Wine and spirits producers rally against alcohol duty reform plans

close up of two people looking at wine labels

Wine and spirits producers have continued to speak out against the Government’s alcohol duty reform plans, as the deadline for the consultation period approaches.

Distillers from across Scotland have written an open letter to chancellor Rishi Sunak, urging the Government to revise its plans, while wine producer Accolade has said the proposals would wipe out the benefits of recent free trade agreements (FTAs).

In the letter, which is signed by dozens of Scotch producers including Ian Macleod, Glenmorangie, Whyte & Mackay and Distell International, signatories said the new system would be unfair for Scotch whisky.

“The Treasury said it wants a higher rate of tax on “stronger” drinks,” the letter said. “But while there’s more alcohol in a pint of beer or cider than in a Scotch and soda or a G&T, spirits drinkers will pay more tax.”

The letter also said the measures would not tackle alcohol misuse, which “needs a more targeted approach”.

Meanwhile, Accolade Wines managing director for Europe, Caroline Thompson-Hill, said the current proposed excise duty reforms will have "long-term and far-reaching implications" for the wine industry and wine drinkers, "wiping out the benefits" of recent FTA progress with Australia and New Zealand.

“While the reforms are intended to be revenue neutral, wine sold in the UK will be subject to much higher tax rates,” she said. “This tax will further impact consumers’ wallets, increasing the cost of their favourite wine.

“It will impact the wine industry which has seen huge disruption through Covid from lockdowns to restrictions on hospitality venues and supply chain bottlenecks.”

Thompson-Hill highlighted Wine Australia figures, which she said suggest the current proposal would add £81 million in duty annually to Australian wine sold in the UK.

“This contradicts the Government’s commitment that the review of the duty system is not intended to materially affect the amount of duty collected,” she added. “The natural-occurring, median alcohol by volume rate of wine in the UK market is approximately 13%. However, the current reforms suggest 11.5% as the median point, therefore imposing a significant increase in tax on all products with an ABV of 11.5% or higher. This means that most wine will be taxed at a significantly higher rate.”

She said the current proposal could impact the range of wines available from New World producers.

“We recognise the need for a reformulation of the current system to promote fairness and simplification, and we believe there is a workable solution that delivers the UK Government’s objectives, particularly by continuing to encourage reformulation and innovation in lower strength wine, while still supporting choice in traditional strength product,” said Thompson-Hill.

A spokesperson from Treasury Wine Estates said the proposed new system will significantly impact the Australian wine industry and increase costs for UK consumers.

"We understand it will wipe out the £26 million benefit for Australian wine growers agreed upon in the recent UK/Australia Free Trade Agreement, replacing it with £70 million of costs and diminish future growth prospects in the largest export market for Australian wine growers and UK consumers. The new duty could add up to £0.40p to a bottle of Australian wine for UK customers.”

 The consultation will close on 30 January 2022. To respond or find out more information, click here

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