The Wine and Spirit Trade Association has urged the Chancellor to consider the huge contribution the UK’s wine industry makes to the economy when he delivers his Budget statement next week.
Britain’s wine importers, bottling plants, distributors, retailers and logistic companies employ around 170,000 people, and in 2017 paid almost £4.7 billion in duty payments to the Treasury, more than any other alcoholic drink.
This substantial figure is only set to increase as Philip Hammond plans to raise the rate of duty by around 3.4% in his Budget statement next week.
The WSTA argues that the planned increase would further undermine an industry that is already facing a tough trading landscape, following the impact of the anticipated Brexit fallout on the pound, and rising inflation.
The UK wine industry is the second largest global importer of wine, both by volume and value, with 99% of wine consumed in the UK being imported.
The wine industry is therefore uniquely exposed to the risks associated with a badly managed Brexit, and the Government must do all it can not to compound pressure on the trade – the WSTA is asking the Chancellor not to inflict a painful rise in duty on business and consumers next week.
Despite the vital contribution of wine duty to Government coffers, and the abundance of employment the sector supplies, the Government has too often failed to support the UK’s wine industry.
Since 2010, wine duty has increased by 28%, adding 48p in duty to a bottle of still wine, and wine duty has been frozen just twice in the last 15 years.
There is some cause for optimism, however – Philip Hammond froze duty on alcoholic drinks last year, and the WSTA has, along with 16 key players in the UK’s wine trade, written to the Chancellor both to thank him and to underline the need for more consistent support to redress decades of unfair treatment by his predecessors.
Wine duty rises wouldn’t just be bad for business – wine is now the UK’s most popular drink, with 64% of UK adults saying they drink wine (the equivalent of 33m people) and rises will hit consumers in their pockets too.
55% of the money Brits pay for an average priced bottle of wine is tax, including the equivalent of £2.16 in wine duty. It is even more for a bottle of sparkling wine at £2.77.
The Chancellor’s planned rises would add 7p on a bottle of still wine and 9p on a bottle of sparkling, with previous WSTA figures already released having shown that, since the Referendum result was announced and Britain began navigating a course away from the EU, an average priced bottle of wine has reached £5.68 – a 28p rise and an all-time high.
As prices rise, the WSTA’s latest Market Report revealed that volume sales of wine in the UK have been affected, and that, as an import product, wine is highly sensitive to market conditions.
By freezing duty next week the Chancellor has the opportunity to put the brakes on further price rises.
After a freeze in wine and spirit duty in the November Budget last year, between February to August 2018, wine duty income increased by £39 million, up 2% on the same time last year, and a report commissioned by the WSTA through EY notes that a freeze “represents a favourable outcome for the UK economy”.
Miles Beale, Chief Executive of the Wine and Spirit Trade Association, said:
“The wine industry is, unfortunately, no stranger to harsh treatment from Chancellors. Since 2012 wine overtook beer as the largest contributor to the public purse through duty payments, and no alcoholic drink has paid more to the Treasury since then.
“This cannot continue indefinitely, and we are now telling the Chancellor that enough is enough. He needs to lend the world leading UK wine industry his support.
“We welcomed a freeze from Philip Hammond last year, but there is so much more that needs to be done to unpick decades of unfair treatment and above-inflation rises, often inflicted whilst other, less popular alcoholic drinks enjoy more favourable treatment. Any rise in duty would be particularly harmful for importers and small businesses, who are uniquely and acutely exposed to the risks of leaving the European Union.
“We have heard talk over the last 18 months of ‘taking back control’ – In this case, the government should exercise the control it already has, and show some support for our wine industry and freeze duty rates.”