Proposed changes to alcohol duty will lead to higher prices and less choice for wine drinkers, the owner of wine merchant Laithwaites warned on Monday (31), saying that the move will be “crippling” for the trade and small-to-medium firms would “probably go out of business”.
Chancellor Rishi Sunak outlined what he described as the “most radical simplification of alcohol duties for over 140 years” during his Budget speech delivered in October last year. However, wine firms reportedly tend to disagree that the new proposals constitute a simplification of the system.
“Wine is an agricultural product and the ABV (Alcohol by Volume) of wine is set by the amount of sunshine warmth in the vineyard when the grapes grow on the vines and that changes every year,” treasurer of Direct Wines, Tim Curtis, told BBC.
“Last year we sold over 7,500 different wines and we would need a team of people dedicated to this to track and calculate the correct amount of duty for each product.”
Saying that the average price of wine would “certainly go up for the UK consumer”, Curtis warned that the new tax system is just going to become “an administrative nightmare for small and medium merchants in the UK”.
“The red tape is just huge so you can imagine some ranges will shrink and sadly some small and medium enterprises will probably go out of business. So for the consumer it is a case of higher cost, less choice and fewer merchants competing for their business.”
In the Budget, the chancellor said that under the new system for alcohol duty, which is due to start in 2023, taxes on sparkling wine, draught beer and cider would be cut, but would rise for stronger drinks such as red wine.
According to the Wine and Spirit Trade Association (WSTA), if wine is taxed according to its alcoholic strength in this way, 70 per cent of all wine, still and sparkling, will go up in price, as will 80 per cent of all still wine, 95 per cent of red wine and 100 per cent of fortified wines.
The WSTA anticipates that implementing the changes would cost the wine trade £250 million per year.
Australian wine producers have already called on the UK government to scrap the proposals, arguing that the reforms would wipe out the benefits of UK-Australian free trade agreement (FTA).