Government Raises Alcohol Duties, Affecting Wine and Spirits Prices

Starting this Saturday, the price of wine and spirits in the UK will increase as the government adjusts alcohol duties in line with inflation. Additionally, new regulations will link tax levels to the alcohol by volume (ABV) content of each drink. This move is expected to raise the cost of many alcoholic beverages, particularly stronger options, while offering a small break for draught beer.

Under the updated system, stronger drinks will face higher tax increases. For example, the temporary reduction in wine duties, which ended last week, means that the duty on a 14.5% ABV bottle of red wine has gone up by 54p. The Wine and Spirit Trade Association (WSTA) has expressed concern over these hikes, suggesting that they could lead to reduced consumer spending on alcohol, ultimately affecting government revenue. They also argue that the price increase could burden drink producers, particularly as the cost of production rises.

In contrast, the duty on draught pints will fall by a modest 1.7%, meaning the price of an average-strength pint will drop by about 1p. While this is seen as a small win for pubs, the British Beer and Pub Association (BBPA) warns that the broader sector still faces significant financial challenges. Increased National Insurance contributions and higher minimum wages set to take effect in April could push up the cost of pints by as much as 30p to 40p, according to estimates. JD Wetherspoon CEO Tim Martin predicts that the rise in staff costs will cost the chain around £80 million annually.

The government, however, defends the policy, stating that it is part of an effort to “modernize and simplify” the alcohol duty system. A Treasury spokesperson highlighted the support being offered to lower-strength drinks, including an expansion of small producer relief for beverages with an ABV of less than 8.5%. This change is designed to help smaller-scale brewers and craft producers compete more effectively against larger companies and supermarket alcohol sales.

Despite the minor tax relief for draught drinks, pubs are still grappling with a wave of rising costs. The BBPA is urging the government to continue supporting the sector to avoid an “April cliff edge” when the new tax measures and cost increases come into effect. On the other hand, some union representatives suggest that large pub chains should absorb the additional costs rather than passing them on to customers.

As consumers face rising living costs, the latest alcohol tax adjustments are likely to have a significant impact on the price of wine and spirits. However, the changes could benefit smaller brewers and those offering lower-strength drinks, potentially helping them compete with supermarket alcohol deals.