Good news for brewers but not wines & spirits

WSTA slams tax hikes on wines and spirits while beer sector celebrates

The Wine and Spirit Trade Association, the UK organisation for the wine and spirit industry, has condemned the Chancellor for pushing ahead with inflation busting alcohol tax rises on wines and spirits for the fifth year in a row, through the much hated Alcohol Duty Escalator.

The Escalator, which has increased taxation by 2% above RPI inflation each year since 2008, will add another 10p to a bottle of wine and 53p to a litre bottle of spirits after the 5.3% rise announced today.
 
The latest rise means that consumers will have seen wine duty increase by 50% and spirits duty by 44% since the escalator was introduced in 2008 putting an additional 67p on a bottle of wine and £2.38 on a 70cl bottle of vodka. This comes despite many consumers struggling with stagnating wages and the rising cost of living.
 
Commenting on the Budget, WSTA CEO Miles Beale said: "This is bad news for the UK wine and spirits sector, with year on year duty increases hitting consumers and businesses hard. It makes little sense to single out beer, particularly as there is a legal precedent to suggest Government is unable to do so.

If this was designed as a measure to support pubs it seems misplaced: over 41% of drinks sold in pubs are wine and spirits, contributing £9.4 billion per year.  The Chancellor’s decision ignores the growing value of the English wine industry and the UK spirits industry, which accounts for 18% of all jobs in the EU spirits industry.”

Beer drinkers will be raising a glass of the fine amber nectar to the health of the Chancellor who has been convinced by lobbying from both the Society of Independent Brewers (SIBA), The British Beer and Pub Association (BBPA) and CAMRA (the campaign for real ale) to reverse Labour's Duty Escalator.

Last year Gerald Michaluk one of the Scottish Trustees met with the Chancellor in Glasgow and the Chancellor’s mind, at that time, was set on continuation of the duty escalator for beer.

Since then a effective campaign has been mounted by both SIBA, the BBPA, and CAMRA to change his mind pointing our the logic of not increasing the duty on beer.

Gerald Michaluk commented “This is good news for the industry and great news for the responsible beer drinker, and it is above all equalling out the playing field which has for far to long been loaded against beer relative to other beverages.  Beer is a relatively lower alcohol product, with health benefits when consumed in moderation, and contains no fat. It supports around 350,000 jobs in the UK and generates £8bn in tax revenue with a total contribution to the UK economy as a whole of some £21bn.” 

The success of effective campaigning, and the logic of the argument has won the day for the beer sector. According to the BBPA, it will save 5,000 jobs this year and a further 16,000 jobs in the pub trade in 2014/15.

Cider producers, however, are not so happy. Paul Bartlett, chair of the National Association of Cider Makers, says that although he welcomes the news that the Chancellor believes the duty escalator is flawed, cider producers are disappointed he has decided to remove it just for beer. “We look forward to having the opportunity to discuss with government the removal of the duty escalator for all alcohol, including cider, he says. “Cider makers will recognise the benefit for a hard-pressed pub industry from this move. As vibrant pubs have a drinks offer much broader than just beer, the abolition of the escalator for all alcohol would have gone further.”

Full details of the Budget reports.

21 March 2013 - Felicity Murray