol duty is now frozen until 1 August 2024, the 10.1% hike introduced in August 2023 is the highest raise the industry has seen in more than 40 years. Many, including the Wine and Spirit Trade Association (WSTA), have blamed the increase for fuelling inflation in the UK.

The Scotch Whisky Association (SWA), meanwhile, revealed in January that the UK government lost out on nearly £100 million (US$127.7m) in tax revenue since the chancellor increased alcohol duty.

Fair support for spirits

In the open letter, the group pressed Hunt to fairly support all categories of alcohol, noting that spirits face a disproportionately high tax burden in comparison with other categories.

The group also criticised the government’s Brexit Pubs Guarantee, urging for the same support to be shown for spirits. Although the guarantee supports the beer and cider industries, it ignores spirits consumers and producers, with spirits drinkers paying more tax per serve for less alcohol.

The group warned that if the duty is not cut, locally produced products could become an ‘unaffordable luxury’ for consumers.

The letter has also been backed by UK bars and bar owners.

For example, Andrew Lamont, owner of No 29 Bar in Richmond, Yorkshire, said: “As the owner of a bar, I feel it is critical to support the growth of the spirits industry in the UK. Spirits make up one-third of all alcoholic drinks served in hospitality settings and are often enjoyed by women and younger people.”

Chris Jaume, co-founder of York’s Cooper King Distillery, who signed the open letter to the chancellor, commented: “British drinkers have embraced locally made gin and whisky, and I’m proud of what we have achieved.

“It’s been a difficult few years grappling with Covid, spiralling costs and a cost-of-living crisis, and we’ve now been hit hard by the duty rise that came into effect on 1 August. It’s driving up the price of our spirits, harming the valued hospitality venues we supply, and is effectively an unfair tax on consumers who want to support their local distillery.

“If duty continues to rise, we’ll see demand and production drop, and our green investments stall. I’m just one of hundreds of distillers across the country who are worried for their future. The chancellor must cut duty on spirits in the spring budget and support our sector.”

‘The current rate of duty remains at an unsustainable level’

In addition, the UK Spirits Alliance (UKSA), which represents more than 280 small and independent distilleries across the UK, published its dossier for the spring budget.

Like the open letter, it detailed the tax hike’s impact on the sector and called for Hunt to cut duty so distillers and hospitality businesses can thrive and grow.

It read: “We warmly welcomed the freeze to spirits duty put in place at the autumn statement, but the current rate of duty remains at an unsustainable level for spirits producers, hospitality venues and consumers.

“A cut to duty would support the further growth of the UK’s distilling industry, providing a boost to one of our vital sectors for the UK’s economy and culture. It would also support a currently struggling hospitality sector, for whom a cut in duty would represent an unnecessary cost slashed.

“For consumers, the high price of alcohol has kept the cost of a basket of goods too high, for too long. For responsible consumers, spirits are a treat as opposed to a vice. The current level of duty has hit the pockets of hardworking people, and it cannot continue.”

The spring budget will be announced on 6 March.

The letter in full

Dear Mr Hunt,

We write to you as business owners with growing concerns for our business ahead of the spring budget and ask for your support. We greatly appreciated the duty freeze until August that was announced in the autumn statement, and while this has been welcomed by the industry, we’d like to see a cut to spirits duty this March to demonstrate your continued support for the spirits sector. 

Economic research suggests the spirits industry supports more than 446,000 jobs and contributes £13 billion (US$16bn) to the UK economy.

The significant investment into the industry has paid dividends from the boom in distillery numbers, which have grown from 190 to 930 in the past eight years alone. However, despite the industry’s growth in recent years, we are extremely worried by the current rate of duty, which remains at an unsustainable level.

The implementation of the reformed alcohol duty system in August 2023 left distillers facing the highest tax increase on spirits in more than 40 years.

While duty has been frozen until August 2024, the current levels remain unsustainable. The extremely high level of duty is yet another cost heaped on producers amid a very cost-heavy environment, with tax on a bottle of spirits already at 80% – the highest in the G7. The operating environment remains challenging for our sector, with inflation and the cost of living adding further pressure as consumers rein in their spending.

A cut in the level of duty would provide much-needed relief to our businesses and consumers who continue to see their budgets squeezed. Without it, there is a risk that our iconic spirits products could soon become an unaffordable luxury for the many responsible consumers who enjoy them.

Britain’s hospitality sector is currently in crisis, as pubs and bars across the UK close daily due to rising cost pressures. Given that one-third of all drinks served in hospitality settings are spirits, we know first-hand that the duty burden, for them too, is too much to bear.

We are therefore requesting that you strongly consider our ever-growing concerns as we approach the spring budget and cut spirits duty. We would very much appreciate your help in ensuring we are given a fair opportunity to thrive.

With very best wishes,

Hugh Anderson
Downton Distillery

Alex and Drew Griffiths
Griffiths Brothers Distillery

Kate Marston
Puddingstone Distillery

Michael Yeoman
Spirit of the Downs Distillery

Chris Jaume
Cooper King Distillery

Annica O’Nions
Thunderflower Distillery

Phil Whitwell
Batch Distillery

Paul Sharrocks
Stockport Distillery

Sophie Best
Silent Pool Distillery

Sadie and Quinton Davies
Atlantic Spirit Distillery