UK Budget 2017: Wine duty rise is 'triple whammy' for drinkers

Wine duty is to rise in-line with inflation, disappointing trade leaders who already warned that consumers will have to pay more per bottle due to the weak pound sterling.

UK Budget 2017: Wine duty to increase despite trade efforts

UK Chancellor of the Exchequer, Phillip Hammond, announced that duty on wine will increase in line with inflation, disappointing those in the trade campaigning for it to be cut.

The Wine & Spirit Trade Association (WSTA) had asked for a 2% cut, warning that retail wine prices would have to rise due to a prolonged weak sterling in the months since the Brexit vote. Ninety percent of wine in Britain is imported.

Tax on wine: What you pay in the UK

‘It is disappointing that the Chancellor has failed to support a great British industry,’ said Miles Beale, chief executive of the Wine and Spirit Trade Association.

‘He has increased what were already excessive and unfairly high rates of duty for the UK’s wine and spirit consumers and businesses.’

Ahead of the Budget, the WSTA urged the Treasury not to ‘punish’ wine drinkers with higher prices.

It warned that an increase in excise duty would result in a ‘triple whammy’ of price increases – combined with the increase in imports costs due to the devaluation of sterling, and impending inflation – badly damaging consumer confidence.

The costs of importing wine has increased 15% following Brexit and the devaluation of sterling, according to the WSTA.

‘This is a missed opportunity to back British business and help out struggling consumers,’ said Beale on today’s announcement.

Duty on a 750ml bottle of wine will increase by 8p to £2.16, and by 10p for sparkling wine, up to £2.77.

Last year, the wine trade was ‘singled out’ with duty increasing with inflation, but frozen for other alcohol.

In 2015, duty on wine was but beer, cider and spirits all had a cut on duty.

After the freeze in 2015, wine duty income increased by 3.6%, by £136 million, the following year, according to the WSTA.

How much of your bottle of wine is tax?

Bibendum’s graphic on how much of a bottle of wine is duty. Credit: Bibendum

See a larger version of the graphic here

The UK already pays the second highest amount of duty on alcohol in the EU, and 62% of UK consumers believe that duty on wine is ‘too high’, according to a survey from the WSTA.

But, the current system is generally seen as offering better value for premium wine drinkers. And this part of the market could also be better insulated following Brexit, according to some in the trade.

The duty on a bottle of wine is £2.08, with VAT on top; meaning 55% of the price of an average bottle of wine goes towards duty and VAT.

Last week, Vinexpo’s chief executive, Guillaume Deglise said that economic uncertainty following Brexit will mean the low cost wine market – priced at £5 a bottle and under – will particularly suffer.