The cost of booze is set to go up tomorrow as the alcohol duty system is revamped for the first time in more than 140 years.
And it’s not just wine which will see prices hiked.
New alcohol duties will see all alcohol taxed based on its strength, rather than the previous categories of wine, beer, cider, and spirits.
Plus, the freeze on alcohol duty will also end on August 1, which means it will increase by inflation at 10.1%.
The Wine and Spirit Trade Association (WSTA) reckons this means a bottle of wine will go up in price by 53p, once the 44p increased duty is combined with VAT.
Duty on 18% cream sherry will go up from £2.98 to £3.85, with VAT adding up to an increase of more than £1 a bottle.
Bottles of port will go up in price by more than £1.50, and the total tax on a bottle of gin or vodka will go up by around 90p.
Miles Beale, chief executive of the WSTA, said: ‘We are careering towards an extremely tough period for wine and spirit businesses with tax hikes and other costs, including a prolonged cost of living crisis for their consumers, persistently high inflation, and rocketing prices for glass, leaving little room for many businesses to turn a profit.
‘Inevitably some won’t be able to stay afloat, with small and medium enterprises most at risk.
‘Amongst all this pressure the government has chosen to impose more inflationary misery on consumers on August 1, with the biggest single alcohol duty increase in almost 50 years.
‘Ultimately, the government’s new duty regime discriminates against premium spirits and wine more than other products.
‘Wine from hotter countries, like new trade deal partner Australia, will be penalised most of all, because the grapes grown in hotter climates naturally produce higher alcohol wines.
‘At the same time, you cannot reduce alcohol in wine like you can for some other products.
‘Making wine isn’t an industrial process; reducing wine’s alcoholic content is limited, changes the product and is costly to carry out.
‘Nor can the alcohol in full strength spirits be reduced for products such as gin, vodka and whisky where a minimum strength is prescribed by law.
‘In the end the Sunak-Hunt changes to wine duty will reduce consumer choice and push up prices.
‘For spirits you can expect at least a £1 increase on a bottle of gin or vodka and a leap of £1 per bottle of wine when duty is increased by 20% (plus VAT).’
The duty paid on draught pints across the UK will drop by 11p in August – however brewers will pay 10.1% more tax on bottles and cans of beer.
The British Beer and Pub Association (BBPA) says tax will make up about 30% of the cost of a 500ml bottle of beer, and this tax increase will add an extra £225 million of costs per year across the industry.
Scotch Whisky Association director of strategy Graeme Littlejohn said: ‘The 10.1% duty increase is a hammer blow for distillers and consumers.
‘Distillers will now face a further competitive disadvantage in pubs, restaurants and bars by being unfairly excluded from tax breaks available to beer and cider.
‘Pubs and other on-trade businesses are about far more than beer and cider.’
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