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Column: industry Tag: UK wine sellers,facts Published: 2024-10-11 13:22 Source: www.foodingredientsfirst.com Author: Alcoholic Beverages
Major UK wine retailers are cautioning customers about looming price hikes due to changes in wine taxes that will take effect in February 2025.
Majestic Wine, Laithwaites, The Wine Society and Cambridge Wine Merchants are among the businesses involved in the campaign. Trade bodies such as the Wine and Spirit Trade Association (WSTA) have been calling for the temporary easement to be made permanent for over a year, which they say will keep costs stable and reduce red tape.
Currently, all wines between 11.5% alcohol by volume (ABV) and 14.5% are taxed the same amount. However, starting next year, the government plans to increase tax bands from one to 30, depending on the alcohol content of wines. This change could drive up prices of a bottle of wine at 14.5% ABV from £2.67 (US$3.49) to £3.09 (US$4.03).
The previous Conservative government introduced the plan to remove the simpler tax measures or easement, which is due to be removed soon. The new Labour government can retain the easement in the upcoming budget on October 30.
“This week, we see a bleak warning from wine retailers who are concerned about the impact of unnecessary and costly red tape due to come into force next year, that they feel it is only right that their customers — consumers of the UK’s favorite alcoholic drink — know that more price rises are coming down the line — thanks directly to government policy,” says Miles Beale, CEO of the WSTA.
“The new prime minister and chancellor have been unequivocal in setting out the need to achieve economic growth and in signaling that the pressures on public expenditure mean difficult decisions will have to be taken at the budget. Abolishing the wine easement will do the opposite — and with no benefit for the public finances.”
Beale notes there is “still time” to help promote UK businesses, especially a sector “packed with potential” by retaining the simplified taxation rules.
“It won’t cost the government anything, but it will support British business by promoting conditions for growth and protect British consumers by keeping prices stable.”
In an email sent to their customers last week, Majestic Wine and Cambridge Wine Merchants warned customers of some wines disappearing from supermarket shelves altogether.
“At the time they launched the policy, the Treasury had a stated aim to create a duty system that would be simpler and fairer for wine businesses like ours to administer.
“Yet, as an industry, 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 annually.”
The companies warn that the “complicated” wine tax will pile up “huge” administrative costs for businesses and smaller wine merchants, leading to another round of price hikes.
Moreover, they state the UK government’s “insistence” on moving forward with the taxation changes could threaten the country’s position as the second-biggest importer of wine globally.
“The quality and choice of wine available for you to purchase is likely to be negatively impacted. There is a genuine risk that the producers of your favorite wine will stop shipping it to the UK entirely due to the additional administrative burden that will be involved in exporting wine to Britain.”
“Smaller, family-run vineyards producing incredible wines are unlikely to change processes that have been in place for generations just to suit the UK market when they could easily export their wines elsewhere in the world without additional admin or cost.”
The WSTA notes that alcohol sales in the UK have decreased after the 2024 alcohol tax hike. According to the association, the change resulted in more than 10% duty increases for spirits and beer and at least a 20% increase in duty for most wines.
The EU wine sector has been grappling with multidimensional challenges. Last week, the European Committee of Wine Companies outlined its vision to address the roadblocks plaguing wine companies in crucial talks with member states.
The committee proposed solutions to ensure sustainability and competitiveness, including easing bureaucratic rules and implementing a digitized, robust labeling system for more effective cross-border wine sales online.
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