Brits warned to brace for higher alcohol prices from next week
On February 1 new duty rates on wine and spirits will come into force, meaning a rise in price for most alcohol.
Under a new sliding system of duties, wine with a higher abv (alcohol by volume) will see the biggest price increase, with the duty on a 14.5 per cent abv wine to rise by 20 per cent, or 54p.
Duties on wine at 11.5 per cent abv will fall by five per cent, although all other abv duties on wine and spirits will rise.
Most wine businesses operate a duty-paid warehouse model, so the change will trickle through the market slowly as firms go to import wines from suppliers.
“There are no winners under the UK’s punishing alcohol tax regime – higher duty rates mean people buy less which results in reduced income to the Exchequer, businesses are being squeezed and consumers have to pay more,” chief executive of the Wine and Spirit Trade Association (WSTA) said.
Majestic, Laithwaites, The Wine Society and Cambridge Wine Merchants are amongst the wine businesses who together launched a poster campaign against changes to the sliding system of excise duties last year.
“We firmly believe the system that is set to be introduced fails on both counts – it is more complex and will be much more costly. Businesses like ours will need to invest six-figure sums just to develop the systems required to handle the new approach, with ongoing administrative costs likely to run into similar sums on an annual basis,” the firms warned.
Alcohol sales in the UK have been on a steady decline since 2023 for a number of reasons, notably the cost-of-living crisis and the increasing tendency for Gen Z to go low-or-no alcohol.
The higher price of wine and spirits is also likely to have played a part. Duties are calculated based on retail price inflation, so 2023 saw the largest alcohol tax hike for 50 years – at 10 per cent for spirits and beer and 20 per cent for most wines.
Tax receipts from alcohol have fallen by £209m so far this financial year, according to the latest HMRC figures.
City AM has contacted the Treasury for comment.