The Wine and Spirit Trade Association and the Association of Licensed Multiple Retailers (ALMR) have teamed up to warn that more British pubs will be under threat of closure if the Chancellor fails to scrap his punitive 5 year plan to raise alcohol duty.
Wine and spirit sales in UK pubs account for 36% of alcohol sold across the bar, worth almost £6 billion to pubs in the 12 months to September.
Landlords across the country, however, had to pay huge duty bills, totalling £843 million on wine and spirits alone, into the Treasury coffers. This is the equivalent of almost £17,000 per pub.
But there is worse news to come for the pub trade – at the current rate, the total duty collected from British pubs by the end of the year is set to soar to over £2.1 billion If Philip Hammond increases the already excessively high duty rates on alcohol, pubs across the country could be hit by a duty tax hike for a second time this year and stand to lose an extra £29m in 2018.
In March, the Chancellor increased duty by inflation at 3.9%, which added 30p to an average priced bottle of spirits, 8p to a bottle of still wine and 10p to sparkling wine.
Despite this rise, the Chancellor now plans yet another increase to spirit duty, this time at 3.4%, just 8 months after the last one. The Chancellor’s actions stand to add another 26p to a bottle of spirits, another 7p to still wine and 9p on sparkling wine.
The sneaky inflationary increases are part of a government policy planned to last for the duration of this Parliament, which means the Government is set to rake in an extra £280 million from British pubs over the next four years, £2.4bn per year by 2022.
The WSTA and ALMR are both calling on Government to do more to support the historic British pub following a spate of pub closures. On average, 21 pubs are closing each week across the UK, and further rises in duty rates will only increase pressure on landlords across Britain.
The wider on trade is becoming ever more dependent on wine and spirits, with sales of those categories accounting for 46.2% of new openings in the last two years compared to just 39% of closures.
New research by CGA Strategy on behalf of WSTA shows that, on average, 4 new spirit brands were added to the back bar since 2013, meaning that there are now an average of 36 spirit brands behind the bar.
Anyone who has expanded their range of spirits has seen a 10.6% increase in value sales, versus those who decreased their range, who saw declining sales of 1.7%.
Thanks to the Prosecco boom, sparkling wine has seen a meteoric rise in sales in our pubs. Latest figures show that sparkling wine sales in pubs have gone up from 3m bottles sold in 12 months to Sept 2013, worth £45 million, to 9.5m bottles sold in the same period to September 2017, worth £204 million.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association said:
“The Chancellor is in danger of missing a huge trick. Not only could he support British pubs by scrapping his plans to raise already punitive duty rates for a second time this year, but he could also show his support for the wider UK hospitality sector.
“He needs to change tack because the pain will not end there, with established government policy being to inflict repeated duty hikes throughout the rest of this Parliament.
“Wine and spirits duty accounts for more than a third of annual pub sales. We are calling on Philip Hammond to help save our British pubs by freezing duty, allowing them to reinvest and stay in business.
“We know that previous decisions to freeze alcohol duty have brought in more revenue for the Treasury coffers, not less. So a duty freeze makes sense for everyone – from the Chancellor, to pub and bar owners, and consumers. With the last rise having come just eight months ago, freezing duty is the least Philip Hammond can do!”
Kate Nicholls, Chief Executive of the Association of Licensed Multiple Retailers, added:
“Pubs in every region of the UK are facing a perfect storm of rising costs and softening consumer demand. Uncertainty and barriers to growth and investment are being exacerbated by the instability being created by Brexit and many venues are looking for positive action from the Government to provide support.
“An increase in duty rates is only going to pile on more costs which pubs cannot continue to absorb – prices will start to rise and threaten consumer demand even further.
“The Government can act decisively to avoid further cost increases and support pubs by freezing alcohol duty at the Budget. If the Government fails to take this chance, then, ultimately, pubs in towns and cities across the UK will be at risk.”