Wine sector reeling as price of a bottle set to be taxed 20 per cent more

By Laura McGuire

Wine lovers will be taxed 20 per cent more on their favourite bottle of red or white in a month’s time, as the government steams ahead with its alcohol duty tax hikes, spelling further pain for customers and businesses.

Chancellor Jeremy Hunt announced the measures as part of the Spring Budget back in March, which saw an end to the blanket alcohol duty freeze which was put in place via the Autumn Budget 2020 during the pandemic and extended in December.

It will now come to an end on 1 August, and alcohol will be taxed by strength (ABV). The duty hikes will bring price rises for 90 per cent of wines sold in the UK, according to wine and spirit trade association WSTA.

The duty paid on alcohol is revalued each year in line with inflation – however it has been either cut or frozen in every budget over the past decade.

A graph by vineyard Chateau Bauduc shows that under the new tax rises if punters spend £8.00 on a bottle of wine, they are getting 90p’s worth of wine and paying £5.90 in tax.

“Amongst all this pressure the government has chosen to impose more inflationary misery on consumers on 1 August, with the biggest single alcohol duty increase in almost 50 years,” Miles Beale, chief executive of the WSTA, said.

WSTA said the decision will not help wine and spirit businesses who are “looking to find ways to keep their products affordable”.

“There is no quick fix, and there are too many tax and costs increases and too few options – especially for wine and full strength premium spirits where reducing ABV simply isn’t realistic.”

It comes as customers are facing increased costs on alcohol in both supermarkets and bars due to soaring inflation and energy costs.

“The looming increase in alcohol duty will be damaging not just for the wine sector, but for the wider UK economy,” a Majestic Wine spokesperson told City A.M.

“The UK’s largest specialist wine retailer said that the move result in higher prices for our retail customers and the thousands of pubs, bars and restaurants we supply in the on-trade, dealing another hammer blow to a fragile hospitality sector that is still recovering from the Covid-19 pandemic.”

They added: “This will have a huge impact on inflation, at a time when the chancellor is supposedly trying to bring rising prices under control. As a policy, it sends an incredibly confusing message to British consumers at a time when they desperately need security and stability from the government.”