There have been some celebrations following the government’s decision to freeze alcohol duty until next year, but many believe the chancellor’s autumn statement does not support the spirits industry enough.
Although the alcohol duty freeze until 1 August 2024 has been welcomed, the move follows the biggest alcohol tax hike in nearly 50 years, which came into effect on 1 August this year.
Many have also argued the current tax system still disproportionately penalises spirits due to its focus on the strength of a finished product, rather than the alcohol units per serving.
The SWA – tentatively – raises a glass
Mark Kent, chief executive of the SWA, said: “The industry is raising a dram to the chancellor’s decision to support Scotch whisky producers by returning to the duty freezes that have supported the industry, incentivised investment and boosted treasury revenue.
“With cost pressures hurting distillers large and small, the treasury has provided some much-needed certainty and stability for the year ahead that will allow us to get back to doing what we do best – making a world-class spirit, with a global reputation, which creates jobs and boosts growth here at home.
“Under the current duty system, Scotch whisky is still put at a disadvantage, based on a fundamental misunderstanding of how people consume alcohol and modern drinking trends. We want to continue the discussion with government about how the tax system can more closely reflect the number of units in a typical drink, rather than the strength of the finished product.
“Despite today’s duty freeze, cider is still taxed four times less than a spirit like Scotch whisky – this is not fair and cannot be justified.”
Prior to the autumn statement, the SWA was campaigning for fairer taxation on spirits, claiming the current system discriminates between alcohol categories.
The WSTA celebrates the freeze
Miles Beale, chief executive of the Wine and Spirit Trade Association (WSTA), said: “The alcohol duty freeze comes as a huge relief to wine and spirit businesses and the hospitality sector, which have taken a battering over the past few years.
“We are extremely relieved that the government – and exchequer secretary Gareth Davies, in particular – has listened to our pleas not to hit wine and spirit businesses and consumers with another painful duty increase.
“Following the introduction of an entirely new alcohol tax regime and huge hike in August, the latest data shows a worrying decline in sales, which concerns businesses of all sizes and which would result in less revenue for the exchequer. A second duty rise would have been disastrous.
“We are pleased that the frustrations of consumers, who are fed up with never-ending price rises, and of businesses struggling with the cost and complexities of the new system have been heeded. These are ongoing concerns about the impact of the new regime, which need to be kept under review.
“We implore the chancellor and his team to lock in the freeze until at least the end of this parliament. This will keep people in jobs and mean consumers will still be able to enjoy a drink at a price they can afford.”
Relief for distillers and suppliers
Kathy Caton, managing director of Brighton Gin, added: “What a great relief for us and our fellow craft distillers that duty has been frozen – we’re operating in such a challenging environment currently, but this is definitely a fillip to the industry.
“The August duty hike has had a very clear and damaging effect on sales. There have already been some very high-profile closures of businesses in our sector and a second duty rise could have seen more distilleries go bust.
“With the vast majority of our customers being within the hospitality industry and us being publicans ourselves, we’re really glad that the hospitality sector and its suppliers are being supported.”
Caton’s comments follow a recent survey that found that almost two-thirds of UK distillers expected to reduce their production if duty had increased.
Ed Baker, managing director at wine and spirits supplier Kingsland Drinks, said: “At Kingsland Drinks, we are relieved that the chancellor has decided to not hamstring the UK wine and spirits sector even more by a further excise increase.
“The recent 1 August increases are making the UK consumer pay some of the highest alcohol taxes in Europe which are now filtering through to higher pricing for them and lower sales for us; an additional rise would have damaged our industry even further.”
It wasn’t all celebrations, though. Sophie Lawrence, marketing and communications director at Sovereign Brands, said: “We’re raising half a glass to the freeze on alcohol duty.
“The past three years have been very turbulent for the on-trade and, while the chancellor’s move is welcomed, we think a real term reduction is needed to really drive an impact for consumers and business still recovering from the Covid hangover, train strikes and the cost of living.”
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Author: Lauren Bowes