Distillers consider production cuts due to possible rise in spirits duty

A good majority of UK distillers expect to reduce production due to a rise in spirits duty, a trade body has stated, calling for for a freeze on spirits tax ahead of Chancellor Jeremy Hunt’s autumn statement.

According to UK Spirits Alliance (UKSA) – which represents more than 280 small and independent distilleries across the country, 61 per cent of distillers expect to cut the amount of spirits they produce.

While 54 per cent of respondents have either not recovered or only partially recovered from the pandemic, 40 per cent of businesses reported a decrease in sales, shows the survey result.

There are fears that the government will increase alcohol duty again following the 10.1 per cent hike for spirits in August.

Looking ahead, 49 per cent warn that rising duty will have a major impact on consumer demand for their product.

A further 70 per cent of distillers fear their ability to invest in business improvements such as production capacity and innovation will be affected by the duty hike. Nearly half (43 per cent) of those surveyed said that the increasing tax rate will hit their staffing levels.

In its submission to the Treasury ahead of the autumn statement, the UKSA wrote: “The chancellor should ensure a fair approach across the industry, and freeze duty on all drinks enjoyed by consumers, rather than simply a beer and a cider pulled in a pub.

“The Brexit Pubs Guarantee not only does little to support pubs, bars and restaurants but also penalises adult customers who might prefer a gin and tonic, or a Spritz over a beer or a cider.”

More than 400 UK businesses have written to the chancellor asking for a duty freeze on alcohol in the autumn statement.

In an open letter, the Scotch Whisky Association (SWA), UK Spirits Alliance (UKSA), English Whisky Guild and Wine and Spirit Trade Association (WSTA) have warned Hunt that a further increase in alcohol duty will damage British businesses, including those in the hospitality sector.

The organisations represent more than 400 drinks producers across the country. The letter also details how the duty hike has impacted inflation, citing data from the Office for National Statistics (ONS) that suggests the increase caused the largest rise in UK inflation on record.